New DOJ Opioid Guidance Puts Employers on Notice; Rocket Docket Update; Virginia Cracks Down on Employers Misclassifying Employees as Independent Contractors
As reported in an article by Jayna Genti in an earlier issue of DGRead, in 2019, then Virginia Governor Ralph Northam issued an Executive Order calling for an inter-agency task force to make recommendations on how to address the problem of companies in Virginia misclassifying their employees as independent contractors. During 2019-2020, legislation was introduced at the federal level and in at least 20 states to deal with this issue. The Virginia study results were issued in November 2020 and revealed that about 214,000 Virginia workers were misclassified as independent contractors, and this alone was costing the Commonwealth approximately $28 million in tax revenues each year.
Virginia’s New Law
In response to the task force’s recommendations, the Virginia General Assembly passed legislation in 2020 to deter companies from misclassifying their employee and penalizing those employers that have misclassified their workers. Then Governor Northam signed the legislation into law, which took effect January 1, 2021.
As set out in DGRead, the new Virginia misclassification law has some real teeth. Businesses that improperly treat their employees as independent contractors are now subject to a fine of up to $1,000 per worker for a first offense. Maximum fines will increase to $2,500 per misclassified individual for a second offense, and up to $5,000 per misclassified individual for a third or subsequent offense.
This legislation also carries the potential for companies violating this law being prohibited from being awarded public contracts. Employers that misclassify workers can be debarred for up to one year for a second offense and up to two years for a third offense. The legislation further requires the Virginia Department of Taxation to share information to help with enforcement.
Criminal Actions to Enforce the Law
To implement the new law, the Attorney General’s office set up a Worker’s Protection Unit to work with the Office of the State Inspector General, and the state first took action under the new legislation in October, 2021. The action was brought against building drywall subcontractors who were working on major construction projects in Virginia, including the building of the new Virginia General Assembly Building. Former Virginia Attorney General Mark Herring empaneled a multi-jurisdictional grand jury that returned charges against several companies, including GTO Drywall and Richmond Drywall Installers, for misclassifying workers as independent contractors rather than as employees allegedly in an effort to avoid paying taxes.
Each company was ultimately charged with ten counts of felony embezzlement. In December 2021, Richmond Drywall pled guilty to five counts of felony embezzlement and the other five counts were nolle prossed. In February, 2022 under the new administration, GTO Drywall pled guilty to five felony counts and the other five counts were similarly nolle prossed. Each company was eventually fined $2,500 for each guilty finding, plus court costs and restitution to the Virginia Department of Taxation for the unpaid taxes.
Civil Actions by Workers
But that is not where the enforcement efforts ended. Enforcement of the Virginia misclassification laws are not limited to the Commonwealth bringing a criminal action. Workers affected by their misclassification may bring a civil action for lost wages under federal and state law, which include penalties, such as trebling the damages if proven. In October 2020, laborers working for some of the same drywall subcontractors, and others, filed a class action in federal court claiming that they were improperly classified as independent contractors instead of as employees. They filed under the Virginia statute as well as the federal Fair Labor Standards Act (“FLSA”). See Moran, et. al. v. Agent Wall Sys., Inc. et. al., Civil Action 3:20-cv-00823- (E.D. Va. October 22, 2020). The laborers had been hired through various labor brokers, but claimed they should be considered employees of both the labor broker and the drywall subcontractor.
In December, 2020, a second group of laborers working for another subcontractor brought almost identical claims in Richmond federal court under the Virginia and the federal misclassification provisions. See Rosales, et. al. v. Capital Interior Contractors, Inc., et. al., Civil Action 3:20-cv-00916 (E.D.Va. December 1, 2020). The laborers claimed, among other things, that the subcontractor failed to pay them overtime constituting a violation of the Virginia Wage Payment Act, which would permit them to recover up to three times the amount of unpaid overtime. In January, 2022 the Rosales case settled. The defendant companies agreed to pay the Primary Group in the class action two times the amounts of alleged underpaid wages that Plaintiffs’ counsel had calculated for each participating class member, plus an additional $400 for each Plaintiff. In addition, defendants agreed to pay $86,000 for Plaintiffs’ attorney fees.
Making the Right Decision
As evidenced by the above referenced criminal and civil cases, the fallout for misclassifying an employee as an independent contractor can be substantial. Employers not only need to be concerned about federal laws prohibiting such practices; it is now clear that Virginia law similarly prohibits such practices. Wage and tax theft statutes are now in place in Virginia that are designed to compensate victims and incentivize employers’ compliance with lawful wage payment practices.
