By Kristina Keech Spitler, Esq. and Brendan F. Cassidy, Esq.
While businesses have been focused on dealing with the Covid-19 pandemic, working remotely, educating kids, and figuring out how to return to work safely, new laws will go into effect starting on July 1, 2020 that you need to know about. These laws will significantly impact Virginia employers.
Due to the enactment of these new laws in Virginia, businesses will need to understand what the laws require, update their pay statements, educate and train their supervisors/managers accordingly, and ensure compliance with upcoming state minimum wage and hour increases. If an employer is a general construction contractor, they will also want to review their subcontractor agreements, or face wage and hour liability for subcontractor violations.
Employee Private Right of Action
The General Assembly passed a new law (effective July 1, 2020) which will allow employees to bring a private cause of action against employers who fail to pay them their wages. Under the new law, employees may bring such an action individually, jointly, with other aggrieved employees, or on behalf of similarly situated employees as a collective action.
General Construction Contractor Liability for Subcontractor Failure to Pay Wages
Under the new law, a general construction contractor is liable for subcontractor wage violations. For any construction contract entered into on or after July 1, 2020, the general contractor and subcontractor are jointly and severally liable to pay the greater of:
The rate and terms in an employment agreement between the subcontractor and its employees, or
The amount of wages the subcontractor is required to pay under applicable law. The general contractor is also subject to all penalties, criminal or civil under existing law.
However, this new law also requires subcontractors to indemnify general contractors (except as stated in a contract) for wages, damages, interest, penalties, or attorney’s fees owed as a result of the subcontractor’s failure to pay, unless the failure to pay subcontractor’s employees was a result of the general contractor’s failure to pay the subcontractor.
For further information or questions about these new laws, or for any questions regarding employment laws applicable to Virginia employers, please contact Ms. Spitler or Mr. Cassidy at Vanderpool, Frostick & Nishanian. The attorneys in the employment law department of VFN are available to help you revise your employee handbook and policies as well as provide training so that your organization complies with these new and other applicable law. Alternatively, if your organization does not have an employee handbook, our firm can draft a handbook tailored to meet your business’s needs.
For further information or questions, please visit our site Employment Law or Call Us (703) 369-4738
Let’s assume that you are the owner of a small business (a corporation or limited liability company) working to obtain a contract for services for the business. You’ve done your research, found a solid services company to work with, negotiated the services and payment details, and are at the conference room table about to sign the contract.
Two things could happen here – (1) concerned about the success rate of small businesses, the services company requires that you, as owner of the business, sign a personal guaranty; or (2) the services company does not require any cosigner, guarantor, or personal guarantee.
The services company requires that you, as owner of the business, sign a personal guaranty.
As confident as you may feel about the success of your small business, it is actually common for owners of small corporations and/or LLCs to be required to sign personal guarantees when entering a contract for their business. In this scenario, similar to the one above where the good friend cosigned a lending agreement, you must understand that by guaranteeing or personally cosigning your business’ contract, you are signing away the limited liability rights and status that you may otherwise have had. And, in the worst case scenario where your small business defaults on the contract payment terms, the services company will be able to, within the terms of the guarantee, seek payment directly from you personally!
The services company does not require any cosigner, guarantor, or personal guarantee.
In the second scenario, where the services company does not require that anyone cosign or personally guaranty the services contract, it is imperative that you, the small business owner, take care in signing the document. While it may be second nature to just quickly and casually scribble your name on the signature line, failing to include your title and position in the business or, even better, words similar to “president, signing on behalf of small business” may be a fool’s move!
Without ensuring that it is perfectly clear that you have signed solely on behalf of the business, you open yourself up to possibly being held personally liable for the contract terms and obligations! Even if you do sign the document as described above, you should also be sure that your signature isn’t doing “double duty.” Specifically, fine print, buried deep in the contract may state that the business signer is also personally liable, even if there is only one signature block! This is a very dubious, but increasingly common, provision; why take the tisk? As such, reviewing not only all of the terms and provisions, but also the signature block, of your small business contract, and then taking care in how you sign such contract, is crucial!
Now, what happens if you do not own the business, but rather are an employee who was tasked with obtaining a contract for the business as part of your job?
In this scenario, it is unlikely that you would have signatory power for the company. In other words, you are not able to sign a contract with any meaningful business title using the words suggested in the above paragraph. As a result, you might be signing the contract personally, which, as above, opens you up to potential personal liability for all of the terms and conditions of the contract.
So, if you are this small business employee tasked with obtaining some sort of goods or services contract for your company, while you should feel comfortable researching providers of said goods and services, when it comes time to sign a contract, it is absolutely in your best interest to hand it over to the boss.
As more and more transactions take place via the internet, it is important for individuals to understand, and be aware of, the liability that may be associated with electronically signing a document.
Virginia, like many other states, has adopted the Uniform Electronic Transactions Act (“UETA”); see Virginia Code § 59.1-479, et seq. The UETA makes it clear that, with few exceptions, one cannot contest the validity of a contract based solely upon one’s electronic signature. Rather, “if a law requires a signature, or provides for certain consequences in the absence of a signature, an electronic signature satisfies the law.” Virginia Code § 59.1-485(d).
