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On March 30, 2021 Governor Northam signed the “Virginia Overtime Wage Act” into law. This new legislation, which goes into effect on July 1, 2021, continues the Commonwealth’s pro-employee push and will create new wage and hour requirements and legal liability for employers in an area traditionally regulated under federal law.
Calculating the Regular Rate of Pay
The most significant impact of this legislation relates to how employers calculate the “regular rate of pay” for establishing wage and overtime requirements for non-exempt employees who are paid a salary. Under federal and prior-Virginia law, an employee’s regular rate of pay constitutes their hourly rate and any additional compensation received in a workweek. This remains the same under the new law for Virginia employees paid on an hourly basis. The regular rate of pay for employees paid on a salary basis, however, will be calculated as one-fortieth of all wages paid for that workweek even where the employee regularly works more hours. The practical impact of this change is to bar employers from utilizing the FLSA’s “fluctuating work week method” or other straight time methods for calculating wages for non-exempt employees.