Virginia Overtime Wage Act Amended to Help Public Employers and Various Private Industries During Special Session

Yesterday, the Virginia General Assembly adopted the following language to the Governor’s budget appropriations bill, HB 7001, which quickly amends the ambiguous Virginia Overtime Wage Act (VOWA), which—since its passage and July 1, 2021 effective date—has sent public and private sector employers into much confusion over their overtime wage obligations.

The amendment, which became effective on August 9, 2021, as soon as both the House and the Senate passed the budget bill, reads as follows:

That for the purposes of the Virginia Overtime Wage Act § 40.1-29.2 the terms “Wages” and “Pay” shall also mean overtime compensatory time in lieu of wages for overtime pay by public agencies as provided by the Fair Labor Standards Act, 29 U.S.C. §207(o), and the term "Employee" shall not include an individual described in 29 U.S.C. §203(e)(4). In addition to the provisions of subsection D of § 40.1-29.2 of the Code of Virginia, an employer may assert an exemption to the overtime requirements for employees who meet any of the exemptions set forth in 29 U.S.C. §213 (a). Employees covered under 29 U.S.C. §213(b)(10)(A) shall be exempt from the overtime requirements set out in Code of Virginia § 40.1-29.2.

This offers employers with some clarity on the following issues:

• Compensatory time is now back on the table for local governments and public agencies. By baking the meaning of “compensatory time” (i.e., leave in lieu of overtime wages) as recognized under the federal Fair Labor Standards Act (FLSA) into the VOWA’s definition of “wages” and “pay,” the General Assembly has clarified that Virginia’s public sector employers are still permitted to utilize “comp time” to satisfy their overtime obligations for nonexempt workers.
• Volunteers of public sector employers are not considered “employees” under VOWA. Many localities and school divisions depend heavily on volunteers for important programs like emergency medical services, fire departments, and public school coaches. This clarity permits those organizations to maintain their volunteer pool so they can continue these important operations in their communities without incurring overtime wage obligations for the first time.
• All employee exemptions found under Section 213(a) of the FLSA may continue to be exempt from VOWA. This resolves questions as to which industries were exempt from overtime caused by inconsistent references to the FLSA within the new law. With this technical correction, long-recognized federal exemptions, such as the “computer” exemption, are now similarly recognized under state law as exempt from overtime. Although VOWA maintained the well-known “white collar” exemptions found under Section 213(a)(1), this amendment confirms the continued exempt status of over a dozen other industries (e.g., amusement and recreation, agriculture, newspaper).
• Finally, the General Assembly expressly exempted another Section 213(b) category of workers from overtime, by clarifying that no overtime wages are required for any “salesman, partsman, or mechanic” as defined in Section 213(b)(10)(A) of the FLSA.

These amendments should be well received by local governments and several private industries. The General Assembly appears to have addressed concerns raised by a variety of industries about the inadvertent and unintended impact VOWA had on their budgets and operations. This news comes at a time when the ability to attract and retain talent continues to be a challenge as Virginia employers both attempt to emerge from the COVID-19 pandemic while keeping their workplaces safe in the face of an uptick in cases caused by the rapidly spreading Delta variant.

Still, employers should continue to monitor the General Assembly’s actions regarding VOWA, which were implemented through Governor Ralph Northam’s budget appropriations bill in a special session. These changes will last only until June 30, 2022, at which point they will expire unless the General Assembly takes steps to permanently adopt them into law.