Archive for year: 2022

By: M. Jarrad Wright

Hiring local counsel should never be an afterthought in litigation. Local counsel should be more than an automatic stamp on pleadings and a means to an end of filing pleadings in a local court. Knowledgeable and capable local counsel can make a significant contribution to the successful outcome of a case. That’s because good local counsel can provide valuable insight into a judge’s inclinations, standing orders, prior decisions and memorandum opinions that may be relevant but hard to locate. Local guidance also can provide guidance on the local rules and the unwritten local practices that can make litigation proceed in a smoother fashion without last minute surprises.

This particularly is true in a jurisdiction like the Eastern District of Virginia, which has the distinction of being the fastest federal district court in the country. Commonly referred to as the “Rocket Docket,” the Eastern District of Virginia moves at a speed that is uncommon in litigation. For example, discovery motions, including complex and momentous discovery disputes, are fully briefed and argued in one week’s time. Experienced Rocket Docket local counsel will alert primary counsel to the deadlines and nuances in the local rules that dramatically speed up a case and, then, will work to ensure that nothing slips through the cracks as the rocket speeds along.

Retaining knowledgeable local counsel also is particularly important in Virginia state courts, where local rules may not be as robust, but where the quirks of local practice still exist. Having counsel knowledgeable about filing requirements and the court’s preferences can eliminate delays and other problems that prevent a successful presentation of a case.

Knowing local procedures, however, are not the only value that good local counsel offer. Local counsel can provide valuable intelligence on the jury pool because they live in the community and interact with the people there on a daily basis. Knowing where potential jurors live and how different communities feel is critical in jury selection. Indeed, even the most logical and straightforward case can be lost if the jury goes rogue. Knowing people, neighbors, and neighborhoods is a valuable insight that is often overlooked.

The attorneys at DiMuroGinsberg, P.C. have been practicing law in the northern Virginia area for decades and have a wealth of experience in litigating civil and criminal cases in state and federal courts in Virginia, including the Rocket Docket, both as primary and local counsel. If you are or will be litigating a case in Virginia, please feel free to contact us to learn more about the numerous ways in which DiMuroGinsberg may be able to assist you in the litigation.

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

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’s General Assembly 2022 session is now well underway, and the election result’s impacts on businesses is beginning to take shape. While the legislature has focused in large part the politically charged debates regarding parents’ rights regarding masks in schools and the need for masks during the pandemic, there have been other business-oriented bills that have advanced that are equally contentious.

For example, the prior General Assembly, which was then controlled by the Democrats, voted to increase Virginia’s minimum in January 2022 to $11 per hour and voted for subsequent increases thereafter until 2024. In this session, Republican members of the House of Delegates, which is now controlled by the Republicans, introduced a bill to freeze any minimum wage increases at the current $11 per hour figure. That bill recently passed the House of Delegates. However, the Senate, which is controlled by the Democrats, recently rejected a similar bill and are expected to reject the bill from the House of Delegates. Similarly, in another example, when the Democrats controlled both chambers they passed legislation that allowed local governments to engage in collective bargaining with local unions, which had previously been banned for government entities. The new House of Delegates has passed a measure to effectively repeal such legislative, while the state Senate has blocked such legislation. In other words, divided government is now the norm in Virginia and dramatic policy swings are unlikely.

That said, Virginia businesses still need to carefully monitor developments. The Democrats have a one seat advantage in the Senate and cannot lose a single senator for any reason because the new Republican Lieutenant Governor Winsome Earle-Sears can break any ties in favor of the Republicans. The school masking issue is advancing in the Senate because of a few democrat cross over votes.

In many ways, the current environment in Virginia mirrors the larger national environment in the U.S. Senate in which the party nominally in charge has at times found that a divided Senate means exercising control is harder than party members think it should be. Indeed, the recent stroke suffered by New Mexico U.S. Senator Ben Ray Luján is forcing capital hill leadership to rearrange votes and could impact the timing of U.S. Supreme Court confirmation hearings.

For the time being, in Virginia, changes to the minimum wage law and collective bargaining are unlikely, but the close margins in the Generally Assembly means that sickness, death, or simply disagreement from one member could change results or control on any number of issues. Businesses and citizens should therefore carefully monitor the situation in Richmond between now and the next state elections in 2023.