Virginia adopts new overtime pay rules

Virginia has adopted a new overtime pay law that, like the federal Fair Labor Standards Act, requires employers to pay non-exempt employees for overtime work at a rate that’s 1.5 times the worker’s regular wage rate.

The Virginia law, which goes into effect on July 1, establishes a new formula to calculate an employee’s regular wage rate. Under the federal FLSA, the regular pay is the total amount paid for employment (minus certain statutory exclusions) divided by the number or hours worked during the workweek.

Under the new Virginia state law, how the regular pay rate is calculated depends on whether the worker is salaried or paid an hourly wage:

For hourly employees: Add up all wages at the hourly rate and any other non-overtime wages paid or allocated for the workweek (minus any items that are regularly excluded under the FLSA). Then divide that amount by the total number of hours worked during the workweek.

For salaried employees: The regular pay rate is one-fortieth (0.025) of all wages paid for the workweek.

SESCO Management Consultants notes the state law requires that the regular rate of pay for salaried non-exempt employees be calculated for overtime purposes based on 40 hours, not actual hours worked. The fluctuating workweek method of payment is no longer allowed, the consulting firm notes.

Employers are not allowed to pay non-exempt employees a fixed salary to cover wages for hours worked in excess 40 hours, SESCO Management Consultants says, adding that companies have to instead calculate an hourly overtime rate.

The state law also allows employees to file claims for unpaid overtime wages up to three years after they did the work, and it removes the good faith defense for employers that fail to pay overtimes wages. That state law also increases the penalties, costs and damages employers may be required to pay as a result of unpaid overtime.