Overtime standards in Virginia will return to federal standards on July 1.
We have some important news to share about how overtime pay is calculated in Virginia starting on July 1, 2022. Here's the latest from our colleagues at SESCO Management Consultants:
On July 1, 2021, the Virginia Overtime Wage Act (VOWA) went into effect, significantly deviating the state’s overtime pay laws from its long-standing reliance on the standards set forth in the federal Fair Labor Standards Act (FLSA). Exactly one year later, Virginia will return to the overtime standards that applied prior to the VOWA.
Generally, the FLSA requires that non-exempt employees be paid overtime at a rate of one and one-half times their “regular rate of pay” for all hours worked in excess of 40 hours in a workweek. Under the FLSA, the regular rate of pay is the sum of an employee’s compensation for a given workweek (barring certain statutory exclusions) divided by the total hours worked by the employee during that workweek. Under the VOWA, if a non-exempt employee was paid on a salary basis, their regular rate of pay was calculated by dividing that same compensation by 40 hours rather than actual hours worked, resulting in a higher regular rate. The new legislation eliminates this difference and returns to the FLSA’s regular rate calculation method entirely.
Now that the FLSA’s regular rate calculation standards will again apply, the fluctuating workweek may be used again.
Based on the definition of “employee” set forth in the VOWA, arguably some of the FLSA’s exemptions from overtime were no longer available under state law. A return to the FLSA’s standards ensures that all overtime exemptions available under federal law likewise will be available under Virginia law
Employers should be mindful that the VOWA was not entirely rescinded. Prior to VOWA, employees could assert overtime pay claims only in federal court under the FLSA. VOWA in part enabled employees to alternatively bring such claims in state court, under arguably more employee-friendly state law standards. While those differing standards are eliminated as of July 1, employees may still pursue their overtime claims in state court, whether under state law, federal law, or both.