Helix Energy v. Hewitt: Day Rates Do Not Meet the Salary-Basis Test Under the FLSA

In Helix Energy Sols. Grp., Inc. v. Hewitt, 143 S. Ct. 677 (2023), the Supreme Court held that the salary-basis test for certain exemptions to the Fair Labor Standards Act is not met when the employee at issue is paid a day rate, even when the day rate exceeds the required minimum weekly salary level. More specifically, the Department of Labor regulation setting out the salary-basis test requires predetermined weekly compensation for the FLSA’s overtime exemption for executive employees. The Court held that this rule applies only to employees paid by the week or longer, and therefore is not met when an employer pays an employee by the day. The case is important because, inter alia, it shows that even highly compensated employees can be entitled to overtime pay if they are not paid on a salary basis.

Statutory and Regulatory Background – FLSA Exemptions and the Salary Basis Test

Relevant to the decision in Helix, Section 213(a)(1) of the Fair Labor Standards Act provides an exemption from its minimum wage and overtime requirements for employees who qualify as bona fide executive, administrative, or professional employees:

Minimum wage and maximum hour requirements

The provisions of sections 206 … and 207 of this title shall not apply with respect to—

any employee employed in a bona fide executive, administrative, or professional capacity (including any employee employed in the capacity of academic administrative personnel or teacher in elementary or secondary schools) …

29 U.S.C. § 213(a)(1).

The Court in Helix Energy further explained that under Department of Labor regulations, an employee is considered a bona fide “executive” under this exemption if the employee meets three tests:

(1) the “salary basis” test, which requires that an employee receive a predetermined and fixed salary that does not vary with the amount of time worked;

(2) the “salary level” test, which requires that preset salary to exceed a specified amount; and

(3) the job “duties” test.

Helix Energy, 143 S. Ct. 677, 678 (citing 84 Fed. Reg. 51230).

The Court further observed that the Department of Labor implemented the bona fide executive exemption through two different rules. One is the “general rule for executive employees,” which at the time of the facts in Helix applied to employees making less than $100,000 per year. 29 C.F.R. §§ 541.100; 541.601(a), (b)(1). A different rule sets out the exemption criteria for “highly compensated employees” (HCEs) who at the time of the facts in Helix were employees who made at least $100,000 per year. 541.601(a), (b)(1). (The HCE salary threshold was later increased to $ 107,432. Id.). Helix Energy, 143 S. Ct. 677, 678, 683-84.

The Court pointed out that the general rule considers employees to be FLSA-exempt executives when they meet the following criteria:

“Compensated on a salary basis” (called the “salary-basis” test); “at a rate of not less than $455 per week” (called the “salary-level” test) (after the facts in Helix Energy, that weekly amount was later increased to $684);

Whose primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof;

Who customarily and regularly directs the work of two or more other employees; and

Who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.

29 C.F.R. § 541.100(a); 143 S. Ct. 677, 678, 683-84. The duties-related requirements in parts 2, 3, and 4 of the general rule are referred to as the “duties test.” Id.

The Court noted that the HCE rule relaxes only the duties test, while keeping the same salary-basis and salary-level tests. “In the HCE rule, the duties test becomes easier to satisfy: an employee must “regularly perform[ ]” just one (not all) of the three responsibilities listed in the general rule.” 143 S. Ct. 677, 678, 683 (citing § 541.601(a); and 69 Fed. Reg. 22174 (2004) (explaining that the HCE rule uses a “more flexible duties standard” and thus leads to more exemptions)).

Facts

From 2014-2017, Hewitt worked for Helix Energy as a “toolpusher” on an offshore oil rig. Helix paid Hewitt on a daily-rate basis, with no overtime compensation. The daily rate ranged, over the course of his employment, from $963 to $1,341 per day. Under this compensation scheme, Helix paid Hewitt over $200,000 annually. 143 S. Ct. 677, 678, 684.

Hewitt filed suit against Helix for failure to pay him overtime compensation. Helix argued that he was an FLSA-exempt executive or highly compensated employee. 143 S. Ct. 677, 678, 684-85.

In Helix, the question for the Court whether the employee Hewitt was an FLSA-exempt executive not entitled to overtime pay. This question turned solely on whether Hewitt was paid on a salary basis. More specifically, the issue for the Court was whether the salary basis test is met when an employee is paid a day rate that exceeds the minimum weekly salary threshold. 143 S. Ct. 677, 678, 684-85.

The Court’s Decision; Salary Basis Regulations

The Court held that Hewitt was not paid on a salary basis, and therefore was not exempt from the FLSA’s overtime requirements.

Important to the Court’s decision in Helix, a pair of regulations describe the “salary basis” test in more detail.

The Court noted that the main salary basis provision, 29 C.F.R. § 541.602(a), states in relevant part:

“An employee will be considered to be paid on a ‘salary basis’ … if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed. Subject to [certain exceptions], an exempt employee must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked.”

143 S. Ct. 677, 678, 683 (quoting 29 C.F.R. § 541.602(a)).

The Court further observed that a separate provision, 29 C.F.R. § 541.604(b), focuses on workers whose compensation is “computed on an hourly, a daily or a shift basis,” rather than a weekly or less frequent one. The Court noted that under § 604(b) an employer may base an employee’s pay on an hourly, daily, or shift rate without “violating the salary basis requirement” or “losing the [bona fide executive] exemption” if two conditions are met:

The employer must “also” guarantee the employee at least $455 each week [the minimum salary level at the time] “regardless of the number of hours, days or shifts worked.”

That promised amount must bear a “reasonable relationship” to the “amount actually earned” in a typical week. This “reasonable relationship test” will be met if the weekly guarantee is “roughly equivalent to the employee’s usual earnings at the assigned hourly, daily or shift rate for the employee’s normal scheduled workweek.”

143 S. Ct. 677, 678, 684 (citing 29 C.F.R. § 541.604(b)).

The Court noted that the “critical question” was “whether Hewitt was paid on a salary basis under § 602(a) of the Secretary’s regulations. 143 S. Ct. 677, 685. This was because Helix acknowledged that Hewitt’s compensation did not satisfy § 604(b)’s conditions: Helix did not guarantee that Hewitt would receive each week an amount (above $455) bearing a “reasonable relationship” to the weekly amount he usually earned. Id. So, the Court observed, “everything turns on whether Helix paid Hewitt on a salary basis as described in § 602(a). If yes, Hewitt was exempt from the FLSA and not entitled to overtime pay; if no, he was covered under the statute and can claim that extra money.” 143 S. Ct. 677, 685.

Examining the text of § 602(a) and the overall regulatory structure, the Court concluded that the answer was “no.”

The Court first observed that the salary basis test of § 602(a) “applies solely to employees paid by the week (or longer); it is not met when an employer pays an employee by the day, as Helix paid Hewitt.” 143 S. Ct. 677, 685.

The Court then pointed out that Helix did not pay Hewitt on a salary basis under § 602(a) because he was paid by the day, rather than by the week or longer. “Daily-rate workers, of whatever income level, are paid on a salary basis only through the test set out in § 604(b) (which, again, Helix’s payment scheme did not satisfy).” Thus, the fact that Hewitt was paid on a daily basis meant that was not paid on a salary basis under § 602(a), since his compensation was based on the day, rather than by the week or longer. 143 S. Ct. 677, 685, 685-692.

