Understanding Employee Misclassification and Overtime Laws in Virginia

Sometimes, employers misclassify employees as independent contractors. While this could be an honest mistake, often it is done intentionally to avoid paying taxes and providing employment benefits. However, there have been recent updates to employee misclassification and overtime laws in Virginia that help employees.

Employee Misclassification

Typically, employees have more rights than independent contractors. Employees have the right to sue an covered employer for illegal discrimination, independent contractors do not.  Similarly,  independent contractors don’t have rights under the Fair Labor Standards Act (FLSA – overtime pay) or the Family and Medical Leave Act (FMLA – leave).

Protecting Your Rights

If you are a non-exempt employee under the FLSA, your employer must pay you time and a half for overtime. However, independent contractors aren’t entitled to overtime pay, unless the customer agrees to it in the contract.

The FMLA may protect you if you can’t work. For instance, say you need emergency surgery and can’t work for a month. If you’re an employee entitled to FMLA leave (50 or more employees at your location, been at work for at least a year), your employer must hold your job open until you return from leave. However, if you are classified as an independent contractor, the company can hire someone else.

Tax Implications

Furthermore, employers are required to pay taxes towards Social Security, unemployment, and worker’s compensation for their employees. Unfortunately, if you are misclassified as an independent contractor, your employer won’t pay these taxes. That is why some employers intentionally misclassify employees. This is wrong and prevents you from receiving the benefits you are entitled to.

Updates to Virginia Law

In July 2020, new updates went into effect. Now, you have the right to file a lawsuit in Virginia if your employer knowingly misclassifies you as an independent contractor. However, the deadline for filing is two years, so don’t wait. Additionally, the new law presumes that you are an employee (rather than an independent contractor) if you provide services similar to those provided by the company in exchange for compensation. In other words, it’s up to the employer to prove that you’re an independent contractor. Furthermore, these new laws penalize employers who misclassify their employees. One such penalty is requiring the employer to pay civil penalties and preventing them from contracting with the Commonwealth.

Retaliation Against Employees for Reporting

Likewise, the new laws prohibit retaliation against employees and independent contractors who report or plan to report an employer for misclassification. Virginia’s new Whistleblower Protection Act would allow you to sue for retaliation, which could help you recover any lost wages.

Recovering Damages for Misclassification

If you can prove that your employer intentionally misclassified you as an independent contractor, the court may award you:

• Lost wages
• Litigation costs
• Reasonable attorney fees
• Lost employment benefits, including expenses that your employer’s group insurance would have covered
• Other lost compensation

Employee Misclassification and Overtime Laws in Virginia

If you think that your employer has misclassified you, you should consult an experienced employment attorney. He/she can determine whether you are an employee or independent contractor under the law. Additionally, an attorney can advise you on the next steps. Contact Cook, Craig & Francuzenko to learn more.