Archive for category: In The News

By:  M. Jarrad Wright

The Old Dominion now has the “honor” of being the first state in the South and the sixteenth state in the nation to legalize marijuana.  With only hours to go before the end of this year’s legislative session, the State Senate and House of Delegates struck a compromise and passed a bill that will legalize marijuana for adult recreational use and retail sales in 2024. The vote occurred on a party line basis without any Republican support.  Democratic Governor Ralph Northam has been supporting legalization efforts, and there is little doubt that he will sign the legislation into law.

Details of the New Law
The new Virginia law will make possession of up to an ounce of marijuana legal when sales are slated to begin in 2024.  The bill also will allow home cultivation of four plants for each household.  Revenue generated through the sale of marijuana is designated for pre-K education and public health initiatives in the state.

Significantly, the legislation includes a clause requiring a second vote in the General Assembly next year to approve the requirements for regulating marijuana sales, but that procedural hurdle will not impact the timeline for legalization.  With the General Assembly up for election this November, the task of finalizing the regulatory framework, therefore, has been left to a General Assembly whose configuration in terms of legislators and party affiliation is as yet unknown.  That especially is the case since the fallout from the General Assembly’s legalization of recreational marijuana use and sales is likely to impact some key races around the Commonwealth, as many Republican legislators in Richmond argued that the legalization bill was rushed, while many Democrats argued that the bill does not go far enough.

Impact on Employers
From an employer’s perspective, the status quo is maintained for the immediate future.  Looking ahead, however, there remain significant business questions that have not been addressed, including how employers should conduct drug testing given that recreational marijuana use will now be legal and potentially prevalent.  Employers, therefore, are likely to be facing a number of challenges in maintaining drug free workplaces.

Assessing with any assurance the practical impact upon employers of the legislation will need to await future developments. Virginia’s laws regarding marijuana, as well as those in most of the country, continue to be in flux, and employers need to keep themselves apprised of any changes in the legal landscape.  Accordingly, we shall continue to update you as Virginia moves forward in establishing the regulatory framework for the sale of recreational marijuana.

Potential Concerns
Of special concern is whether the General Assembly may seek to provide legal protection to those persons who legally use marijuana.  Other states have done so, and prohibit an employer from taking an adverse job action against an employee simply because the individual is legally using pot outside the workplace.  Should Virginia move in this direction, the impact on employers is clear.

In short, this year’s General Assembly action to legalize recreational pot clearly is not the end of the story.  Stay tuned.

By: Billy B. Ruhling, II

The cultural awakening our nation has experienced over the last year in the wake of police shootings and the recognition that what had once been common behavior toward certain gender groups no longer is acceptable in the Old Dominion. On January 5, 2020, Virginia Attorney General Mark Herring announced that the existing Office of Human Rights would be restructured in order to create a new Office of Civil Rights. Along with the name change, the staffing will be significantly increased, and the new office will have a more encompassing scope of reach.

This change builds upon a series of bills passed in the General Assembly last year authorizing Virginia’s Attorney General to investigate discrimination in local police departments as well as enhancing the Attorney General’s ability to protect LGBTQ rights and to root out gender-based discrimination. The Office of Civil Rights will be staffed by seven attorneys and six staff members, which is a dramatic change from the Office of Human Rights’ prior complement of just one attorney and three staff members. As Attorney General Herring explained when announcing the change, “The Office of Civil Rights will enhance our ability to protect Virginians from discrimination in housing, employment and public life, as well as allow us to tackle new responsibilities, like ‘pattern and practice’ investigations that can root out and end unconstitutional policing and enforcing protections against discrimination for LGBTQ Virginians.”

The new office can be reached at 804-225-2292 or CivilRights.oag.state.va.us.

By: Jayna Genti, DiMuroGinsberg P.C.

Companies misclassifying their employees as independent continues to be a hot-button issue throughout the country, and Virginia is no exception. In the last year alone, legislation related to independent contractor misclassification was introduced at the federal level and in at least 20 states. New Jersey and California recently enacted employee misclassification laws, and other states including New York are considering similar legislation.

Virginia Acts to Prevent Misclassification

In 2019, Virginia Governor Northam issued an executive order calling for an inter-agency task force to make recommendations on how to address the issue.  The study results issued last November found that about 214,000 Virginia workers are misclassified as contractors, costing the Commonwealth some $28 million in tax revenues each year.

In response to the task force’s recommendations, the Virginia General Assembly passed legislation this term that seeks to prevent misclassification and to penalize those employers who misclassify their workers.  Governor Northam recently signed the legislation into law, which will take effect January 1, 2021.