The Court further explained that these conclusions “follow from both the text and the structure of the regulations.” 143 S. Ct. 677, 685, 686-692. It also addressed Helix’s policy-based objections to this conclusion, such as its operational and cost-based objections from having to pay overtime to highly-paid daily-rate workers, and found that those objections did not justify departing from the text of the rules. 143 S. Ct. 677, 690-692.

Therefore, the Court held that because Hewitt was paid on a daily basis, Hewitt did not meet the salary basis test. As the Court observed, “A daily-rate employee like Hewitt is not paid on a salary basis under § 602(a) of the Secretary’s regulations. He may qualify as paid on salary only under § 604(b). Because Hewitt’s compensation did not meet § 604(b)’s conditions, it could not count as a salary. So Hewitt was not exempt from the FLSA; instead, he was eligible under that statute for overtime pay.” 143 S. Ct. 677, 692.

Analysis

In sum, Helix held that the salary-basis test for certain FLSA exemptions is not met when the employee is paid a day rate. This is the case even when the day rate exceeds the minimum weekly salary requirement. The DOL regulation setting out the salary-basis test requires predetermined weekly compensation for the FLSA’s overtime exemption for executive and highly compensated employees. The Court held that this rule applies only to employees paid by the week or longer, and therefore the test is not met when an employer pays an employee by the day. The case is important because, inter alia, it shows that even highly compensated employees can be entitled to overtime pay if they are not paid on a salary basis.

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1-434-218-3133 or send an email to info@coffieldlaw.com.

This blog was previously published on April 14, 2023 at timcoffieldattorney.com

Spouses of Disabled Veterans

Virginia’s Veteran Preferential Hiring Law, Va. Code § 40.1-27.2 (“VPHL,” titled “Preference for veterans and spouses,”) allows employers to choose to grant preference in hiring and promotion to veterans or the spouses of disabled veterans.

Definition of Disabled Veteran

The VPHL generally defines “disabled veteran” for the purposes of its provisions as a veteran who has been found by the U.S. Department of Veterans Affairs or by a retirement board of a branch of one of the armed forces to have a “compensable service-connected permanent and total disability”:

A. As used in this section, unless the context requires a different meaning:

“Disabled veteran” means a veteran who has been found by the U.S. Department of Veterans Affairs or by the retirement board of one of the several branches of the armed forces to have a compensable service-connected permanent and total disability.

Va. Code § 40.1-27.2(A).

Definition of Veteran

The VPHL further generally defines veteran as any person who has received an honorable discharge and:

(i) has provided more than 180 consecutive days of full-time, active-duty service in the armed forces of the United States or reserve components thereof, including the National Guard, or

(ii) has a service-connected disability rating fixed by the United States Department of Veterans Affairs.

The VPHL that the definition of “veteran” “has the same meaning ascribed to such term in § 2.2-2903.” Va. Code § 40.1-27.2(A). That section therefore provides the relevant definition:

“Veteran” means any person who has received an honorable discharge and (i) has provided more than 180 consecutive days of full-time, active-duty service in the armed forces of the United States or reserve components thereof, including the National Guard, or (ii) has a service-connected disability rating fixed by the United States Department of Veterans Affairs.

Va. Code § 2.2-2903(E).

General Rule: Permissive Preference in Hiring and Promotion

The VPHL provides that an employer may grant preference in hiring and promotion to a veteran or the spouse of a disabled veteran:

B. An employer may grant preference in hiring and promotion to a veteran or the spouse of a disabled veteran.

Va. Code § 40.1-27.2(B). While the law states that employers “may” grant such a preference, it does not state that employers are required to do so.

Relationship to Local or State Equal Employment Opportunity Laws

Finally, the VPHL further provides that granting the preference allowed in hiring or promotion of veterans or spouses of disabled veterans does not violate local or state equal employment opportunity law:

C. Granting preference under subsection B does not violate any local or state equal employment opportunity law.

Va. Code § 40.1-27.2(C).

This blog was previously published on April 14, 2023 at timcoffieldattorney.net

EEOC v. Abercrombie & Fitch Stores, Inc.: Title VII Gives Favored Treatment to Employees’ Religious Practices

In Equal Emp’t Opportunity Comm’n v. Abercrombie & Fitch Stores, Inc., 575 U.S. 768 (2015), the Supreme Court held that to prove a religion-based disparate treatment claim under Title VII of the Civil Rights Act of 1964, a job applicant need only show that her need for a religious accommodation was a motivating factor in the employer’s adverse employment action. Therefore, the applicant did not need to show that the prospective employer knew that the applicant’s practice was a religious practice requiring accommodation. More generally, the Court also observed that Title VII gives “favored treatment” to religious practices and requires employers to accommodate the same so long as the accommodation does not create an undue hardship for the employer.

Statutory Background – Title VII and Religious Discrimination

In relevant part, Title VII of the Civil Rights Act of 1964 prohibits two kinds of employment practices:

(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin; or

(2) to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s race, color, religion, sex, or national origin.”

42 U.S.C. § 2000e–2(a). The first category is typically referred to as “disparate treatment” or “intentional” discrimination, and the second category is typically referred to as “disparate impact” discrimination. Abercrombie involved a claim of disparate treatment discrimination based on a job applicant’s religion.

Title VII defines the word “religion” to “includ[e] all aspects of religious observance and practice, as well as belief, unless an employer demonstrates that he is unable to reasonably accommodate to” a “religious observance or practice without undue hardship on the conduct of the employer’s business.” 575 U.S. 768, 771-72 (quoting 42 U.S.C. § 2000e(j)).

Therefore, Title VII prohibits a prospective employer from refusing to hire an applicant in order to avoid accommodating a religious practice that it could accommodate without undue hardship.

In Abercrombie, the issue for the Court was whether this rule applies only where an applicant has informed the employer of his need for a religious accommodation. 575 U.S. 768, 770.

Facts

Abercrombie was a clothing company. It imposed a “Look Policy” that governed how its employees dressed. The Look Policy prohibited “caps” as being too informal for Abercrombie’s desired image. 575 U.S. 768, 770.

The plaintiff, Samantha Elauf, was a practicing Muslim. Consistent with her understanding of her religion’s requirements, she wore a headscarf. She applied for a position in an Abercrombie store, and was interviewed by the store’s assistant manager. Using Abercrombie’s ordinary system for evaluating applicants, the assistant manager gave Elauf a rating that qualified her to be hired. However the assistant manager was concerned that Elauf’s headscarf would conflict with the company’s Look Policy. 575 U.S. 768, 770.

The assistant manager consulted with a store manager and then a district manager to clarify whether the headscarf was a forbidden “cap.” She told the district manager that she believed Elauf wore her headscarf because of her faith. The district manager told the assistant manager that Elauf’s headscarf would violate the Look Policy, as would all other headwear, religious or otherwise, and directed the assistant manager not to hire Elauf. 575 U.S. 768, 770.

The EEOC sued Abercrombie on Elauf’s behalf, asserting that the company’s refusal to hire Elauf violated Title VII. EEOC won in the trial court. The Tenth Circuit then reversed and awarded Abercrombie summary judgment. It concluded that ordinarily an employer cannot be liable under Title VII for failing to accommodate a religious practice until the applicant (or employee) provides the employer with actual knowledge of her need for an accommodation. 575 U.S. 768, 770-71 (citing 731 F.3d 1106, 1131 (2013)).

