Employers Who Fail to Pay Wages: Employee Private Right of Action
(Part Three of a Four-Part Series)
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) that 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.