Happy holidays and bright wishes for the new year! This special time of year, it never hurts to look forward to the ways our laws are changing in the coming days. Virginia updates its laws on January 1 and July 1 each year, when the changes from previous legislative sessions go into effect. This year, there are several changes coming up that everyone should be aware of, whether you’re engaged in business, contracting and subcontracting, or you’re a consumer. Let’s take a look.
First, Virginia is one of 25 states raising the minimum wage effective New Year’s Day, 2023. The previous minimum wage was $11 per hour, which is being hiked to $12 per hour. This change affects residents in the service industry, cooks, butlers, maids, valets, and chauffeurs, among others. It also affects any individual employed by an employer, which includes home care providers. Virginia Democrats seek to increase the new $12 rate to $15 over the next few years, but face opposition. While we’re at it, the Commonwealth is also doing away with its 1.5% sales tax on groceries, and every little bit counts.
In a more complicated area of law, the decades of approval by the Virginia courts of pay-if-paid and pay-when-paid clauses in construction contracts is coming to an end. Virginia Code Section 2.2-4354 and 11-4.6, each taking effect on the first of January, will do away with pay-if-paid clauses entirely and limit pay-when-paid clauses, respectively. A pay-if-paid clause in a construction contract is a deal where the contractor will pay the subcontractor only if the contractor is paid by the owner. Essentially this is an attempt to insulate the contractor from having to pay out on jobs they themselves were not paid for. Pay-when-paid clauses are similar, but the Virginia Courts have held them to a different interpretation. Essentially the clause attempts to insulate the contractor from liability on unpaid or untimely paid accounts similarly, but the Courts have held they only allow a reasonable delay in the date of payment, not non-payment.
In technical jargon, the new law bars the making of any subcontracting contract in which receipt of compensation by a higher-tier party contemplated by the contract is a condition precedent to compensation under the contract. More plainly, contractors can’t require that their subcontractors only get paid if the contractor gets paid. Regarding pay-when-paid clauses, the law allows the contractor to pay the subcontractor either by 60 days after the completion of the work, or seven days after the contractor is paid, whichever is earlier. This is all applicable to private construction projects, whereas public projects will follow the same rule for pay-if-paid clauses, but pay-when-paid clauses will be unchanged from interpretations pre-existing the new law.
Finally, the Virginia Consumer Data Protection Act goes into effect the first of the year, creating rights for Virginia residents over their personal information and creating data collection and protection obligations for businesses that meet certain criteria. The Act applies to businesses which operate in Virginia or produce products/services targeted to Virginia residents and which also meet certain other criteria. Such companies must also, during a calendar year, control or process personal data of at least 100,000 Virginians, or control or process the same of at least 25,000 Virginians and derive more than half of their gross revenue from the sale of such data. However, a notable exception exists as this control only applies to data collected from individuals acting in a personal or household capacity, and excludes professional, commercial, and employment data.
Companies operating in this space will notice the similarities to the California Consumer Privacy Act, but there are some differences. The Virginia Act grants consumers the right to know and confirm whether an entity is processing their personal data, and to access the data, the right to correct the data if it is inaccurate, the right to obtain a copy of it, and the right to delete personal data, though this is subject to a large number of exceptions. These exceptions seem to be balanced against the Virginia Act’s opt-out provisions, allowing consumers to entirely opt out of the processing of personal data for advertising purposes, the right to opt out of the sale of personal data, and the right to opt out of profiling based on the same.
While the Act does provide certain rights, it does not create an independent cause of action. The Virginia Attorney General maintains exclusive and original authority to bring actions to enforce the provisions of the Act. The purpose and effect of the Act seems geared toward regulatory authority, so don’t expect to be litigating against a bunch of thirsty Plaintiff’s firms anytime soon.