The Court’s Decision

The Court reversed the Tenth Circuit. It held that to prevail in a disparate-treatment claim, an applicant need show only that his or her need for an accommodation was a motivating factor in the employer’s decision, not that the employer had knowledge of his or her need.

First, the Court observed that Title VII’s disparate-treatment provision forbids employers to: (1) “fail … to hire” an applicant (2) “because of” (3) “such individual’s … religion” (including religious practice). In Elauf’s case, Abercrombie (1) failed to hire Elauf, and the parties agreed that (if Elauf sincerely believed that her religion so required) Elauf’s wearing of a headscarf was (3) a “religious practice.” Therefore, the Court determined that the only remaining question was whether she was not hired (2) “because of” her religious practice. 575 U.S. 768, 772.

The Court then discussed the meaning of “because of.” The Court observed that under its decision in University of Tex. Southwestern Medical Center v. Nassar, 570 U.S. 338, 133 S.Ct. 2517 (2013) “because of” refers to the traditional notion of “but-for” causation. 575 U.S. 768, 772-73. It further observed, however, that Title VII relaxes this standard to prohibit even making a protected characteristic a “motivating factor” in an employment decision. 575 U.S. 768, 773 (quoting 42 U.S.C. § 2000e–2(m)).

The Court explained that the “because of” language in § 2000e–2(a)(1) links the forbidden consideration to each of the verbs preceding it. Therefore, an individual’s actual religious practice may not be a motivating factor in failing to hire, in refusing to hire, and so on. 575 U.S. 768, 773.

Importantly, the Court found, § 2000e–2(a)(1) does not impose a knowledge requirement on the employer. This makes Title VII different from some other antidiscrimination statutes, which do impose a knowledge requirement. For example, the Americans with Disabilities Act of 1990 defines discrimination to include an employer’s failure to make “reasonable accommodations to the known physical or mental limitations” of an applicant. 575 U.S. 768, 773 (quoting 42 U.S.C. § 12112(b)(5)(A) (emphasis added by the Court). But Title VII contains no such limitation. 575 U.S. 768, 773.

Therefore, the Court determined that Title VII’s intentional discrimination provision “prohibits certain motives, regardless of the state of the actor’s knowledge.” 575 U.S. 768, 773 (emphasis in original). This is because “[m]otive and knowledge are separate concepts.” Id. For example, the Court pointed out that “an employer who has actual knowledge of the need for an accommodation does not violate Title VII by refusing to hire an applicant if avoiding that accommodation is not his motive.” Id. (emphasis in original). And on the other side of the token, “an employer who acts with the motive of avoiding accommodation may violate Title VII even if he has no more than an unsubstantiated suspicion that accommodation would be needed.” Id.

Using this rationale, the Court found a straightforward rule for disparate-treatment claims based on a failure to accommodate a religious practice: “An employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions.” Id.

As an example of this rule, the Court provided a hypothetical where an employer thought (without knowing for certain) that a job applicant may be an orthodox Jew who would observe the Sabbath, and therefore be unable to work on Saturdays. The employer could not, under Title VII, decline to hire the applicant if the employer’s desire to avoid that accommodation was a motivating factor in that decision: “If the applicant actually requires an accommodation of that religious practice, and the employer’s desire to avoid the prospective accommodation is a motivating factor in his decision, the employer violates Title VII.” 575 U.S. 768, 773-74.

Finally, the Court rejected Abercrombie’s argument that in declining to hire Elauf it did not violate Title VII’s intentional discrimination requirement because it was simply applying a “neutral policy” about headwear. The Court observed that religious practices are entitled to “favored treatment” under Title VII:

But Title VII does not demand mere neutrality with regard to religious practices—that they be treated no worse than other practices. Rather, it gives them favored treatment, affirmatively obligating employers not “to fail or refuse to hire or discharge any individual … because of such individual’s” “religious observance and practice.”

575 U.S. 768, 775.

The Court acknowledged that an employer like Abercrombie is entitled to have a no-headwear policy “as an ordinary matter.” But when an applicant requires an accommodation as an “aspec[t] of religious … practice,” the Court found that it would be no response for an employer to argue that the subsequent “fail[ure] … to hire” was due to an otherwise-neutral policy. Instead, “Title VII requires otherwise-neutral policies to give way to the need for an accommodation.” 575 U.S. 768, 775.

Analysis

In sum, Abercrombie held that to prove a religion-based disparate treatment claim under Title VII, a job applicant need only show that her need for a religious accommodation was a motivating factor in the employer’s adverse employment action. This rule does not require the applicant to show that the prospective employer knew that the applicant’s practice was a religious practice requiring accommodation. More generally, the Court observed that Title VII gives favored treatment to religious practices and requires employers to accommodate the same so long as the accommodation does not create an undue hardship for the employer.

Originally published on Tim Coffield’s website.

Virginia Civil Air Patrol Leave Law: Protections for Employees Who Are Civil Air Patrol Volunteers

Virginia’s Civil Air Patrol Leave Law, Va. Code § 40.1-28.7:6 (“CAPLL,” titled “Employers to allow leave for volunteer members of Civil Air Patrol; civil remedy”), provides that employees who are volunteer members of the Civil Air Patrol are entitled to limited amounts of job-protected leave for training for or responding to emergency missions.

Job-Protected Leave For Civil Air Patrol Training and Missions

The CAPLL provides job-protected leave for employees who are volunteer members of the Civil Air Patrol to attend training for emergency missions or to respond to emergency missions. The employee is entitled to this leave without loss of seniority, accrued leave, benefits, or efficiency rating. The job-protected leave is capped at 10 days per year for training and 30 days per year for responding to emergency missions:

A. Any employee who is a volunteer member of the Civil Air Patrol shall be entitled to leaves of absence from his employment without loss of seniority, accrued leave, benefits, or efficiency rating on all days during which such employee is (i) engaged in training for emergency missions with the Civil Air Patrol, not to exceed 10 workdays per federal fiscal year, or (ii) responding to an emergency mission as a Civil Air Patrol volunteer, not to exceed 30 workdays per federal fiscal year.

Va. Code § 40.1-28.7:6(A). Thus, for example, under the CAPLL an employer may not require the employee to use accrued vacation days or other types of accrued leave during the period when the employee is on job-protected Civil Air Patrol leave.

Requirements for Civil Air Patrol Leave

The CAPLL provides that to receive leave under the statute, the employee must provide the employer with (1) certification that the employee has been authorized by an appropriate government authority to respond to or train for an emergency mission, and (2) verification from the Civil Air Patrol that there is an emergency need for the employee’s volunteer service:

B. Any employee requesting leave pursuant to this section shall provide (i) certification that the employee has been authorized by the United States Air Force, the Governor, or a department, division, agency, or political subdivision of the state to respond to or train for an emergency mission and (ii) verification from the Civil Air Patrol of the emergency need of the employee’s volunteer service.

Va. Code § 40.1-28.7:6(B).

No Requirement to Exhaust Other Leave

The CAPLL also includes several provisions about how the leave is to be treated under the employer’s leave policies. While the employer may treat CAPLL leave as unpaid leave, employers may not require an employee to exhaust other forms of leave that the employee may be entitled to (like vacation or allotted personal days) before using the leave to which the employee is entitled under the CAPLL. Further, the law specifies that it while the employer may treat the leave as unpaid, the CAPLL does not prevent an employer from providing the employee with paid leave during the CAPLL leave period:

C. An employer may treat leaves of absence pursuant to this section as unpaid leave. No employer shall require an employee to exhaust any other leave to which the employee is entitled prior to such leaves of absence. Nothing in this subsection shall be construed to prevent an employer from providing paid leave during such leaves of absence.

