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Brave New World for Virginia Employers: New Nondiscrimination, Accommodations, and Other Employment Requirements

Employment

Brave New World for Virginia Employers:

New Nondiscrimination, Accommodations, and Other Employment Requirements

By William R. Thetford, Esq. and H. Robert Showers, Esq.

Last Updated: August 25, 2020

Virginia had long been considered one of the most pro-business right-to-work states when it came to employment law.[1] A 2019 survey found Virginia to be the least employee friendly state in the nation when it came to employment and wage and hour provisions.[2] Virginia has also historically been a state that has held tightly to its common law tradition, with its accompanying strictness at times, and is usually one of the last states to update its statutes and procedures, even as other states change more rapidly. That has changed as Virginia now has some of the most pro-employee employment statutes in the South, and rivals western and northeastern states, like California or Massachusetts, long known (and either praised or criticized depending on one’s perspective) for their pro-employee policies. Due to the major events of 2020, the drastic changes in Virginia employment law have not received the attention they otherwise would have garnered, since they were passed this spring and took effect July 1st, during the pandemic and civil unrest.

Depending on your perspective, some of these changes are good, some are up for debate, and there are some changes that we are deeply concerned about for small businesses, churches and nonprofits. Regardless of your opinion of the changes, they will certainly impact your legal duties and vulnerabilities as a business or organization (even churches and religious organizations). Whether a worker is truly an exempt employee not subject to overtime, an independent contractor not subject to your employee benefits, or a person being discriminated against as a LGBTQ class of employees will now be of critical importance to you. It is crucial that you be aware of new standards, review your practices and policies for compliance, and prepare accordingly.

Discrimination Law – Virginia Values Act, Amended Virginia Human Rights Act, et al.

Previously, Virginia law prohibited discrimination on the basis of “race, color, religion, national origin, sex, pregnancy, childbirth or related medical conditions, including lactation,” which applied to all employers of 15 or more. Note that Title VII of the Civil Rights Act of 1964 is similar and also applies to employers with 15 or more employees. Virginia law also protected against age discrimination (over the age of 40) for employers with more than 20 employees. Under Virginia law, the primary discrimination claim an employee could make against an employer was wrongful discharge and the employee typically had to prove that the discriminatory reason or violation of public policy was the primary or only reason they were terminated.

The New Virginia Human Rights Act – As Expanded by the Virginia Values Act

The new nondiscrimination provisions that took effect this year dramatically change the legal environment by: (1) increasing the number of classes upon which discrimination is prohibited, (2) expanding the types of discrimination forbidden, (3) changing the standard by which discrimination is proved, and (4) expanding the remedies and recoveries available to employees or others who prevail in a discrimination claim.

Protected Classes. Virginia employment law now lists the following as protected classes (new categories in bold): race, color, religion, sex, sexual orientation, gender identity, marital status, pregnancy, childbirth or related medical conditions including lactation, age, status as a veteran, or national origin. Va. Code § 2.2-3905(B)(1). For a fuller discussion on the new sexual orientation and gender identity requirements please see our article here.

Areas of Discrimination Reviewed. Employers are forbidden to “fail or refuse to hire, discharge, or otherwise discriminate against any individual with respect to such individual’s compensation, terms, conditions, or privileges of employment” because of the employee’s protected class. Va. Code § 2.2-3905(B)(1)(a). Employers also may not “limit, segregate, or classify employees or applicants for employment in any way that would deprive any individual of employment opportunities or otherwise adversely affect an individual’s status as an employee” because of an employee’s protected class. Va. Code § 2.2-3905(B)(1)(b).

Standard for Discrimination. No longer is it necessary for the employee to prove that the protected class was the reason for termination or even the primary reason, but must only show that the protected class was “a motivating factor for any employment practice, even though other factors also motivate the practice.” That is a major change and makes employee discrimination charges much easier to prove against the employer. The text suggests that if an employer had a strained relationship with an employee due to differences between them arising out of a protected classification, (for instance, the employee was over 40), an employee might prevail against the employer even if the primary reason the employee had action taken against him was legitimate (not showing up for work on time, poor work performance, etc.) if the employee proves the protected classification was also a motivating factor. It will be interesting to see how the courts weigh cases where multiple motivating factors are present under the new legal standard.