Classification of Employees

Under the new law, the Virginia Department of Taxation will determine whether a worker is an employee or independent contractor by applying Internal Revenue Service guidelines.  The IRS guidelines involve a multi-factor analysis, with the most important being the level of control exercised by a company.  In making the requisite assessment, the presumption will be that a worker who performs a service for an employer for pay will be considered an employee unless the individual or his or her employer demonstrates that she is an independent contractor.

Penalties and Enforcement

The new Virginia misclassification law has some real teeth.  Businesses that improperly treat their employees as independent contractors will be 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.

The new legislation also prohibits the awarding of public contracts to employers that misclassify workers.  Debarment will last 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.

Further Efforts to Halt Misclassification

The new Virginia law imposing penalties for employee misclassification will not be the end of the story.  Further efforts are likely to be forthcoming to crack down on employers who misclassify their workers, and deny tax revenues to both states and the federal government.  The impetus for the Commonwealth to move quickly against employee misclassification has arisen as a result of the recent federal legislation extending unemployment insurance to gig workers and other independent contractors who do not traditionally receive unemployment when they cannot work.  Unemployment benefits are funded by specific payroll taxes on employee pay.  Companies, however, do not pay unemployment insurance for independent contractors, even though they will now be able to receive unemployment benefits courtesy of the federal government.

Thus, we can expect heightened scrutiny on companies that misclassify employees as independent contractors and, thereby, evade their obligation to pay unemployment taxes.  As it stands, misclassification already has reportedly denied the Commonwealth substantial revenue, and this concern will only be heightened by the current COVID-19 pandemic and the stay-at-home orders shuttering many businesses.

Bottom Line

Going forward, you can expect greater attention by Virginia enforcement and investigative agencies to claims of worker misclassification.  Those agencies are on high alert for violations of the law and undoubtedly will use the full spectrum of available enforcement mechanisms to crack down and penalize those employers that evade the law.  The stakes of losing at the agency level are high and can lead to fines, legal expenditures, and litigation.

Given the continuing evolution of these and other related employment law matters, you are well advised to undertake a thorough assessment of the appropriateness and defensibility of classifying any members of your workforce as independent contractors.  Such an evaluation should be undertaken under the direction of an employment law attorney who is well versed in these matters and can review your policies and present workforce classifications to ensure legal compliance.  Misclassification no longer will result in simply a slap on the wrist.  Real penalties will now be imposed.

By: Stacey Rose Harris

Nicole Bazemore is an African-American who worked at Best Buy.  One day at work, her white colleague, Anne Creel, held up a hazelnut and said that she used to refer to those kinds of nuts as “N[….]r T[…]s.”  Bazemore was deeply offended and reported Creel’s conduct to management.  After some time, Bazemore was told that the situation had been addressed, but she was not told specifically what action was taken.  Creel did not make these statements again, but she was also not fired.  Nevertheless, Bazemore was deeply humiliated by the incident and believed it should have been addressed more publicly and with more severity.  She sued Best Buy in federal court in Maryland, asserting a claim of hostile work environment under Title VII of the Civil Rights Act.

Best Buy moved to dismiss Bazemore’s claim, arguing that Creel’s conduct could not be imputed to it.  Specifically, to state a claim against an employer for hostile work environment, the plaintiff must allege four elements: (1) that she was subject to unwelcome conduct; (2) based on her race or sex; (3) that was severe enough to make her work environment hostile or abusive; and (4) which conduct is imputable to her employer.

The question of imputation was the subject of the court’s analysis.  This element was problematic for Bazemore because the statement was made by a co-worker, not a superior.  The law in the Fourth Circuit is that, to show imputation, a plaintiff must allege that the employer knew, or should have known, about the harassment and failed to take action reasonably calculated to stop it.  Bazemore had alleged that she informed Best Buy of Creel’s statement; that Best Buy had taken action (albeit not action as forceful as Bazemore would have liked), and that Creel’s conduct did not repeat.  Based on Bazemore’s own allegations, she failed to show that Best Buy knew or should have known of the conduct and failed to take reasonable actions to stop it.  When the wrongdoer is a superior, it is more difficult for the employer to overcome the burden of showing that it did not know of, or took reasonable actions, to stop the conduct.

Even if Best Buy’s corrective measures were not as strong as Bazemore would have liked, the Court noted that it does not “does not sit as a kind of super-personnel department weighing the prudence of employment decisions made by firms charged with employment discrimination . . ..” Rather, Bazemore’s allegations that Best Buy did address the situation, and that Creel’s conduct did not occur again, were sufficient to defeat Bazemore’s ability to satisfy the fourth element of her claim.

The take-away of this ruling for employers is to take immediate action in response to racially or sexually offensive remarks, and document those efforts, including follow-up.  These kinds of measures may be sufficient to defeat a claim of hostile work environment when the wrongdoer is a colleague, (not a superior) of the plaintiff.