Va. Code § 40.1-28.7:6(C).

Civil Remedy

Finally, the CAPLL provides a private right of action for employees whose rights under the law are violated. If the employee prevails, the CAPLL allows the employee to recover lost wages, reasonable attorney fees, and costs:

D. Any employee aggrieved by a violation of any provision of this section may bring a civil action to enforce such provision. Any employee who is successful in such action shall be entitled to recover only lost wages, reasonable attorney fees, and court costs incurred in such action.

Va. Code § 40.1-28.7:6(A).

Originally published on Tim Coffield’s website.

Tim Coffield’s Interview on Ideamensch

Tim Coffield, Attorney, is a licensed law professional based in Charlottesville, Virginia. After an extensive education and dedicated work, Tim founded his legal practice, Coffield PLC, in 2012. Prior to his start as an attorney, Tim obtained his B.A degrees from North Carolina State University in Philosophy and English. His education continued to the University of Montana, where he earned his M.F.A in Creative Writing and taught undergraduate writing courses. In 2011, Tim graduated from the University of Virginia School of Law and began his profession as a dedicated attorney.

From his early years in the law and litigation field, Tim has had a passion for law, and serving different areas as a dedicated and trusted attorney. His early career, through law school and after, began with a focus on environmental and natural resources law where he worked towards addressing state and federal environmental issues and clean water laws. As a Law Clerk/Fellow at Trout Unlimited, Tim focused much of his time on regulatory matters regarding gas pipelines and state water use regulations. He also has additional experience in collaborating and working with environmental conservation groups.

As owner and operator of Coffield PLC, Tim has a primary focus on areas such as employment and civil rights law, civil litigation, business and estate planning, and contract disputes. Much of his experience comes from managing and resolving various civil cases in both federal and state court. Tim has a passion for representing and helping employees and has dedicated a majority of his practice to doing so. One of Tim’s most notable accomplishments is his serving as a co-class counsel in Boswell v. Panera Bread Co. 2016 WL 1161573 (E.D. Mo. Mar. 24, 2016). This case was not only nationwide, but obtained a multi-million dollar judgment on behalf of the class members. Other notable cases that Tim has represented include Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159 (4th Cir. 2016), where he was successfully able to argue before the Fourth Circuit Court of Appeals and obtained a partial reversal in the case; and Smith v. Loudoun County Public Schools, Case No. 1:15-CV-956,Dkt. No. 128 (E.D Va. November 15, 2016), where he obtained a jury verdict in the Eastern District of Virginia under the Americans with Disabilities Act.

Tim Coffield founded Coffield PLC with the goal of running a practice that is not only defined by its clients but is trusted and dedicated to serving clients based on individual needs. He understands that each client and business faces different challenges, and has different legal issues; there is no cookie cutter solution. He is passionate about crafting personalized legal strategies for each of his clients and is dedicated to serving them with his best foot forward.

In addition to his extensive education and experience, Tim is affiliated with various professional organizations, including the Virginia Employment Lawyers Association, the National Employment Lawyers Association, and the Metropolitan Washington Employment Lawyers Association.

Where did the idea for your company come from?

I’m an attorney. When I first started out, I noticed a lot of prospective clients had questions about their legal rights and responsibilities in the context of the employer-employee relationship. The laws governing these rights and responsibilities are often nuanced and fact-specific, and not always well-publicized. It seemed like there was an opportunity to provide a useful service by focusing my legal practice on these laws, and on employment rights and responsibilities generally.

What does your typical day look like and how do you make it productive?

On days when I’m not in court, in the morning I typically have consultations with existing or prospective clients, and take phone calls or exchange correspondence with other attorneys. In the afternoon, I typically focus on moving existing projects forward — preparing memoranda, court filings, or administrative filings for agencies like the Equal Employment Opportunity Commission or Virginia’s Office of Equal Employment and Dispute Resolution.

How do you bring ideas to life?

I make a list of small, achievable tasks that serve the idea. Then I tackle the list item by item.

What’s one trend that excites you?

The trend towards electronic filing and electronic evidence presentation in courts and administrative agencies. Compared to paper filings and preparing large binders of paper exhibits, I think electronic means of exchanging and presenting evidence in court and administrative proceedings saves time and money. It’s a more efficient and effective way to share information.

What is one habit of yours that makes you more productive as an entrepreneur?

I don’t know if this qualifies as a habit, but I make a concerted effort to keep in close touch with my clients throughout the representation. Phone calls, emails, texts. Whatever works best. A good friend once told me that more communication is always better, and I’ve found this to be true in life and in business. I think it’s especially true in the attorney-client context, where clear communication about goals and expectations is vital to a lasting and effective relationship.

What advice would you give your younger self?

Don’t drive the truck onto a sandbar in the inlet waterway. The tide will come in.

Tell us something that’s true that almost nobody agrees with you on.

If almost nobody agrees with you about something you believe is true, chances are you may be wrong. Always be open to reconsidering what you think you know.

As an entrepreneur, what is the one thing you do over and over and recommend everyone else do?

This goes well beyond building a business, but I think it’s important to work hard at building healthy, trusting relationships with everyone we encounter. This includes relationships with purported rivals and those who don’t always share our perspectives or objectives.

What is one strategy that has helped you grow your business?

Asking clients to consider referring friends or family members to me. This a classic, old school form of business development, and if you build strong relationships with existing clients, it can be wonderfully effective.

What is one failure you had as an entrepreneur, and how did you overcome it?

Early on, I could have done a better job meeting and building relationships with other attorneys. I was a little shy. I’ve worked to overcome this by making a concerted effort to spend quality time with other folks in the same line of work — by attending conferences, having lunch, trying to help answer questions on attorney listservs. That sort of thing. Strong relationships are the center of everything, personally and professionally.

What is one business idea that you’re willing to give away to our readers?

Gyms in airports. Or at least some pullup bars sprinkled in between the newsstands.

What is the best $100 you recently spent? What and why?

Adobe Sign. This software makes it infinitely easier for people to review and sign documents, through email, even on their phones — without having to waste paper or spend money on a scanner.

What is one piece of software or a web service that helps you be productive?

As an attorney with a nearly paperless office, I need reliable software to manage electronic documents and client information, keep track of my time, and perform accounting tasks. I use a web service called Clio to organize documents, organize client matters, track time, and keep the books — among many other administrative tasks involved in running a law practice. The company’s customer service is outstanding. I recommend it.

What is the one book that you recommend our community should read and why?

Terkel’s Working. The book collects interviews with people about what they do for a living. It opened my eyes to how vital a job can be, not just to a person’s economic well-being, but to her sense of self and place in the greater community.

What is your favorite quote?

“If people sat outside and looked at the stars each night, I’ll bet they’d live a lot differently. ” – Bill Waterson, Calvin & Hobbes.

Originally published on Ideamensch.

Torres v. Texas Dep’t of Pub. Safety: States Do Not Have Sovereign Immunity Against Damages Claims for Servicemember Discrimination Under USERRA

In Torres v. Texas Dep’t of Pub. Safety, 142 S. Ct. 2455 (2022), the Supreme Court held that States do not have sovereign immunity against damages claims for servicemember employment discrimination in violation of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). The Court determined that by ratifying the Constitution, the States agreed their sovereignty would yield to the national power to raise and support the military. Therefore, Congress was free to exercise this power to authorize private damages suits against nonconsenting States, as provided in USERRA.