Virginia will likely look to federal laws such as Title VII with similar language for guidance. Title VII has similar language in establishing a violation when discrimination is one of perhaps several “motivating factors.” However, unlike Virginia, Title VII also expressly includes other language sharply reducing the potential payout an employer might face if the employer can show that it “would have taken the same action in the absence of the impermissible motivating factor.” 42 USCS § 2000e-5. The Virginia code section does not articulate a reduction in damages for this reason and it will be up to judges to determine how to interpret the law in those situations.

Consequences of a Violation. The law sets forth a number of remedies for employees prevailing under the nondiscrimination law. According to Va. Code § 2.2-3908, remedies may include:

  • compensatory damages (unlike some employment discrimination laws, there is no cap to these damages),
  • punitive damages up to the Virginia statutory maximum of $350,000,
  • reasonable attorney’s fees and costs, and
  • a permanent or temporary injunction, temporary restraining order, or other order, as the judge deems appropriate, requiring a defendant to stop engaging in a practice or to take certain affirmative action or face being held in contempt of court.

Additionally, where the Attorney General has “reasonable cause to believe” that any person or group “is engaged in a pattern or practice” of resisting the nondiscrimination provisions of the Virginia Human Rights Act (including the employment provisions, as well as others), he may petition the circuit court for a civil penalty of $50,000 for a first violation and $100,000 for any subsequent violation, injunctive relief from the court, and attorney’s fees in addition to an award of the remedies above to the aggrieved person.

How Complaints May Be Made. The new Virginia law contains a new procedure for filing employment lawsuits. This procedure is designed to be similar to the requirements to file with the U.S. Equal Employment Opportunity Commission prior to bringing a federal discrimination complaint. Before filing a suit directly for any employment discrimination matter,[3] the employee must file a written complaint under oath with the Division of Human Rights of the Department of Law. Va. Code § 2.2-3907. The Division will then investigate the complaint. At the close of the investigation, regardless of the outcome, the Division will issue a notice of the right to file a civil action to the complaining employee. If the Division concludes “there is reasonable cause to believe the alleged unlawful discrimination has been committed,” the Division may attempt to informally work with the employer to bring about a resolution or may itself bring suit on behalf of the employee.

Discrimination on the Basis of Race Expanded

Virginia is also one of the first states to ban what some call “hair discrimination.” In reality the new law seeks to prevent race discrimination in the form of appearance codes that might impact traits or hairstyles associated with race. The provision reads:

The terms “because of race” or “on the basis of race” or terms of similar import when used in reference to discrimination in the Code and acts of the General Assembly include because of or on the basis of traits historically associated with race, including hair texture, hair type, and protective hairstyles such as braids, locks, and twists.

Va. Code § 2.2-3901(d).

This provision appears to apply to not just the nondiscrimination provisions discussed in this article, but to any other Virginia law prohibiting race discrimination as well.

Pregnancy Discrimination Expanded 

The General Assembly also broadened pregnancy discrimination protections in the Virginia Human Rights Act. Employers may be sued for refusing “to make reasonable accommodation to the known limitations of a person related to pregnancy, childbirth, or related medical conditions.”

Reasonable accommodations include:

  • frequent or longer bathroom breaks,
  • breaks to express breast milk,
  • access to a private location other than a bathroom for the expression of breast milk,
  • acquisition or modification of equipment or access to or modification of employee seating,
  • a temporary transfer to a less strenuous or hazardous position,
  • assistance with manual labor,
  • job restructuring, a modified work schedule,
  • light duty assignments,
  • and leave to recover from childbirth.”

There is also an exception from these requirements for employers that “can demonstrate that the accommodation would impose an undue hardship on the employer.” An undue hardship analysis takes into consideration the nature of the employer’s operation, structure of work force, size of the facility, and nature and cost of the accommodation among other factors.

Importantly, the law contains posting requirements that the employer provide information concerning: “(i) the prohibition against unlawful discrimination on the basis of pregnancy, childbirth, or related medical conditions and (ii) an employee’s rights to reasonable accommodation for known limitations related to pregnancy, childbirth, or related medical conditions.”

Employers must provide this information: (1) in a notice posted in a conspicuous location, (2) in any employee handbook, (3) directly to new employees, and (4) to any employee within 10 days of the employee providing notice to the employer that she is pregnant. The posted notice and handbook material must be provided by October 29, 2020 (120 days from effective date of July 1).

