Hunton Employment & Labor Perspectives

Virginia’s 2020 legislative session is not scheduled to wrap-up until March. But Virginia employers need to pay attention now to several game-changing bills moving through the legislative process and expected to be signed into law this spring.  The Hunton government relations team, working with several lobbying clients, has already helped defeat  several of these measures including a proposed repeal of Virginia’s right to work statute.  But others are expected to become law, and could dramatically increase the volume of employment litigation in Virginia.  Employers are therefore well advised to begin planning for these changes now.

After a landmark 2019 election in which Democrats took control of the Virginia House of Delegates and Senate while under the tenure of a Democratic governor, the new political majority in the state wasted no time delivering on campaign promises. New leaders in the House signaled this shift by symbolically renaming the House “Commerce and Labor Committee” to “Labor and Commerce Committee”.

In that spirit, the legislative bodies of Virginia have proposed and passed several laws that will have a major impact on Virginia employers. A few bills to watch:

The Virginia Values Act (SB 868):  On the surface, the bill amends the Virginia Human Rights Act (VHRA) to add gender identity and sexual orientation to the list of protected classes in employment discrimination.  But underneath the surface, the bill includes several technical amendments applicable to all types of prohibited discrimination (except age).  First, the bill does not require any administrative exhaustion before an employee can file a discrimination lawsuit. Second, the bill drastically expands VHRA’s scope by removing the large employer exception; meaning large Virginia employers who previously never thought about the VHRA are now subject to its provisions.  Finally, the bill provides for no cap on economic damages claims.

These changes could spark a groundswell of state court litigation.  For instance:

• Large Employer Liability - The VHRA currently only covers employers with 5 to 14 employees, which means that larger employers previously could not be sued under the VHRA. Under the proposed bill, any employer with more than 5 employees, including those with 15 or more, are subject to liability for unlawful discrimination against all protected classes (i.e., not just the newly added gender identity and sexual orientation), except age. In this way, the bill would open up the ability for employees to file separate race, sex, national origin, etc. discrimination lawsuits in in lieu of, or parallel with, EEOC charges under federal anti-discrimination law.
• Direct Right of Action - Without an administrative exhaustion requirement, plaintiffs would be able to file VHRA discrimination lawsuits immediately in Virginia state court.
• Stuck in State Court – Given these conditions, plaintiffs’ lawyers may forego the EEOC/Title VII process altogether and pursue only a VHRA claim. Without a federal claim, employers used to litigating employment cases in federal court may be stuck in state courts unless diversity jurisdiction exists.
• No Incentive for Plaintiffs Lawyers to Settle - Obtaining summary judgment in Virginia state courts is more difficult than it is in federal court because different procedural rules apply, which means that it will be exceedingly difficult for a defendant to dispose of a VHRA claim without having to litigate the merits at trial or settle. And the liability for such claims would be uncapped.  Plaintiff’s lawyers are unlikely to be as willing as in the past to settle employment cases early in the litigation, and/or at reasonable amounts.

Minimum Wage (SB7/HB395): Both chambers also have competing bills that would gradually increase the minimum wage over the next several years, with a target wage of $15.00/hour within several years.  The Senate version adds a complicating factor of applying different increases to different regions of the state.  Both bills would also tie increases after 2023 or 2026 to a cost of living index.  While the House and Senate versions will be reconciled in conference by early March, it is clear that employers will need to factor in these potential minimum wage increases when preparing their budgets for 2021 and beyond.  Moreover, the minimum wage increases – if passed into law – could create wage compression for employees already receiving pay at or above the new minimum wage, which could lead to a domino effect of wage increases across all job classifications.

Prevailing Wage (SB8/HB833): Would require contractors and subcontractors under any public contract worth more than $250,000 with a state agency for public works to pay the prevailing wage rate to mechanics, laborers, and workers performing services in connection with the contract. This could increase contractors’ expenses on state and local government contracts, which need to be taken into account prior to submitting a bid.

Paid Sick Leave (SB481/HB898): Would require employers with 15 or more employees to provide up to 40 hours per year of earned paid sick leave to employees beginning January 1, 2021.  Employees would earn one hour of paid sick leave benefit for every 30 hours worked.  The proposed law would not apply to unionized employers who have entered into a bona fide collective bargaining agreement. Employers who already have a paid leave policy which already provides 40 hours per year would not be required to provide additional paid sick leave.

Fair Share/Repeal Right to Work (SB426/HB153): The senate bill authorizes an employer to require as a condition of employment any employee who is not a member of such labor union to pay a fair share fee to compensate the labor union for the costs of representing the nonmember employee. The house version of this bill repeals right to work in Virginia.  These bills failed.  But there is a strong possibility that these proposals will be on the table again in 2021.  It goes without saying that a repeal of Virginia’s right to work status would be disastrous for its economic prosperity and best-for-business status.

We will continue to track and provide updates as necessary, and will provide a summary of all changes signed into law at the conclusion of the legislative session.  For now, one thing is clear: we are entering a brave new world for Virginia employers. For decades Virginia has been seen as an unfavorable jurisdiction for plaintiffs’ lawyers, but that perception may be changing in the near future.