Constitutional Background – Sovereign Immunity

The Eleventh Amendment to the U.S. Constitution states:

The judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by citizens of another state, or by citizens or subjects of any foreign state.

Courts have interpreted the Eleventh Amendment and common law as barring suits for damages against states or state agencies. Sovereign immunity generally encompasses suits for damages by an employee against his or her state government employer, unless the employee’s claim is one for which sovereign immunity has been validly abrogated by Congress or waived by the state.

Sovereign immunity is the privilege of the sovereign not to be sued without its consent. As the Supreme Court observed in Virginia Off. for Prot. & Advoc. v. Stewart, 563 U.S. 247, 253-56 (2011), the Court has long interpreted the Eleventh Amendment to confirm the framers’ structural understanding that States entered the Union with their sovereign immunity intact. Thus, the Court has held that States have retained their traditional immunity from suit, “except as altered by the plan of the Convention or certain constitutional amendments.” Alden v. Maine, 527 U.S. 706, 713 (1999).

This principle that States did not retain their immunity “as altered by the plan of the Convention” was particularly important to the decision in Torres.

Additionally, State may waive its sovereign immunity at its pleasure, College Savings Bank v. Florida Prepaid Postsecondary Ed. Expense Bd., 527 U.S. 666, 675–676 (1999), and in some circumstances Congress may abrogate it by appropriate legislation. But in the absence of waiver or valid abrogation, federal courts may not entertain a private person’s suit for damages against a State. Stewart, 563 U.S. at 253-56.

Constitutional Background – Article I and the Power to Raise and Support Armies

Article I of the Constitution grants Congress the power “[t]o raise and support Armies” and “[t]o provide and maintain a Navy.” Article I, § 8, clauses 1, 12–13.

Statutory Background – USERRA

Using that Article I authority, Congress enacted the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). USSERA gives returning servicemembers the right to reclaim their prior jobs with state employers and authorizes servicemembers to file suit if those employers refuse to accommodate veterans’ service-related disabilities. See 38 U.S.C. § 4301, et seq.; 38 U.S.C. § 4313(a)(3).

Facts

Torres enlisted in the Army Reserves in 1989. In 2007, he was called to active duty and deployed to Iraq. While serving in Iraq, Torres was exposed to toxic burn pits, a method of garbage disposal that sets open fire to all manner of trash, human waste, and military equipment. Torres received an honorable discharge. 142 S. Ct. 2455, 2461.

Torres returned home with constrictive bronchitis. This is a respiratory condition that narrowed his airways and made breathing difficult. Torres alleged that this condition left him unable to work his old job as a state trooper. Torres therefore asked his former employer, Texas Department of Public Safety, to accommodate his condition by reemploying him in a different role. Texas refused to provide this accommodation. 142 S. Ct. 2455, 2461.

Torres therefore sued Texas in state court to enforce his rights under USERRA, 38 U.S.C. § 4313(a)(3). Texas tried to dismiss the suit by asserting it had sovereign immunity. The trial court denied Texas’ motion. An appellate court reversed, reasoning that, under Supreme Court precedent, namely Central Va. Community College v. Katz, 546 U.S. 356, 126 S.Ct. 990, 163 L.Ed.2d 945 (2006), Congress could not authorize private suits against nonconsenting States pursuant to its Article I powers except under the Bankruptcy Clause. The Supreme Court of Texas declined to review the case. 142 S. Ct. 2455, 2461.

After the Texas court decision, the Supreme Court issued an important ruling in PennEast Pipeline Co. v. New Jersey, 594 U. S. ––––, 141 S.Ct. 2244, 210 L.Ed.2d 624 (2021). PennEast held that the States waived their sovereign immunity as to the federal eminent domain power pursuant to the “plan of the Convention.” 142 S. Ct. 2455, 2461 (citing PennEast, 141 S.Ct. 2244, 2258).

The Court’s Decision

The Court then took Torres’ case to determine whether, in light of that intervening ruling in PennEast, USERRA’s damages remedy against state employers was constitutional.

Applying the reasoning in PennEast, the Court held that by ratifying the Constitution, the States agreed their sovereignty would yield to the national power to raise and support the Armed Forces. Therefore, in enacting USERRA, Congress validly exercised this power to authorize private damages suits against nonconsenting States for violations of USERRA.

The Court observed that in PennEast, it considered whether Congress could, pursuant to its eminent domain power (another Constitutional power), authorize private suits against States to enforce federally approved condemnations necessary to build interstate pipelines. The PennEast Court had held that Congress could authorize such suits because, upon entering the federal system, the States implicitly agreed their “eminent domain power would yield to that of the Federal Government.” 142 S. Ct. 2455, 2463 (citing PennEast, 141 S.Ct. at 2259).

The Torres Court pointed out that PennEast defined the test for “structural waiver” of sovereign immunity as whether the federal power is “complete in itself, and the States consented to the exercise of that power—in its entirety—in the plan of the Convention.” 142 S. Ct. 2455, 2461-63 (quoting PennEast, 141 S.Ct. at 2263).

Reviewing the text of the Constitution, its history, and past cases, the Court determined that Congress’ power to build and maintain the Armed Forces fit the PennEast test. Under the PennEast test, the Court observed that Congress’ power to build and maintain a national military is “complete in itself.” 142 S. Ct. 2455, 2463, 2466 (citing PennEast, 141 S.Ct. at 2263). As the Court put it in PennEast, when they entered the Union, the States agreed that their sovereignty would “yield … so far as is necessary” to federal policy for the Armed Forces. 142 S. Ct. 2455, 2463, 2466 (quoting PennEast, 141 S.Ct. at 2259). The Court further emphasized that because the States committed not to “thwart” this federal power, “[t]he consent of a State,” including to suit, “can never be a condition precedent” to Congress’ chosen exercise of its authority. 142 S. Ct. 2455, 2459, 2463, 2466 (quoting PennEast, 141 S.Ct. at 2255, 2256–2257). In these circumstances, the States simply “have no immunity left to waive or abrogate.” 142 S. Ct. 2455, 2463 (citing PennEast, 141 S.Ct. at 2263).

Accordingly, when Congress enacted USERRA, it validly exercised its power to authorize private damages suits against nonconsenting States for violations of servicemembers’ rights under USERRA. Texas therefore did not have sovereign immunity against Torres’ damages claim for alleged violations of his rights under USERRA.

Analysis

In sum, in Torres the Supreme Court held that States do not have sovereign immunity against damages claims for servicemember employment discrimination in violation of USERRA. The Court determined that by ratifying the Constitution, the States agreed their sovereignty would yield to the national power to raise and support the military. Therefore, Congress was free to exercise this power to authorize private damages suits against nonconsenting States, as provided in USERRA.

Originally published on Tim Coffield’s website.

Virginia Misclassification Anti-Retaliation Law: Protections for Employees And Independent Contractors Who Report Misclassification

Virginia’s Misclassification Anti-Retaliation Law, Va. Code § 40.1–33.1 (“MARL,” titled “Retaliatory actions prohibited; civil penalty”), provides that employers shall not discharge, penalize, or take any retaliatory action against an employee or independent contractor for reporting, or planning to report, to an appropriate authority an employer’s failure to properly classify an individual as an employee and failure to pay required benefits or other contributions.

