Virginia recently enacted significant amendments to its wage payment laws. These amendments under Virginia’s Wage Payment Act (“VWPA”) are the first of its kind and provide enhanced protections for employees who are victims of wage theft by creating a private cause of action for employees to sue their employers to recover unpaid wages owed. Additionally, the new laws expand the Virginia Department of Labor and Industry’s (“DOLI”) authority to investigate wage complaints.
As background, the VWPA provides employees with numerous employee protections such as requiring employers to establish regular pay periods, providing restrictions on deductions from wages, requiring salaried workers to be paid at least once a month, and requiring that hourly workers be paid twice a month. In addition, the VWPA requires that “upon termination . . . an employee shall be paid all wages or salaries due . . . on or before the date on which he would have been paid for such work had his employment not been terminated.” See Va. Code § 40.1-29 (A). The VWPA provides for stiff criminal penalties for employers who violate the section. For example, for violations less than $10,000, the employer could be found guilty of a misdemeanor. For violations over $10,000 or for subsequent convictions, the employer could be found guilty of a felony and subject to prison time.
Although the VWPA provides many employee protections, the VWPA did not provide a meaningful way for employees to enforce these provisions. Previously, VWPA claims were considered administrative and could only be brought by the DOLI in which the Commissioner had complete discretion in deciding whether to initiate proceedings to enforce compliance on behalf of the employee. (Generally, the DOLI brought employee claims based on a breach of contract action stemming from the employment contract. See Mar v. Malveaux, 732 S.E.2d 733, 738–39 (2012)).
However, effective July 1, 2020, employees can bring a private action against their employers who fail to pay wages owed under the VWPA. Specifically, the new law provides that employees can bring an action individually, jointly, or with other aggrieved employees to recover payment of wages owed. See Va. Code § 40.1-29 (J). If the employee prevails, in addition to recovering unpaid wages, the employee can recover an additional equal amount as liquidated damages, prejudgment interest from the date the wages were due, and reasonable attorney fees. (For example, if the employer unlawfully withheld $8,000 the employer is liable for an additional $8,000 in liquidated damages plus other costs and fees as mentioned above.)
If the employer knowingly fails to pay wages, the employee is entitled to triple the amount of wages due plus reasonable attorney fees and costs and the imposition of a civil penalty not to exceed $1,000 per violation. An employer is knowingly in violation if the employer has actual knowledge that the employee is owed wages and the employer deliberately or recklessly disregards the truth in remitting wages. (Note: the employee does not have to prove specific intent to defraud.) An employee has three years to bring a claim for unpaid wages under the VWPA.
It is likely the new legislation and availability of attorney fees and treble damages will make Virginia a focal point for wage theft claims and lawsuits.
Increased Authority to Investigate Claims
The DOLI’s authority was broadened due to the enactment of Va. Code § 40.1-29.1, allowing the DOLI to investigate claims in accordance with the VWPA’s new wage theft protection laws. Under this new law, while reviewing a wage complaint, the DOLI has authority to investigate whether the employer has failed to pay wages to other employees. If the Commissioner finds the employer is in violation of § 40.1-29, the DOLI can initiate proceedings on behalf of those employees as well.
New Provision Pertaining to Construction Contractors
The new wage theft laws also apply to construction contracts entered into after July 1, 2020. Specifically, Va. Code § 11-4.6 provides that general and subcontractors are jointly and severally liable for wages owed to the subcontractor’s employees if: the general contractor knows the subcontractor is not paying his employees wages; the project is a project other than a single-family residential project; and the value of the project is more than $500,000. The statute defines that general contractors are the employers of the subcontractor’s employees for purposes of the wage theft laws. The code gives fair warning to all general contractors to review their indemnification contract provisions immediately in the event that their subcontractor fails to pay wages to his employees!