4.7 Wage and Hour Law

• Library: The Virginia Lawyer: A Deskbook for Practitioners (Virginia CLE) (2022 Ed.)

4.7 WAGE AND HOUR LAW

Before 2020, Virginia had few requirements beyond those mandated by the federal Fair Labor Standards Act. ²⁰⁸⁵ But in 2020 and 2021, the Virginia General Assembly enacted several new laws that significantly affect wage and hour law in the Commonwealth. A Virginia employment lawyer now needs to pay close attention to state laws, which may become the dominant method of enforcing overtime, minimum wage, and related wage and hour issues for Virginia employees.

4.701 The Fair Labor Standards Act.

A. In General.

The Wage and Hour Division of the Department of Labor (DOL) enforces the Fair Labor Standards Act (FLSA) and issues regulations based on the FLSA. ²⁰⁸⁶ To encourage and facilitate private enforcement of the FLSA, an award of attorney fees and costs is mandatory to a prevailing plaintiff. ²⁰⁸⁷

B. Basic Requirements of the FLSA.

The FLSA (i) establishes a minimum wage; (ii) requires the payment of overtime compensation of one and one-half times the regular rate of pay for all hours over 40 worked in a workweek; (iii) prohibits retaliation against any employee for filing a complaint under the FLSA; (iv) requires various record-keeping and posting procedures; and (v) prohibits gender-based unequal pay practices in the Equal Pay Act. ²⁰⁸⁸ It also prohibits many forms of child labor. An employee cannot waive his or her rights under the FLSA. ²⁰⁸⁹

C. Coverage.

1. In General.

The scope of coverage under the FLSA is very broad and includes the great majority of employees working in the United States. The only rational approach for an employer is to assume that it is covered by the FLSA, unless it has received specific advice to the contrary.

2. Employer Coverage.

There are two ways an employer is subject to the FLSA: enterprise coverage and individual employee coverage. Certain employers, such as hospitals, some residential institutions, schools for children who are mentally or physically disabled or who are gifted, preschools, elementary schools, secondary schools, institutions of higher education, and those conducting an activity of a public agency are expressly included within the definition of "enterprise," regardless of other factors. ²⁰⁹⁰

If the employer is not a business that is expressly included within the definition of "enterprise," then the employer is an "enterprise" if its "annual gross volume of sales made or business done is not less than $500,000." ²⁰⁹¹

3. Individual Coverage.

Regardless of the employer's status as an enterprise, individual employees are covered by the FLSA if they handle instruments of interstate commerce, such as mail and telephones, or handle goods or products that have moved in interstate commerce. ²⁰⁹² Few businesses operating today can escape coverage under the individual employee tests. ²⁰⁹³

D. Exemptions.

1. In General.

The exemptions to the FLSA outlined below are narrow. The employer bears the burden of proof and must prove, by clear and convincing evidence, that an employee is exempt.

2. Independent Contractors.

The FLSA applies only to employees, not to independent contractors. ²⁰⁹⁴ This limitation is very narrow, however, and true independent contractor relationships are rare. ²⁰⁹⁵

3. Elected Officials.

Elected officials and their personal staffs, policy-making appointees, legal advisors, and legislative employees generally are not covered by the FLSA.

4. Volunteers.

Volunteers are excepted from the FLSA if they meet a six-part test. An employee may perform volunteer work for his or her employer under certain circumstances, but an employee cannot perform the same type of work for the same employer as both a paid employee and a volunteer.

5. Other Exceptions.

Certain employees are not subject to the overtime requirement. ²⁰⁹⁶ Certain others may be paid less than the minimum wage. ²⁰⁹⁷ Business relationships that differ from the traditional employer-employee relationships may be excluded. ²⁰⁹⁸

E. Exemptions from Minimum Wage and Overtime.

1. In General.

Unless an employee meets the criteria of one of the FLSA exemptions, the employee is nonexempt and must receive at least the minimum wage and overtime compensation at a rate not less than one and one-half times the employee's regular rate of pay. Exemptions are an affirmative defense to a claim for unpaid minimum or overtime wages under the FLSA, and the burden of establishing the exemption is on the employer. Those exemptions must be established by clear and convincing evidence.

2. "White-Collar" Exemptions.

