Virginia’s overtime regulations have seen some significant changes recently, and if you’re a business operating in the state, you’ll want to know what’s new and what’s not. Whether you have employees in Virginia or plan to hire there in the future, staying compliant with the state’s overtime laws is crucial.
Let’s discuss everything you need to know about Virginia’s Overtime Wage Act (VOWA), how it impacts your payroll compliance, and how it compares to the federal Fair Labor Standards Act (FLSA). We’ll also share how Mosey can help you manage state compliance.
What Is the Virginia Overtime Wage Act (VOWA)?
In July 2021, Virginia rolled out the Virginia Overtime Wage Act (VOWA). This marked a departure from the federal FLSA overtime rules, creating new standards and expectations for businesses.
For a little over a year, VOWA had stricter rules on how employers calculated overtime, especially for salaried employees, and came with higher penalties for non-compliance.
However, in July 2022, Virginia scaled back some of those changes, bringing many of its overtime requirements back in line with federal standards. Even so, there are still important differences between Virginia law and the FLSA that you need to be aware of.
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What Are the Key Differences Between VOWA and the FLSA?
While Virginia’s overtime laws now align more closely with the FLSA, there are still some differences that matter. Here are the key areas where you’ll want to pay extra attention:
Private Right of Action
Virginia gives employees the right to sue their employer in state court for unpaid overtime, in addition to any federal claims they might bring under the FLSA. That means Virginia employers can face lawsuits in state courts, so it’s vital to be extra vigilant about complying with overtime rules.
Penalties for Noncompliance
Under VOWA, the penalties for overtime violations are stricter than those under the FLSA.
Virginia law allows for automatic liquidated damages (equal to the amount of unpaid wages) and an 8% annual interest rate. Employers who knowingly violate overtime laws could even face triple damages.
Statute of Limitations
Virginia law allows employees three years to file overtime claims, while the FLSA typically allows only two years (or three for willful violations). If an overtime issue arises, your business could be on the hook for longer under Virginia law than federal law.
Salaried Non-Exempt Employees
The biggest difference between VOWA and the FLSA lies in how overtime is calculated for salaried employees. Under Virginia law, the regular pay rate for salaried non-exempt employees is calculated by dividing their total weekly wages by 40 hours.
In contrast, the FLSA calculates the rate based on all hours worked during the week, which can sometimes work in the employer’s favor.
How To Calculate Overtime in Virginia
Now that you know the key differences, let’s discuss how to calculate overtime under VOWA. Whether your employees are hourly or salaried, the rights calculations are required.
Hourly Employees
For this type of employee, the process is pretty straightforward. You’ll calculate their regular pay rate by dividing their total wages by the hours worked in the week. Any hours worked beyond 40 should be paid at one-and-a-half times that regular rate.
Salaried Non-Exempt Employees
Here’s where things get tricky. In Virginia, the regular rate of pay for salaried non-exempt employees is based on a standard 40-hour workweek, regardless of how many hours the employee actually worked.
Even if your salaried employee worked 45 hours in a given week, their regular rate will still be calculated by dividing their weekly salary by 40. Any hours over 40 are then paid at one-and-a-half times this rate.
It’s a good idea to double-check your Virginia payroll system to ensure it’s set up to calculate overtime according to these rules, especially for salaried workers.
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How To Avoid Common Pitfalls With VOWA
With these overtime rules in place, it’s easy to make mistakes that could cost your business. Here are some of the most common pitfalls to avoid:
Misclassifying Employees
Misclassifying employees as exempt from overtime is one of the most common mistakes that a business can make. Under VOWA, misclassified employees are entitled to one-and-a-half times their regular rate for any hours worked over 40, and there’s no getting around it. Be sure to review your employee classifications carefully to avoid missteps.
Not Tracking Hours Accurately
Accurate time tracking is essential. If your payroll system isn’t logging hours correctly, you could end up underpaying your workers or not paying them the proper overtime.
Remote employees, in particular, can pose challenges for tracking time, so make sure your systems are up to the task.
Not Auditing Payroll Systems Regularly
Payroll compliance isn’t something you can set and forget. Regular payroll audits will help you catch any potential issues before they turn into costly penalties. With VOWA’s penalties being more severe than the FLSA’s, this consideration is absolutely paramount.
By being proactive and addressing these potential pitfalls, you can safeguard your business from costly errors and ensure compliance with state and federal overtime laws alike.
Are There Exemptions to Overtime Rules in Virginia?
While most employees are entitled to overtime under both federal and Virginia law, there are some exemptions. Virginia follows many of the same exemptions as the FMLA, with a few exceptions, like the derivative carrier exemption.
The FLSA allows airlines and their affiliates to be exempt from overtime rules, but Virginia has chosen not to include this exemption in its state law. If your business is part of an airline subsidiary or affiliate, this is something you’ll need to keep an eye on.
How To Plan for the Future of Your Business
Compliance is never static. Staying on top of local, state, and federal regulations is the best way to ensure your business isn’t caught off-guard. However, you don’t have to go it alone — automating your payroll compliance can help you stay ahead of changes and avoid errors.
Tools like Mosey’s compliance management platform can help you track the state and local requirements of your workforce and even notify you when new regulations come into effect. By integrating our tool with your existing systems, you can streamline your payroll process and make compliance much simpler.
Take Action Today on VOWA
Virginia’s overtime laws have evolved, and while many of the initial challenges posed by the Virginia Overtime Wage Act have been addressed, it’s still important to stay informed.
Remember, Virginia employers now have to manage both state and federal overtime regulations, which means double-checking everything from employee classifications to how you calculate pay.
By staying proactive, reviewing your payroll processes, and monitoring changes to state and federal law, you can ensure your business remains compliant with overtime rules in Virginia.
If you’re looking for an easier way to stay in line with payroll regulations, Mosey is here to help. Schedule a free demo with Mosey today to learn how we can streamline your compliance process and keep your business on track.
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