The MARL is important because it prohibits employers from retaliating against employees or independent contractors for reporting possible independent contractor misclassification to appropriate authorities.

PROHIBITION ON RETALIATION FOR REPORTING MISCLASSIFICATION

The MARL contains a broad prohibition on employers taking retaliatory actions against employees or independent contractors who engage in either of two “protected activities.” First, the employer cannot retaliate against an individual for reporting or planning to report to appropriate authorities the employer’s failure to properly classify an individual as an employee. Second, the employer cannot retaliate against an individual for being requested or subpoenaed by an appropriate authority to participate in an investigation, hearing, or inquiry by an appropriate authority or in a court action:

A. An employer shall not discharge, discipline, threaten, discriminate against, or penalize an employee or independent contractor, or take other retaliatory action regarding an employee or independent contractor’s compensation, terms, conditions, location, or privileges of employment, because the employee or independent contractor:

1. Has reported or plans to report to an appropriate authority that an employer, or any officer or agent of the employer, has failed to properly classify an individual as an employee and failed to pay required benefits or other contributions; or

2. Is requested or subpoenaed by an appropriate authority to participate in an investigation, hearing, or inquiry by an appropriate authority or in a court action.

Va. Code § 40.1–33.1(A).

GOOD FAITH AND REASONABLE BELIEF

Importantly, the MARL provides that its anti-retaliation protections only apply if the employee or independent contractor who discloses information about suspected worker misclassification has done so in good faith and upon a reasonable belief that the information is accurate:

B. The provisions of subsection A shall apply only if an employee or independent contractor who discloses information about suspected worker misclassification has done so in good faith and upon a reasonable belief that the information is accurate. Disclosures that are reckless or the employee knew or should have known were false, confidential by law, or malicious shall not be deemed good faith reports and shall not be subject to the protections provided by subsection A.

Va. Code § 40.1–33.1(B).

ADMINISTRATIVE PROCESS

The MARL provides an administrative process for individuals who experience retaliation in violation of its provisions. Under this process, an individual who experiences retaliation in violation of MARL may file a complaint with the Commissioner of Labor and Industry. See Va. Code § 40.1–2 (defining “Commissioner” as meaning the Commissioner of Labor and Industry.) The Commission, with the employee’s signed consent, may then institute proceedings against the employer to recover appropriate remedies, including reinstatement and lost wages:

C. Any employee who is discharged, disciplined, threatened, discriminated against, or penalized in a manner prohibited by this section may file a complaint with the Commissioner. The Commissioner, with the written and signed consent of such an employee, may institute proceedings against the employer for appropriate remedies for such action, including reinstatement of the employee and recovering lost wages.

Va. Code § 40.1–33.1(C).

CIVIL PENALTY

Finally, the MARL further provides that an employer that violates its provisions will be subject to a civil penalty in an amount up to the amount of lost wages resulting from the violation:

D. Any employer who discharges, disciplines, threatens, discriminates against, or penalizes an employee in a manner prohibited by this section shall be subject to a civil penalty not to exceed the amount of the employee’s wages that are lost as a result of the violation. Civil penalties under this section shall be assessed by the Commissioner and paid to the Literary Fund.

Va. Code § 40.1–33.1(D).

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1–434–218–3133 or send an email to info@coffieldlaw.com.

Originally published on Tim Coffield’s website.

Harbourt v. PPE Casino Resorts Maryland: Fourth Circuit Recognizes Training Can Be Compensable Work Under FLSA

In Harbourt v. PPE Casino Resorts Maryland, LLC, 820 F.3d 655 (4th Cir. 2016) the Fourth Circuit held that under the Fair Labor Standards Act, compensable “work,” for which the FLSA requires employers to pay at least minimum wage, broadly encompasses physical or mental exertion, whether burdensome or not, controlled or required by the employer primarily for its benefit, and therefore training can constitute “work” under the FLSA.

Statutory Background — Compensable “Work” under the FLSA

Congress enacted the FLSA “to protect all covered workers from substandard wages and oppressive working hours.” Trejo v. Ryman Hosp. Props., Inc., 795 F.3d 442, 446 (4th Cir. 2015) (quotes omitted.) To accomplish these goals, the FLSA requires employers to pay their employees both a minimum wage and overtime pay. Hall v. DIRECTV, LLC, 846 F.3d 757, 761 (4th Cir. 2017).

Specifically, the FLSA requires employers to pay their employees at least the federal minimum wage. 29 U.S.C. § 206(a)(1). And it requires employers to pay not less than time and a half for each hour worked over forty hours during a workweek. Id. § 207(a)(1). The FLSA’s overtime requirement “was intended ‘to spread employment by placing financial pressure on the employer’ and ‘to compensate employees for the burden of a workweek in excess of the hours fixed in the Act.’ ” Calderon v. GEICO Gen. Ins. Co., 809 F.3d 111, 121 (4th Cir. 2015).

Relevant to the situation in Harbourt, the FLSA requires that employers pay employees the minimum hourly wage “for all hours worked.” Perez v. Mountaire Farms, Inc., 650 F.3d 350, 363 (4th Cir. 2011) (internal quotation marks omitted). As Harbourt pointed out, the FLSA Act does not define “work.” See 29 U.S.C. §§ 201–219. But the Supreme Court instructs that “in the absence of a contrary legislative expression” courts should assume that Congress was referring to work or employment “as those words are commonly used — as meaning physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business.” Tennessee Coal, Iron & R. Co. v. Muscoda Local №123, 321 U.S. 590, 598, 64 S.Ct. 698 (1944), superseded by statute on other grounds, Portal–to–Portal Act of 1947, Pub. L. №104–188, 110 Stat.1928. Harbourt, 820 F.3d at 658.

In Harbourt, the court addressed the question of whether a casino’s training program for prospective dealers constituted compensable “work” under the FLSA, even though the casino was not yet even open or operating at the time of the training. As explained below, the Harbourt held that such training could be compensable work for which the employer must pay minimum wages.

Facts

The defendant, PPE Casino, operated a casino in Maryland. The Casino selected approximately 830 of the applicants to attend a “dealer school.” The “dealer school” consisted of four hours of daily instruction Monday through Friday, for about twenty hours per week, for twelve weeks. The school was scheduled to conclude about ten days before the start of legalized table gambling in Maryland. 820 F.3d 655, 657–58.

Plaintiffs, who attended the dealer school, were not paid to attend it until the final two days. They alleged the training at the dealer school was specific to the manner in which the Casino’s employees were to perform the table games at the casino once it opened. The plaintiffs further alleged that although the Casino advertised the “school” as being held in conjunction with a community college, it was really just run by the Casino. The Casino authored all course materials, Casino employees provided all instruction, and attendees never interacted with anyone from a community college. During the “school,” the attendees completed employment forms, including an income tax withholding form and direct deposit authorization form. To help the attendees receive a gambling license by the end of the course, the Casino required them to submit to a drug test, provide their fingerprints and social security numbers, and authorize the Casino to obtain their driving records and perform criminal and financial background checks on them. 820 F.3d at 657–58.

The Casino did not pay the attendees to attend the dealer school until the final two days of the twelve week course. For the final two days they were paid minimum wage. The plaintiffs filed a putative class action asserting violations of the minimum wage provisions of the FLSA and various state laws. The district court granted the Casino’s motion to dismiss, holding that the plaintiffs “fail[ed] to show that the primary beneficiary of their attendance at the training was the Casino rather than themselves.” 820 F.3d at 657–58.