Therefore, unless an exception applies to the document in question, it is important to understand that an electronic signature has the same strength and validity as a hard copy signature.
Additionally, not only does an electronic signature bind the signor, but the Fourth Circuit Court of Appeals has held that by clicking “I Agree” at the end of online terms and conditions agreement, one has electronically signed that document and is bound by its provisions.
The Local Government Attorneys of Virginia hired Martin Crim of Vanderpool, Frostick & Nishanian P.C. to draft an amicus curiae brief in the Virginia Supreme Court case of Dumfries-Triangle Rescue Squad v. Board of County Supervisors of Prince William County.
The case started when members of the rescue squad falsified operational records and the County’s Operational Medical Director refused to renew the operating license for the rescue squad. In response, the Board of Supervisors dissolved the Rescue Squad pursuant to statute and the agreement between the County and the Rescue Squad.
The Rescue Squad refused to wind up its affairs, however, claiming that its incorporation as a nonstock entity in 1959 made it immune to dissolution by the County. The Virginia Supreme Court allowed the appeal on the questions of whether the County had the authority to dissolve the Rescue Squad and whether the trial court was right to order the Rescue Squad to distribute its assets to the County.
The appeal presented the novel question of whether a rescue squad can unilaterally protect itself from local government accountability by becoming a non-stock corporation.
The amicus brief pointed out the state law has, since 1970, authorized local governments to regulate and even dissolve volunteer rescue squads, and similar laws apply to volunteer fire companies. Rescue squads are funded in large part with donations from private individuals and local governments, sothe amicus brief argued that local governments need to have the ability to supervise, regulate, and, when necessary, dissolve rescue squads. State law has granted local governments those powers since 1970, and such laws affect rescue squads that existed before 1970 because the General Assembly has the power to affect existing corporations with new legislation designed to protect public health and safety.
* NO GUARANTEE OF RESULTS: Our prior results, including successful judgments and settlements, do not guarantee a similar outcome. Each case we handle is different and therefore we cannot guarantee any specific result in your case.
With a steady increase of reported COVID-19 infections, employers face increased risks regarding their employees’ safety. Risks include potential fines and other penalties from the Occupational Safety and Health Administration (OSHA) for violation of the OSHA Act.
Employers Have an Obligation
Under the OSHA Act, employers have an obligation to “furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.” https://www.osha.gov/laws-regs/oshact/section5-duties
Since many employees working outside of their homes often physically interact with other people, employers should take steps to limit their employees’ risk of infection. To help employers reduce the risk of worker exposure to COVID-19, OSHA recently issued Guidance on Preparing Workplaces for COVID-19. https://www.osha.gov/Publications/OSHA3990.pdf
Employers should review both OSHA and CDC guidance and follow recommended procedures, especially if their employees are in jobs classified as high or very high exposure risk. OSHA and CDC guidance discusses different steps employers may take to protect employees, including providing Personal Protective Equipment (PPE). The type of PPE that an employer will need to provide can vary based on the employee’s risk classification or occupation. For example, OSHA does not recommend PPE for workers in the lower exposure group, but workers in a very high risk group would likely need to wear gloves, a gown, face shield, and in some cases a respirator.
Employers face risks from COVID-19 beyond OSHA violations, as employees can bring lawsuits against their employers for claims including negligence and wrongful death. Since the start of the pandemic, employees have already begun filing claims against employers stemming from COVID-19, including lawsuits against retailer Walmart.
Employers should take actions recommended under OSHA and CDC guidance to minimize employee risks related to COVID-19. An employer’s failure to protect its employees can result in potential fines, lawsuits, or even imprisonment.
Please note that this summary is designed to provide general information, is not intended to constitute legal advice, and should not be utilized as a substitute for professional services in specific situations. If legal advice or other expert assistance is required, please consult with an attorney.
should you do to best protect your business from litigation arising out of the
Stay up to date. The federal government is passing a significant number of new laws in response to the crisis, especially related to employment. Additionally, governors, administrative agencies, and courts are issuing orders changing how a business or individual can act, in light of public health concerns related to Covid-19. Some of these changes are intended to create new opportunities for businesses to keep operating without risking public health, but others create potential liability for businesses and individuals that don’t comply with the new laws and orders.
Document as much as possible. You may not remember in a year why you did something, even though it seemed very important at the time. Also keeping contemporaneous records helps protect your business against losing knowledge about an event because an employee leaves and helps protect against claims that someone in your organization is misremembering or lying about what happened. Most litigation does not take place until months or years after the event at issue and people rarely realize that something could turn into litigation at the time it is happening. Keeping clear, consistent, and detailed records can often either prevent litigation or allow it to be resolved more quickly and for less cost than if records are minimal.