By: Jayna Genti, DiMuroGinsberg P.C.

When the 2021 Virginia General Assembly reconvenes, the session will inevitably be colored by the ongoing COVID-19 pandemic. For starters, the House of Delegates plans to gavel in its regular session virtually, with the state Senate again planning to meet at the Virginia Science Museum to provide for greater social distancing. Significantly, lawmakers are set to resume debate over whether to require employers to offer paid sick and family medical leave.

Movement toward paid leave
About 1.2 million Virginians have no paid sick time or family leave, according to a November 2020 study by the Shift Project. To address the lack of paid leave, various members of the legislature for years have pushed to pass laws requiring most employers to provide the benefit. The members argue the legislation would help maintain the state’s competitive edge in attracting workers, as Maryland and 13 other states plus the District of Columbia have already enacted such protections for employees.

And, with the rise of the COVID-19 pandemic, the importance of paid leave legislation to both employees and the public health has never been clearer. According to Richmond and Henrico County Health Director Dr. Danny Avula, the spread of the coronavirus in the Commonwealth could have been drastically reduced if paid leave had been available to more workers. That’s because “the vast majority of our exposures and our outbreaks are happening in workplaces,” Avula said.

The situation is exacerbated by the fact that many people who lack paid sick leave earn low wages, such as grocery and fast-food workers. They don’t have the option to work remotely. “Many of them are the front-line jobs that keep this country running in the pandemic,” said Delegate Elizabeth R. Guzman of Prince William, who advocates for a paid leave mandate. “No one should have to choose between their health and a paycheck.”

“If the pandemic has taught us anything, it’s the importance of staying home when you’re sick,” said Kim Bobo, executive director of the Virginia Interfaith Center for Public Policy, which is part of a coalition called Virginians for Paid Sick Days that was formed to advance the issue.

Last year’s unsuccessful efforts
Nevertheless, actually enacting a paid leave law during the legislative session will be an uphill battle. In 2020, the Virginia House and Senate passed slightly different versions of a paid sick leave bill, but the legislation died in the Senate in March, just as the state was recording its first COVID-19 cases. A major sticking point was offering the benefit to part-time workers, many of whom don’t have the option to work remotely.

During an extra-long special legislative session that ran from summer to fall, a compromise effort to offer 10 days of paid leave if employees or their relatives contracted the coronavirus also failed. The failure occurred in part when members disagreed over what businesses to exempt: (1) employers with fewer than 25 employees under the bill backed by Governor Ralph Northam or (2) employers with fewer than six employees under Guzman’s bill. The measure advancing the furthest, from Senator Barbara A. Favola of Arlington, would have exempted employers with fewer than 15 employees.

This year’s push
In 2021, legislators are still working out their bills’ details. Favola plans to introduce a bill requiring only employers that already offer a sick leave program to allow employees to use up to five days of the benefit to care for an immediate family member who is ill. In its current form, the bill would exempt employers with fewer than 25 employees.

Guzman, who is running for lieutenant governor, plans to sponsor a much more robust measure that would apply to businesses with 26 or more employees. The legislation would require certain businesses to provide at least five paid sick days to full-time employees (part-time workers wouldn’t be covered). The paid sick leave envisioned by both bills could be used for not only the coronavirus but also any type of serious health condition.

Under Guzman’s proposal, the paid leave mandate would apply to at least eight categories of employees defined as “essential,” including those working in emergency services, food plants, child care, domestic work, education, health care, and home health care. The requirement also would cover employees of essential retail businesses, as defined by Governor Northam’s Executive Order dealing with the COVID-19 pandemic. The order encompasses staff at grocery stores, pharmacies, liquor stores, convenience stores, gas stations, banks, and pet stores, among other establishments.

“We’re really narrowing down the bill to essential workers because after speaking with a few senators, they said it’s something they could support,” Guzman said. “We would love to give it to the 1.2 million Virginians that don’t have access currently, but the reality is we don’t have the votes.” And, as a safety valve, Guzman’s bill also will include a provision allowing certain businesses experiencing serious financial hardship to be exempted from the mandate.

Outlook for legislation
The chances look good for legislation mandating some version of paid leave to pass the House of Delegates. Even in a narrowed form, however, any legislation likely will have a hard time in the Senate. Moreover, should an employer paid sick leave mandate make its way through both chambers, the legislation likely wouldn’t take effect until at least July 1, 2021.

Given the importance of the issue, we will continue to monitor the progress of the paid leave laws in this year’s Virginia legislative session. Stay tuned for further developments.

Jayna Genti is an attorney with DiMuroGinsburg PC in Alexandria, Virginia. She may be reached at jgenti@dimuro.com.