The Court’s Decision

The Fourth Circuit reversed, holding the plaintiffs did sufficiently allege violations of the FLSA’s minimum wage provisions.

In reaching this conclusion, the Fourth Circuit observed that “work” for FLSA purposes broadly encompasses “physical or mental exertion (whether burdensome or not) controlled or required by the employer” primarily for its benefit. 820 F.3d at 660 (quoting Tennessee Coal, 321 U.S. at 598. And the Supreme Court has held “training” can constitute “work” under the statute. Id. (citing Walling v. Portland Terminal Co., 330 U.S. 148, 151, 67 S.Ct. 639 (1947) (noting that “[w]ithout doubt the Act covers trainees”); McLaughlin v. Ensley, 877 F.2d 1207, 1208–10 (4th Cir. 1989) (holding trainee routemen of a food distribution company were “employees” for FLSA purposes when they participated in a five-day, 50–to–60–hour training program in which they learned how to load trucks and maintain food vending machines and helped experienced routemen perform their duties); and 29 C.F.R. §§ 785.27–.31 (2015) (establishing the requirements that mid-employment training must meet for the training not to count toward work hours).

The Fourth Circuit rejected the Casino’s argument that because the trainees could not interact with paying customers in the Casino during the “school,” they failed to qualify as FLSA employees performing work for the Casino. “That the Casino could not operate table games during the dealer school does not necessarily mean that the Trainees were not working for FLSA purposes in attending the required ‘school.’” 820 F.3d at 660. Rather, the Fourth Circuit observed, “whether the required training would constitute work for FLSA purposes would depend on whether it primarily constituted a benefit to the employer or the trainee.” Id.

The Fourth Circuit then found that plaintiffs sufficiently alleged facts to support a conclusion that the Casino, rather than the trainees, primarily benefited from the dealer school training. For example, the plaintiffs alleged that the Casino received a large benefit — a workforce of hundreds of dealers trained to operate table games to the Casino’s specifications when the table games became legal in Maryland. And the plaintiffs also alleged that they received very little from the twelve weeks of training that did not primarily benefit the Casino, since the training was unique to the Casino’s specifications and not transferable to work in other casinos.

The Fourth Circuit also pointed out that the plaintiff alleged the dealer school training was “either conceived or carried out in such a way as to violate … the spirit of the minimum wage law.” 820 F.3d at 660 (quoting Portland Terminal, 330 U.S. at 153. Specifically, the plaintiffs alleged that the “sole purpose” of the Casino’s “temporary makeshift ‘school’ was to hire the exact number of dealers needed to fill the vacant table games positions[,]” and that the Casino “disguised its employee-training course as a school for the purpose of not paying” the trainees. 820 F.3d at 660–61.

The Fourth Circuit found that if these allegations were correct, “a fact finder could conclude that requiring applicants to attend a training ‘school’ for twenty hours each week for a full twelve weeks, training advertised to be associated with a community college course but that allegedly had nothing to do with any college, demonstrates that the Casino ‘conceived or carried out’ its ‘school’ to avoid paying the minimum wage. Id. The Fourth Circuit observed that “a fact finder could further conclude that an employer would only take such actions to avoid paying the minimum wage to persons who were labelled ‘trainees’ but who actually worked for the Casino and were FLSA employees.” Id.

Accordingly, the Fourth Circuit held that the plaintiffs alleged sufficient facts to state a claim that the Casino violated the FLSA and the Maryland wage laws by failing to pay them for the dealer school training. 820 F.3d at 660–61.

Analysis

In sum, in Harbourt the Fourth Circuit held that training can be compensable “work” requiring at least minimum wages under the FLSA. For purposes of the FLSA, “work” broadly encompasses physical or mental exertion, whether burdensome or not, controlled or required by the employer primarily for its benefit. Therefore, an employee attending an employer’s training program can be performing “work” under the FLSA.

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1–434–218–3133 or send an email to info@coffieldlaw.com.

This article was originally published on Tim Coffield’s website.

Virginia Employee Social Media Privacy Act: Protections for Employee Social Media Information

The Virginia Employee Social Media Privacy Act, VA Code § 40.1–28.7:5 (“VESMPA”), titled “Social media accounts of current and prospective employees,” generally prohibits Virginia employers from (1) requiring employees or prospective employees to disclose their social media usernames and passwords or (2) to “friend” or “connect” with the employer on social media. As with many laws, however, the VESMPA has some exceptions to the general rule.

EMPLOYER DEFINED

The VESMPA defines “employer” broadly. The definition includes the catch-all definition under VA Code § 40.1–2:

“Employer” means an individual, partnership, association, corporation, legal representative, receiver, trustee, or trustee in bankruptcy doing business in or operating within this Commonwealth who employs another to work for wages, salaries, or on commission and shall include any similar entity acting directly or indirectly in the interest of an employer in relation to an employee.

VA Code § 40.1–2.

In addition, the VESMPA applies to government employers:

“Employer” includes, in addition to the persons enumerated in the definition of employer in § 40.1–2, (i) any unit of state or local government and (ii) any agent, representative, or designee of a person or unit of government that constitutes an employer.

VA Code § 40.1–28.7:5(A).

SOCIAL MEDIA ACCOUNTS DEFINED

The VESMPA defines social media accounts broadly, to include a wide variety of private social media activity:

“Social media account” means a personal account with an electronic medium or service where users may create, share, or view user-generated content, including, without limitation, videos, photographs, blogs, podcasts, messages, emails, or website profiles or locations.

There are limitations, however. Importantly, “social media accounts” protected by the VESMPA do not include accounts associated with the employer:

“Social media account” does not include an account

(i) opened by an employee at the request of an employer;

(ii) provided to an employee by an employer such as the employer’s email account or other software program owned or operated exclusively by an employer;

(iii) set up by an employee on behalf of an employer; or

(iv) set up by an employee to impersonate an employer through the use of the employer’s name, logos, or trademarks.

VA Code § 40.1–28.7:5(A).

PROTECTIONS

The VESMPA provides, as a general rule, that employers cannot require employees or prospective employees to disclose their social media usernames and passwords or to “friend” or “connect” with the employer on social media:

B. An employer shall not require a current or prospective employee to:

1. Disclose the username and password to the current or prospective employee’s social media account; or

2. Add an employee, supervisor, or administrator to the list of contacts associated with the current or prospective employee’s social media account.

VA Code § 40.1–28.7:5(B).

INADVERTENT RECEIPT OF SOCIAL MEDIA ACCOUNT INFORMATION AND PROHIBITION ON USE

The VESMPA clarifies that an employer does not violate the law by only inadvertently receiving an employee’s social media login information through an employer-provided device or an employer’s network-monitoring program. However, the employer still may not use the information to access the employee’s social media account:

C. If an employer inadvertently receives an employee’s username and password to, or other login information associated with, the employee’s social media account through the use of an electronic device provided to the employee by the employer or a program that monitors an employer’s network, the employer shall not be liable for having the information but shall not use the information to gain access to an employee’s social media account.

VA Code § 40.1–28.7:5(C).

