Under current Virginia law, employees have a difficult time collecting wages that are improperly withheld. The costs of hiring a lawyer often outweigh the benefits of collecting the unpaid wages. The remedies presently available to a Virginia employee seeking to collect earned wages are (1) file a complaint with the Department of Labor; or 2) file a breach of contract lawsuit in state court.
The legal framework for unpaid wage claims may soon shift in favor of employees. On January 9, 2019, House Bills 1687 and 2524 were introduced into the Virginia General Assembly. Both bills would create a private right of action against an employer who fails to pay their employees’ earned wages. Further, in order to make it economically feasible for attorneys to take the employees’ cases, the bills provide that “the court shall award the employee, in addition to the amount of wages and prejudgment interest, the employee’s reasonable attorney fees and other costs” – if the employer is found to have withheld earned wages knowingly. In other words, if the bills pass, an employee could receive an attorneys’ fees award if she proves that her employer knowingly withheld her wages.
Additionally, if the employer willfully and with the intent to defraud “failed or refused to pay wages in accordance with this section, the court” can “award the employee, in addition to prejudgment interest and the employee’s reasonable attorney fees and other costs, an amount equal to three times the amount of wages due.” This language provides a defrauded employee with an option to receive an award of treble damages.
These bills have received bipartisan support. Further, proponents of these bills claim that it will incentivize lawyers to take employee compensation cases because reasonable attorneys’ fees could be paid if the cases are successful. Additionally, the new laws may ease the burden on the Department of Labor inspectors who investigate complaints about unpaid wages.
Opponents of the bills claim that these new laws would harm small businesses. They argue that the bills will force small businesses to fight off frivolous claims in court, resulting in incurrence of unwarranted and expensive legal fees. Yet proponents of the bills claim that businesses that operate within the bounds of the law have nothing to worry about.
As of the date of writing, House Bill 2524 has been referred to the House Committee for Courts of Justice, and House Bill 1687 was recommended to be laid on the table in the House Committee on Commerce and Labor.
Katie Lipp is a Partner at Berenzweig Leonard, LLP. Katie is a labor and employment attorney and litigator who focuses her practice on workplace legal exposure and employee separations. She can be reached at [email protected].
Law Clerk Tom Caulfield is a third -year law student at George Mason University School of Law.