The most commonly available exemptions are the "white-collar" exemptions, which exempt executive, administrative, and professional employees from the minimum wage and overtime requirements of the FLSA. ²⁰⁹⁹ Under 2019 regulations, an executive, administrative, or professional employee must be paid on a salary basis of not less than $684 per week and satisfy a job duties test to qualify for the exemption. ²¹⁰⁰

An employee may not be paid on a "salary basis" if the employer deducts from the weekly salary for partial-day absences. ²¹⁰¹

"Highly compensated" employees who receive annual compensation of $107,432 or more (and at least $684 per week) and satisfy one or more of the exempt duties of an executive, administrative, or professional employee are also exempt from the FLSA. ²¹⁰²

3. Computer-Related Occupation Exemption.

Certain employees engaged in computer-related occupations are exempt. As with executive, administrative, and professional employees, employees in computer-related occupations must regularly receive compensation of $27.63 per hour or more and satisfy a job duties test to qualify for the exemption. ²¹⁰³

4. Outside Sales Exemption.

Outside sales employees are exempt from the minimum wage and overtime provisions if the following requirements are met:

a. The employee is employed for the purpose of making sales or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and

b. The employee is customarily and regularly away from the employer's place of business.

Employees who work at the employer's place of business making sales either in person or by telephone do not qualify for the outside sales exemption. ²¹⁰⁴

5. Partial Overtime Pay Exemption for Hospital Employees.

Employees of hospitals and nursing homes may be paid overtime at one and one-half times their regular rate on the basis of a 14-day period, rather than the usual 7-day workweek, if there is a mutual agreement to that arrangement and if the employees receive overtime both for hours worked in excess of 8 on any day and for hours worked in excess of 80 during the two-week period. ²¹⁰⁵ There are additional record-keeping requirements for employers who have this pay plan. ²¹⁰⁶

6. Partial Overtime Pay Exemption for Certain Public Employees.

Public law enforcement employees must be paid overtime for hours worked over 171 hours during a 28-day consecutive work period. Public employees engaged in fire protection must be paid overtime for hours worked over 212 hours during a 28-day consecutive work period. ²¹⁰⁷

7. Motor Carrier Act Exemption.

The FLSA overtime provisions do not apply to any employee whose qualifications and maximum hours of service are subject to regulation by the Motor Carrier Act. ²¹⁰⁸ Before 2008, the Motor Carrier Act exemption was construed very broadly by some courts, and the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) ²¹⁰⁹ was enacted at least in part to address the over-broad reading some courts had given to this exemption. As a result, the law is clear that the Motor Carrier Act exemption does not apply to a driver, driver's helper, loader, or mechanic in any workweek in which their work affects the safe interstate operation of certain motor vehicles weighing 10,000 pounds or less.

8. Other Exemptions.

A number of job types are excluded from either the minimum wage or overtime provisions of the FLSA or both. These job types—many of which are regional in scope—include occupations like harvesters of maple sap, certain seasonal employees, certain agricultural employees, and others. ²¹¹⁰

F. Job Requirements Cannot Reduce Pay.

An employee must receive the minimum wage and overtime compensation "free and clear" of his or her employer's interests. Job requirements, such as a certain type of uniform or use of a personal car, cannot reduce the amount the employee receives below the minimum wage for all hours worked in any workweek and may not reduce the employee's pay below one and one-half times his or her regular rate of pay for all hours worked over 40 in a workweek. ²¹¹¹

G. Overtime Compensation.

1. In General.

Nonexempt employees must receive overtime compensation equal to no less than one and one-half times their regular rate of pay for all hours worked in excess of 40 hours per workweek. ²¹¹² The FLSA has no daily overtime requirement and simply requires the payment of overtime compensation when an employee works more than 40 hours in a week.

2. Calculation of Pay.

When an employer is required under the FLSA to pay an employee overtime pay, the employer must pay the employee for the overtime hours at an hourly rate equal to one and one-half times the employee's regular hourly rate. In a simple working "off-the-clock" case, the employee's hourly rate is the employee's regular rate, and the regular rate is multiplied by 1.5 to determine the applicable overtime rate. The overtime rate is multiplied by the number of overtime hours for each week. This means that the employee receives his or her full pay for the first 40 hours of work and then receives payment at the overtime rate for all hours over 40.

3. Payments Included in Regular Rate.

All bonuses are included in the calculation of the regular rate except (i) bonuses paid pursuant to ERISA governed plans such as profit-sharing plans; (ii) purely discretionary bonuses not based on specific job...