Whistleblower Protection (Va. Code § 40.1-27.3)

While Virginia had a limited case law protection based on public policy for employees discharged for whistleblowing on wrongdoing (Bowman v. State Bank of Keysville, 229 Va. 534 (1985)), there was no general statute on the subject until now. The new law prohibits employers from taking retaliatory action (including discharge, discipline, threats, discrimination, or action as to compensation, terms, conditions, or privileges of employment) for certain whistleblower activity.

This whistleblower activity includes when an employee:

  • Makes a good faith report of a violation of any federal or state law or regulation to a supervisor, governmental body, or law-enforcement official.
  • Is requested by a governmental body or law-enforcement official to participate in an investigation, hearing, or inquiry.
  • Refuses to engage in a criminal act that would subject the employee to criminal liability.
  • Refuses an employer’s order to perform an action that violates any federal or state law or regulation and the employee informs the employer that the order is being refused for that reason.
  • Provides information to or testifies before any governmental body or law-enforcement official conducting an investigation, hearing, or inquiry into any alleged violation by the employer of federal or state law or regulation.

The law contains an important caveat that whistleblower protection does not authorize an employee to (1) make a disclosure of data protected by law or legal privilege, (2) make a statement or disclosure knowing it is false or in reckless disregard of the truth, or (3) make disclosures in violation of federal or state law as to confidentiality of certain information (such as HIPAA-protected medical information, trade secrets, FERPA-protected education information).

An aggrieved employee has one year to bring a charge of retaliation for protected activity under this statute. The Court is empowered to provide the following remedies: (1) injunction to restrain employer from further violating this law, (2) reinstating the employee to the position held before the action or an equivalent position, and (3) compensation for lost wages and benefits, plus reasonable attorney fees and costs.

These protections only expressly apply to employees, not independent contractors. Although, as noted below, the new law also makes it much more difficult, and more dangerous, to classify someone as an independent contractor.

Do All of These Requirements Apply to My Business or Organization?

The answer is probably yes, but there are various employee minimums for most of the provisions. Generally, the employment discrimination provisions apply to any employer “employing 15 or more employees for each working day in each of 20 or more calendar weeks in the current or proceeding calendar year.” Va. Code § 2.2-3905. Some provisions have a higher or lower threshold (see chart below).

Category Minimum Employee Number
Generally. Unless stated otherwise – § 2.2-3905(A) 15
Age Discrimination – § 2.2-3905(A) 20
Unlawful discharge – § 2.2-3905(A) 5
Pregnancy Discrimination – § 2.2-3909 5

Employers may be somewhat relieved to hear that this law does not appear to be intended to have retroactive effect. Thus, employees will not be able to successfully bring suit under the new standards for actions that took place prior to July 1, 2020. Employers will still be accountable to employees on the basis of the law as it was at the time of the actions in dispute.

Do Any Exceptions Apply?

Yes. There are seven narrow exceptions in the area of employment. Va. Code § 2.2-3905(C) and (E).

  • Employers may hire or classify for employment individuals on the basis of religion, sex, or age, when religion, sex, or age is a “bona fide occupational qualification reasonably necessary to the normal operation of that particular employer.”
  • Schools or institutions of higher education may hire and employ employees of a particular religion if:
    1. The school or institution of higher education is owned, supported, controlled, or managed by a particular religion, religious corporation, or association;
    2. Or the school or institution is “directed toward the propagation of a particular religion.”
  • Employers may apply different standards of compensations or certain terms based on a bona fide seniority or merit system, as long as the system does not discriminate on the basis of protected classifications.
  • Employers may give and act upon the results acquired from a professionally developed ability test, as long as the test does not discriminate on the basis of a protected classification.
  • It is not considered discrimination for the employer to provide reasonable accommodations related to pregnancy, childbirth, or related medical conditions.
  • Employers may condition employment based upon citizenship status where required to do so for national security reasons by federal law or regulation or executive order.
  • Certain religious organizations may discriminate on the basis of religion. As the provisions of the employment nondiscrimination code section “shall not apply to the employment of individuals of a particular religion by a religious corporation, association, educational institution, or society to perform work associated with its activities.”