PROHIBITIONS ON RETALIATION AND DISCRIMINATION

The VESMPA prohibits employers from taking action against current employees or failing to hire prospective employees for exercising their rights not to disclose social media account information under the VESMPA:

D. An employer shall not:

1. Take action against or threaten to discharge, discipline, or otherwise penalize a current employee for exercising his rights under this section; or

2. Fail or refuse to hire a prospective employee for exercising his rights under this section.

VA Code § 40.1–28.7:5(D).

SAFE HARBOR FOR VIEWING PUBLICLY AVAILABLE INFORMATION

The VESMPA clarifies that it does not prohibit an employer from viewing information about a current or prospective employee that is publicly available:

E. This section does not prohibit an employer from viewing information about a current or prospective employee that is publicly available.

VA Code § 40.1–28.7:5(E).

EXCEPTIONS

As noted above, the VESMPA contains several exceptions, under which an employer is permitted to require employees to disclose social media usernames and passwords. Generally, these exceptions allow an employer to require disclosure of social media account credentials if necessary to comply with laws or regulations.

In addition, the VESMPA does not prohibit an employer from requesting disclosure of an employee’s credentials for purposes of accessing a social media account if the employer “reasonably believes” the employee’s social media account activity is relevant to a formal investigation or related proceeding by the employer into allegations that the employee violated law or the employer’s written policies.

F. Nothing in this section:

1. Prevents an employer from complying with the requirements of federal, state, or local laws, rules, or regulations or the rules or regulations of self-regulatory organizations; or

2. Affects an employer’s existing rights or obligations to request an employee to disclose his username and password for the purpose of accessing a social media account if the employee’s social media account activity is reasonably believed to be relevant to a formal investigation or related proceeding by the employer of allegations of an employee’s violation of federal, state, or local laws or regulations or of the employer’s written policies. If an employer exercises its rights under this subdivision, the employee’s username and password shall only be used for the purpose of the formal investigation or a related proceeding.

VA Code § 40.1–28.7:5(F). If the employer obtains social media account information under this part of the law, the employee’s username and password may only be used for the purpose of the formal investigation or proceeding.

REMEDIES

The VESMPA does not provide a statutory civil right of action for any employee harmed by a violation of its provisions. However, if an employee is terminated in violation of the policy stated in VESMPA, or because the employee exercised the rights created by the VESMPA, the employee may have a common law Bowman claim of wrongful discharge in violation of public policy.

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1–434–218–3133 or send an email to info@coffieldlaw.com.

Originally published on Tim Coffield’s website.

Virginia Worker Misclassification Law: Protections for Employees Asked to Sign Agreements that Misclassify Them As Independent Contractors

Virginia’s Worker Misclassification Law, VA Code § 58.1–1900–05 (“WML”), emphasizes the rights of employees to be properly classified as such, and makes it unlawful for employers to require or request that employees sign documents incorrectly classifying them as independent contractors. While the WML does not provide a statutory right of action, an employee terminated in violation of the policy stated in this law may have a common law claim for wrongful discharge.

The WML is important because it prohibits employers from asking or requiring workers sign documents that seek to deny them basic employment rights, like payroll taxes, unemployment protections, and overtime and minimum wages, by misclassifying them as independent contractors.

CLASSIFICATION OF EMPLOYEES

Section 1900 creates a default rule that, for purposes of Virginia employment, tax, worker’s compensation, and unemployment benefits laws, an individual is an employee of the company that pays for his services, unless the company or individual can prove that the individual is an independent contractor under IRS guidelines:

A. For the purposes of this title and Title 40.1, Title 60.2, and Title 65.2, if an individual performs services for an employer for remuneration, that individual shall be considered an employee of the party that pays that remuneration unless such individual or his employer demonstrates that such individual is an independent contractor. The Department shall determine whether an individual is an independent contractor by applying Internal Revenue Service guidelines.

VA Code § 58.1–1900(A).

CIVIL PENALTIES

Section 1901 imposes civil penalties on employers, and officers and agents of employers, who fail to properly classify employees as such, and fails to pay taxes, benefits, or other contributions required to be paid with respect to the employee:

Any employer, or any officer or agent of the employer, that fails to properly classify an individual as an employee in accordance with § 58.1–1900 for purposes of this title, Title 40.1, Title 60.2, or Title 65.2 and fails to pay taxes, benefits, or other contributions required to be paid with respect to an employee shall, upon notice by the Department to the affected party, be subject to a civil penalty of up to $1,000 per misclassified individual for a first offense, up to $2,500 per misclassified individual for a second offense, and up to $5,000 per misclassified individual for a third or subsequent offense. Each civil penalty assessed under this chapter shall be paid into the general fund.

VA Code § 58.1–1901.

Debarment Penalty

Section 1902 imposes a debarment penalty, which prohibits public bodies and covered institutions from doing business with a employer that fails to properly classify a worker as an employee:

A. Whenever the Department determines, after notice to the employer, that an employer failed to properly classify an individual as an employee under the provisions of § 58.1–1900, the Department shall notify all public bodies and covered institutions of the name of the employer.

B. Upon an employer’s subsequent violations of subsection A, all public bodies and covered institutions shall not award a contract to such employer or to any firm, corporation, or partnership in which the employer has an interest in the following manner:

1. For a period of up to one year, as determined by the Department, from the date of the notice for a second offense.

2. For a period of up to three years, as determined by the Department, from the date of the notice for a third or subsequent offense.

VA Code § 58.1–1902.

PROHIBITION ON AGREEMENTS MISCLASSIFYING EMPLOYEES AS INDEPENDENT CONTRACTORS

Importantly, Section 1903 prohibits employers from requiring or requesting that a worker sign an agreement or document that results in the misclassification of the employee as an independent contractor, or otherwise does not accurately reflect the worker’s relationship with the employer:

No person shall require or request that an individual enter into an agreement or sign a document that results in the misclassification of the individual as an independent contractor or otherwise does not accurately reflect the relationship with the employer.

VA Code § 58.1–1903.

PROHIBITION ON TERMINATING AN EMPLOYEE FOR REFUSING TO SIGN AN AGREEMENT MISCLASSIFYING THE EMPLOYEE AS AN INDEPENDENT CONTRACTOR

Section 1904 makes it unlawful for an employer to terminate or otherwise discriminate against an employee to refuses to sign a document misclassifying the employee as an independent contract, or for exercising other rights under the WML:

It shall be unlawful for an employer or any other party to discriminate in any manner or take adverse action against any person in retaliation for exercising rights protected under this chapter.

VA Code § 58.1–1904.

REMEDIES

While the WML does not contain a statutory remedy, an employee terminated in violation of the WML’s provisions may be able to bring a common law claim for wrongful discharge in violation of public policy under Bowman v. State Bank of Keysville, 331 S.E.2d 797 (Va. 1985) and its progeny.

RECORDKEEPING

Section 1905 imposes on the Virginia Department of Taxation recordkeeping and reporting requirements relating to the misclassification of employees as independent contractors:

The Department shall report annually to the Governor and the General Assembly regarding compliance with and enforcement of this chapter. The Department’s report shall include information regarding the number of investigated reports of worker misclassification; the findings of such reports; the amount of combined tax, interest, and fines collected; the number of referrals to the Department of Labor and Industry, Virginia Employment Commission, Department of Small Business and Supplier Diversity, Virginia Workers’ Compensation Commission, and Department of Professional and Occupational Regulation; and the number of notifications of failure to properly classify to all public bodies and institutions.

VA Code § 58.1–1905.

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Originally published on Tim Coffield Attorney’s website.