Determining whether a potential hire is an employee or an independent contractor is not always clear cut. Employers in Virginia should consult with experienced legal counsel in making their employment related decision as to how to properly classify their workers as employees or independent contractors. A wrong decision can result in criminal and civil liability.
By Jonathan R. Mook
When the COVID-19 pandemic first began forcing workplaces to close or at least limit their operations to curb the spread of the virus, Virginia was one of the first states to adopt a COVID-19 safety standard for employers. Now that the pandemic has waned, at least in terms of COVID-19 hospitalizations, Virginia has shifted its approach.
Revocation of COVID-19 Standard
Recently, the Virginia Safety and Health Codes Board voted unanimously to recognize that Covid-19 no longer poses a “grave danger” to workers and to recommend that Gov. Youngkin approve the withdrawal of Virginia’s mandatory COVID-19 Standard. In response, Governor Youngkin applauded the Board’s decision and issued the following statement on the matter:
Businesses asked us for updated workplace guidance to reflect our current COVID-19 situation in Virginia. We are pleased with the board’s move and this vote signals that a return to normalcy in Virginia is not a partisan issue. We’re going to continue providing greater certainty and decision-making power to businesses and workers in the Commonwealth as we move beyond the pandemic. With the removal of these regulations, it is undeniable that Virginia is open for business.
New COVID-19 Guidelines
Although Virginia no longer has a mandatory COVID-19 Standard in place, the Board has issued Guidance for workplaces, as Virginia “transitions to near normalcy.” The Guidance includes the following steps for employers to follow:
- Facilitate employees getting vaccinated and boosted
- Encourage workers with COVID-19 symptoms to stay home and seek advice on testing and treatment from their physician;
- Require all workers infected with the COVID-19 virus to stay home;
- Provide workers with face coverings, as appropriate;
- Encourage good sanitary work habits such as frequent hand washing;
- Educate workers on your COVID-19 policies and procedures;
- Operate and maintain ventilation systems in accordance with manufacturers specifications to achieve optimal performance;
- Continue to record and report COVID-19 infections and deaths, which are mandatory under VOSH regulations part 1904.
Masking has become a major political issue, and in that regard, Virginia employers should note that the Guidance suggests that employers provide masks as “appropriate.” This situation may arise where you have immunocompromised employees or employees with young children who are especially concerned about the medical consequences of contracting COVID-19. Remember that your bottom line must be to provide a safe workplace for all of your employees.
By Jonathan R. Mook
Two years ago, the Democratically controlled Virginia General Assembly ratified the Equal Rights Amendment (ERA). In doing so, Virginia became not only the 38th state to endorse the amendment, but also the final one to satisfy the required 2/3 majority needed to amend the U.S. Constitution. Virginia’s ratification, however, did not necessarily mean that the ratification was effective. That’s because Congress established a 1982 deadline for the ERA’s ratification to occur.
Virginia Joins ERA Lawsuit
To clarify the matter, Virginia joined two other states (Nevada and Illinois) in filing suit in the U.S. District Court for the District of Columbia, contending that the deadline set by Congress wasn’t binding and seeking to compel the U.S. Archivist to certify the ERA as the 28th Amendment to the Constitution. The district court dismissed the lawsuit last year, but the states appealed the dismissal to the District of Columbia Circuit, where it presently is pending.
Last fall, however, a sea change occurred in Virginia’s political landscape when Republican Glenn Youngkin won the Governor’s race along with Republican Lieutenant Governor Winsome Earle-Sears and Republican Attorney General Jason Miyares. Significantly, in 2020, Attorney General Miyares had a been a member of the Virginia House of Delegates, and he had voted against ratification of the ERA.
Virginia Bales Out
Given Attorney General Miyares’ view, it should have come as no surprise that he now has asked the D.C. Circuit to dismiss Virginia as a party to the pending ERA lawsuit. Miyares’ position is that the district court correctly dismissed the lawsuit, and any further participation in the lawsuit would undermine the U.S. Constitution and its amendment process. Although the appeal is being pursued before the D.C. Circuit by the two remaining states, Virginia’s withdrawal from the case certainly is not a good omen for a positive outcome for the ERA. Instead, the likely outcome appears to be “RIP.”
Virginia Abandons ERA; Carelessly Lifting Mask Requirements May Invite Bias Claims; Virginia Jettisons COVID-19 Workplace Standard
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