Don’t overpromise. Whether dealing with customers, vendors, contractual partners, or employees the natural tendency is to try to make the other party happy or to emphasize the strengths and benefits of your product, service, or business. But when this natural salesmanship goes too far it often leads to litigation. When a party feels like they have been “lied” to, even if that was not your intention, they are less likely to be reasonable in finding a solution. Set reasonable expectations for both your business and those you deal with, especially in light of the known and likely future impacts of Covid-19.
Communicate clearly and document those communications. Businesses are often asked by their customers, vendors, contractual partners, or employees for things they have no obligation to provide, either because it is not called for under the contract or the law does not require it. This is especially true during an unusual or significant event like the Covid-19 crisis. In the interest of maintaining good relationships, many businesses will try to accommodate the request. Likewise, when ending or changing a relationship with vendors, contractual partners, or employee the instinct often is to soften the blow by being vague. While it is not necessary to be rude, communications should be clear and not leave room for the other side to come up with their own interpretation of what you meant. If you are going to try to do something, but may not be able to, you should be clear about that. Likewise, if you have a contract, make sure you are clear about if what is being discussed is or is not intended to modify the contract. If you do intend to modify the contract, make sure you review the contract and any amendment is done in accordance with its terms.
Who bears the risk if a contract can’t be fulfilled due to a Covid-19 hardship? It is important for businesses to review any existing contracts they believe could be affected by these disruptions. When reviewing your contracts consider these measures:
Identify the “choice of law” or “governing law” provision in the contract. Does the contract provide that a particular state’s laws will be used to interpret the agreement?
If there is a force majeure clause, review the language to see whether specific applicable terms are included. In general, Virginia courts will not allow more general “act of God” language to completely relieve a party of their contractual obligations unless the nonperformance was completely outside of the party’s control. Consider whether there are alternative means to perform contractual obligations or proactive steps that can be taken to minimize the potential consequences of a breach and/or default.
And make sure to comply with the contractual termsregarding notice requirements that have been provided to preserve your ability to invoke that clause
No force majeure clause? An agreement may contain a provision having the same effect as a force majeure clause without using those words. For example, a contract might contain a section called “Termination” or another catch-all provision that may list events that will allow nonperformance. If your contract does not contain such a clause, Virginia courts may still be willing to excuse non-performance or delay if it is impossible to perform or the whole purpose of the contract is frustrated.
Consider negotiating a written amendment to the contract to reflect a commercially reasonable resolution.
If you are entering into new contracts, keep in mind what you can actually accomplish and when you can accomplish your contractual obligations if there continue to be Covid-19 related impacts for the next several months or over the next year. You will likely not be able to use the Covid-19 impacts going on longer than expected to excuse performance for contracts entered into after the crisis started.
Act consistently and adopt well-developed legal strategies. Consider how your response may impact your long-term relationship with your contract partners. Also consider how taking different approaches depending on what side of the transaction you are on may impact your ability to defend your positions later on.
Vanderpool, Frostick & Nishanian, P.C. is pleased to announce Jonathan S. Gelber, Esq., formerly of Gelber & Associates, PLLC, has joined our firm.
Mr. Gelber comes to Vanderpool, Frostick, & Nishanian, P.C. as Of Counsel with over 35 years of experience and practice in collections and in civil litigation within the Commonwealth of Virginia. Mr. Gelber will focus his practice in the areas of litigation, collections, commercial law, civil defense matters, arbitration, and Guardian ad litem matters.
Many have considered Mr. Gelber a source and resource of practical advice and knowledge of the law in these areas. As an experienced attorney in the Northern Virginia area, Mr. Gelber has taught Continuing Legal Education courses for lawyers, lectured at the annual meetings of the Virginia Creditors Bar Association and other organizations, is a Guardian ad Litem for Incapacitated Adults in both Arlington and Fairfax counties, and has been a member of the Arlington County Judicial Bar Selection Committee in the past. Mr. Gelber has also been a member of the Virginia State Bar Fourth District Subcommittee, Section 1, which meets to hear cases regarding attorneys charged with various acts by the Virginia State Bar.
The firm of Vanderpool, Frostick, & Nishanian, P.C. is honored to have Mr. Gelber in-house and available to its clients. Mr. Gelber is excited about the prospect of practice with Vanderpool, Frostick & Nishanian, P.C., and anticipates the ability to serve an even broader range of clients.
About Vanderpool, Frostick & Nishanian, P.C.
Vanderpool, Frostick & Nishanian, P.C. is a law firm located in Manassas, VA. Established in 1986, we have served clients for over 30 years in business law, commercial real estate, litigation, lending, IP, employment law, land use and zoning, municipal law and criminal defense.
To learn more about Vanderpool, Frostick & Nishanian, P.C., visit our about us page.
Vanderpool, Frostick & Nishanian, P.C. is proud to announce that six of its attorneys have been recognized by the Virginia Business Magazine as being among Virginia’s “Legal Elite” within their various practice categories. All of the attorneys named have been nominated as Legal Elite in the past and we’re extremely honored to celebrate their continued success and exceptional work!