The changes to public accommodations law and housing have somewhat more robust exceptions. Public accommodations are discussed below. For a discussion on the interplay between the new sexual orientation and gender identity nondiscrimination requirements and religious liberty under the First Amendment see our article devoted to that subject specifically.

Public Accommodations

Businesses and organizations should be aware that they may have expanded obligations under public accommodations law. A public accommodation is defined as “all places or businesses offering or holding out to the general public goods, services, privileges, facilities, advantages, or accommodations.” Va. Code § 2.2.-3904(A).

The public accommodations section provides that it is an unlawful discriminatory practice for: any person acting on behalf of the public accommodation (such as the “owner, lessee, proprietor, manager, superintendent, agent, or employee of any place of public accommodation”) to:

[R]efuse, withhold from, or deny any individual, or to attempt to refuse, withhold from, or deny any individual, directly or indirectly, any of the accommodations, advantages, facilities, services, or privileges made available in any place of public accommodation, or to segregate or discriminate against any such person in the use thereof, or to publish, circulate, issue, display, post, or mail, either directly or indirectly, any communication, notice, or advertisement to the effect that any of the accommodations, advantages, facilities, privileges, or services of any such place shall be refused, withheld from, or denied to any individual on the basis of race, color, religion, national origin, sex, pregnancy, childbirth or related medical conditions, age, sexual orientation, gender identity, marital status, disability, or status as a veteran.

Va. Code Ann. § 2.2-3904(B).

New Wage and Hour Requirements

Private Right of Action for Wage Claims

The biggest change that has occurred is giving a private right of action to individuals who believe they have not been paid in accordance with the law. Va. Code § 40.1-29(J). In the past, violations of wage-and-hour laws, such as the Virginia Wage Payment Act, were left to government agencies. Now, employees may themselves sue the employer. Similar to the federal Fair Labor Standards Act, the individual or individuals sued are entitled to double damages (“wages owed plus an additional amount as liquidated damages”) or treble damages (3x the amount wages wrongfully not paid) if the violation was knowing. The doubling or tripling of damages, prejudgment interest, and reasonable attorney’s fees are not discretionary, but mandatory (“shall”) for the court when a violation or knowing violation is established.

Crucially, the definition of a knowing violation under Virginia law is much easier to satisfy than under federal statutes. The employee does not need to establish specific intent to defraud. Instead, “a person acts ‘knowingly’ if the person, with respect to information: (i) has actual knowledge of the information, (ii) acts in deliberate ignorance of the truth or falsity of the information, or (iii) acts in reckless disregard of the truth or falsity of the information.” Va. Code § 40.1-29.

The time period to bring such a claim is generally three years from the date the cause of action accrues, with some tolling provisions. There are also anti-retaliation provisions for employees who file claims or complaints or participate in proceedings regarding wage claims. 

Private Right of Action on Misclassification of Workers (Employee v. Independent Contractor)

There are very different duties and benefits a business owes an employee versus a true independent contractor. We find that many businesses and nonprofit organizations frequently misunderstand the distinction and misclassify as independent contractors those who would be found to be employees if legally challenged. Virginia Code § 40.1-28.7:7 will likely be used to surprise many businesses and organizations who think they are engaging an independent contractor.

Legally, the realities of the relationship trump what the parties call the arrangement in a contract. The IRS has long used a multi-factor test to determine whether a worker is an employee or independent contractor for tax purposes.[4] These factors all essentially come back to the aspect of control (behavioral control, financial control, and relationship). If the business or organization has the right to control the manner in which the worker does his job, not just the ultimate goal, the worker is likely an employee. This is true even if the parties to the agreement both expressly agree in writing that the relationship is intended to be on an independent contractual basis, not an employer-employee basis.

The new Virginia law makes the presumption even stronger as it now explicitly requires that any “individual who performs services for a person for remuneration shall be presumed to be an employee” for the purposes of Virginia’s employment statutes, “unless it is shown that the individual is an independent contractor” using the guidelines published by the IRS.[5]

Under the new law, a misclassified employee can bring a civil lawsuit against the employer “for failing to properly classify the employee if the employer had knowledge of the individual’s misclassification.” If the worker prevails, he is entitled to the wages, salary, benefits, expenses, and other compensation the worker lost by virtue of being misclassified. The court may also award reasonable attorney’s fees and costs. Again, this is likely still true even if the worker sues his would-be employer, had signed an agreement designating the relationship as an independent contractual one, not employer-employee.

Workers can also file administrative complaints for government officials to proceed against the employer, instead of filing a lawsuit themselves. Workers have whistleblower protection for these reports and investigations specifically.

Though this code section is short, it may be one of the most impactful provisions for many businesses and nonprofits and the Virginia legal environment as a whole. If you are concerned that some of your independent contractors may, in reality, be employees, you should have an attorney knowledgeable in employment classifications law review the facts in light of the existing standards and new requirements. In areas where it is difficult to determine whether a worker is an employee or worker under the IRS multi-factor test, there are steps you can take to request the IRS to make a formal determination for you prior to incurring liabilities for misclassifying. 

Reshaping of Virginia Law Governing Covenants Not to Compete

With little fanfare, another bill reshaped the standards for Virginia non-compete agreements with median-wage employees. Under Va. Code § 40.1-28.7:8, “No employer shall enter into, enforce, or threaten to enforce a covenant not to compete with any low-wage employee.” (emphasis added).

Covenant not to compete is defined broadly in the act to include “a covenant or agreement, including a provision of a contract of employment, between an employer and employee that restrains, prohibits, or otherwise restricts an individual’s ability, following the termination of the individual’s employment, to compete with his former employer.” Whether that includes non-solicitation provisions of clients/customers is uncertain.

Importantly, low-wage employees, is calculated to mean less than “average weekly wage of the Commonwealth as determined pursuant to subsection B of § 65.2-500.” (emphasis added). Since the number is set as a calculation rather than a flat figure, the threshold will change from year to year or even quarter to quarter. However, the latest numbers from the Virginia Employment Commission set the average weekly wage at $1,204, or $62,608 annually.

  • Independent contractors are also included in “low wage employee” if the contractor is compensated at an hourly rate less than the median hourly wage in the Commonwealth, currently, $20.30.[6]
  • Low-wage employees also include “interns, students, apprentices, or trainees employed, with or without pay, at a trade or occupation in order to gain work or educational experience.”
  • It does not include an employee paid predominantly out of “sales commissions, incentives, or bonuses paid to the employee by the employer.”

Consequences of Violation. If a low-wage employee brings suit, the court can void any infringing covenant not to compete and order injunctive relief, liquidated damages, lost compensation, and other damages. The court is required to award reasonable attorneys’ fees and costs (including expert witness costs) in the event of a violation. The Commissioner of Labor and Industry may also impose a civil penalty of $10,000 for each violation.

The law also requires that a copy of the section or a summary approved by the Department of Labor and Industry be posted in the workplace. Strangely, one portion of the act as signed into law is not currently listed in the corresponding statute: the indication that the act only applies to contracts entered into on or after July 1, 2020. 

Minimum Wage

Under the new law, Virginia is set to reach a $15 per hour minimum wage by January 2026 through a series of increases each year until that point. The first jump is from the current minimum wage of $7.25 per hour to $9.50 per hour starting May 1, 2021. This provision was amended to push the initial date back from January to May due to concerns about the economic impact of COVID-19.

Federal Fair Labor Standards Act (FLSA) Changes for 2020

The state changes discussed in this article are on top of a significant update to the FLSA, effective January 1, 2020, which makes many formerly exempt employees now subject to wage and overtime requirements. The Department of Labor expects that this rule will make an additional 1.3 million workers eligible for overtime pay under the FLSA.[7] In short, the minimum salary exemption threshold was increased from $455 per week to $685 per week (equivalent of $35,568 annually). Likewise, the threshold for the “highly compensated employee” exemption was raised from $100,000 to $107,432 per year. Thus, any employee making under $35,568 will generally not be subject to any exemption and you will be required to pay overtime to these employees. Any employee making over that amount may be exempt, but you will need to ensure that the employee fits within one of the applicable exemptions. These changes are discussed in depth in our article on the subject after the rule was proposed. Now that the final rule has been implemented, however, if you have not changed your system of classifying exempt and non-exempt employees to match the new standards, it is crucial that you do so now as you can face penalties and legal claims if you are not complying with the overtime requirements on your newly non-exempt employees.

What Should I Do Now?

Your business, organization, church, or nonprofit must understand the new obligations and take action accordingly. Consider the following checklist:

  • Review your employment policies (including your handbook) and job descriptions to ensure you are complying and any necessary protective measures are in place.
  • Review your wage, classification, and overtime policies and practices to ensure you do not fall afoul of any of the new state or federal wage and hour rules.
  • Review your exempt versus non-exempt employees for wage and hour violations due to new changes in FLSA and update classifications correctly.
  • Make sure your independent contractors are truly independent contractors. Consider whether you need to re-classify some contractors as employees under the new law. Recognize that you will be under added scrutiny; operate above reproach, and make sure you make your policies clear and act on them consistently.
  • Consider a human resources or employment legal audit with a law firm knowledgeable in your field (business, nonprofit, or church). We find that it is much easier (and less expensive!) to discover the potential problem and address it before there is a lawsuit or enforcement action taken against you. Our firm is able to help you classify exempt employees correctly, determine whether a worker is truly an independent contractor or employee under the law, and change your employment agreements and policies to be consistent with all the new federal and VA state law changes.

Do not delay this HR legal review since the consequences are severe and can hamper or end your church, small business or nonprofit organization since the changes are effective July 1, 2020. Remember that the law itself even requires you to update some of your policies, handbooks, and postings to be consistent with these changes by October 29, 2020 at the latest.

CONCLUSION 

One important thing to note is the unique combination of changes to employment law and existing procedure that will now occur in Virginia. While Virginia was strict towards employees on the law under the prior statutory scheme, its litigation procedure is very pro-plaintiff in many ways. For instance, it is very difficult for a defendant to get even a weak case dismissed on the pleadings or on summary judgment, compared to the federal courts or the courts of many other states. In the past, Virginia’s strict stance on the law but pro-plaintiff litigation procedures tended to offset one another. Now, they will both weigh heavily in favor of employees taking legal action against their employers. Employers will likely find it much more difficult to defend against employment, wage-and-hour, and related suits. Some commentators have declared that Virginia as a right-to-work-state became a union like state similar to California and New York overnight in one legislative session. Unfortunately, many businesses thinking of coming to Virginia are now reconsidering and others already in the Commonwealth have discussed relocating.

Even if you have never discussed your employment policies or agreement with counsel, you should now consult with legal counsel experienced in Virginia labor and employment law for a review of the law as it applies to your church, small business, or nonprofit organization. Not every lawyer will be well-versed in employment law in general, especially if it relates to church/nonprofit law.

*************************************************************************************

Disclaimer: This memorandum is provided for general information purposes only and is not a substitute for legal advice particular to your situation. No recipients of this memo should act or refrain from acting solely on the basis of this memorandum without seeking professional legal counsel. Simms Showers LLP expressly disclaims all liability relating to actions taken or not taken based solely on the content of this memorandum. Please contact Robert Showers at hrs@simmsshowerslaw.com or Will Thetford at wrt@simmsshowerslaw.com for legal advice that will meet your specific needs.

[1] Best States for Business, Forbes (2019), https://www.forbes.com/best-states-for-business/list.
[2] Best and Worst States to Work in America, Oxfam America (2019), https://assets.oxfamamerica.org/media/documents/
BSWI_2019_Report_Final.pdf.
[3] With some exceptions, such as in certain pregnancy discrimination matters.
[4] Understanding Employee vs. Contractor Designation, IRS (July 8. 2020), https://www.irs.gov/newsroom/understanding-employee-vs-contractor-designation#:~:text=Consider%3A,indicator%20of%20an%20independent%20contractor.
[5] See 26 C.F.R. § 31.3121(d)-1 (2020); Id.
[6] May 2019 State Occupational Employment and Wage Estimates Virginia, U.S. Bureau of Labor Statistics, https://www.bls.gov/
oes/current/oes_va.htm#00-0000. (last updated Mar. 31, 2020).
[7] Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, 84 Fed. Reg. 51,230 (Sept. 27, 2019) (to be codified at 29 C.F.R. pt. 541); see also Emily Weeks, U.S. Department of Labor Issues Final Overtime Rule, U.S. Dep’t of Labor (Sept. 24, 2019), https://www.dol.gov/newsroom/releases/whd/whd20190924#:~:text=In%20the%20final%20rule%2C%20the,a%20full%2Dyear%20worker)%3B.

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