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Virginia the at Will State

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Submitted By rock311
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It is critical that social sector organizations familiarize themselves with relevant employment laws that affect their employees and their organizations. Often social sector organizations begin with like-minded persons informally coming together for the purpose of addressing a challenging social problem. However, regardless of the ties that bind those who work together on a social mission, the social sector organization must comply with applicable employment laws and implement relevant policies and procedures.

The following provides an overview of federal and Virginia employment laws that could apply to social sector organizations and their employees located in Virginia. This overview does not provide a complete and comprehensive analysis of all potentially applicable employment laws in Virginia and the United States and it should not be acted upon without specific legal advice based on particular a situation.

At Will Employment

The conventional relationship between an employer and an employee hired for an indefinite period of time is called “employment at will.” Under this arrangement and setting aside the potential applicability of a number of special laws, either the employer or the employee may terminate the employment relationship at any time, with or without cause, and with or without advance notice. In the absence of a written contract or other evidence indicating that an employee may be terminated only “for cause,” employment is generally presumed to be at will. Virginia common law has established the employment at will doctrine, allowing an employer to fire an employee for any reason as long as it does not violate public policy.

It is important to remember, however, that there are a number of special laws, both federal and state, that limit an employer’s unfettered right to terminate traditional “at will” employees. These laws, many of which are identified and discussed in the Federal Laws Regarding Employment and Other Virginia Specific Considerations sections, prevent employers from firing any employee, whether at will or not, for illegal reasons (e.g., discriminatory reasons, whistleblowing, or engaging in certain activities protected by law). In Virginia, there are three general exceptions to the employee at will doctrine: (1) a discharge of an employee for exercising a statutory created right; (2) a discharge for a reason contrary to a public policy explicitly expressed by statute; (3) and a discharge resulting from an employee’s refusal to engage in an illegal act.

Temporary Employment and Consulting Relationships

In addition to traditional at will employees or contract employees, many employers may use the services of temporary employees, independent contractors, or consultants (and employees of independent contractors or consultants).

When an employer hires an employee for a temporary period or for a season, the temporary employee is still an at will employee of the employer, and the relationship is governed by the same laws as those applicable to at will employees. As with permanent employees, legally mandated benefits, such as workers’ compensation insurance and unemployment insurance, must be offered to temporary employees. Optional benefits, such as 401(k) plans, need not be offered to temporary employees.

An independent contractor or consultant is not considered an employee of the employer. Instead, an individual independent contractor is self-employed, and payments made to the independent contractor are considered contract payments rather than wages. The U.S. Internal Revenue Service (“IRS”) and other governmental agencies have a variety of tests for determining whether a worker is an employee or an independent contractor, which, despite variations among the tests, tend to share the same primary factors. Essentially, workers who are performing the same job and performing under the same supervision as regular employees are usually deemed to be employees. Additional factors shared by the various tests include: the degree of control the employer exercises over the worker’s hours and manner of performance; whether the employer provides the worker’s tools and/or employee benefits (e.g., medical insurance, vacation pay); the length of service; and the method of payment (e.g., is the worker paid hourly or on a project basis). In Virginia, courts use the following factors to decide whether a worker is an employee or an independent contractor: 1) whether instructions have to be obeyed; and 2) whether either of the parties possesses the right to terminate services at will without incurring liability to the other.

The consequences of incorrectly classifying an employee as an independent contractor can be far-reaching and expensive (e.g., liability for unpaid payroll taxes and penalties, administrative claims for benefits provided to regular employees, liability for unpaid unemployment insurance and workers’ compensation premiums, increased exposure to governmental audits, and potential exposure to employment-related civil suits and administrative claims).

Employment Agreements

While it is not required or necessary to enter into an employment agreement with any employee, social sector organizations may wish to enter into written employment agreements with one or more key leaders. If an organization chooses to enter into an employment agreement with a particular employee, such agreements typically spell out the term of employment (even if it is “at will”), duties, compensation and circumstances under which the agreement may be terminated by either party. In addition, such agreements often contain provisions requiring key employees to keep information confidential even after they leave employment and barring them from becoming employed by certain competing organizations for a limited period of time following termination.

In Virginia, non-competition agreements will be upheld as long as the employer can demonstrate that (1) the restraint is not unreasonable in that it is not greater than necessary to protect some legitimate business interest; (2) the restraint is not unduly harsh and oppressive in curtailing the employee’s legitimate efforts to earn a livelihood; and (3) the restraint is reasonable from the standpoint of a sound public policy. When determining the reasonableness of a non-compete agreement, Virginia courts will consider 1) the duration of the restriction; 2) the geographic scope of the restriction; and 3) the breadth of activity being restricted.

The provisions of these agreements and whether any such agreement should be used should be discussed with an employment attorney before they are presented to an employee or prospective employee.

Although non-competition agreements have been considered to be methods of protecting confidentiality, Virginia courts have found that the enforceability of non-competition agreements and non-disclosure agreements do not necessarily have to be analyzed under the same standard. Federal Courts have interpreted Virginia law as indicating that non disclosure agreements will be analyzed under a higher standard than non-compete agreements, and in the event that the non-compete agreement is invalid, the non-disclosure agreement can be severed from the invalid non-compete agreement.

Outside of non-compete agreements, Virginia law prevents employers from willfully and maliciously preventing or attempting to prevent former employees from obtaining employment with another employer.

Government Contractors

A number of laws impose specific requirements on employers who contract with the government or a government-funded agency and on employers who receive grants or other funding from the government. These laws include special equal opportunity laws, affirmative action laws, prevailing wage laws, and drug-free workplace laws. The application of the laws depends on the value of the contract or funding and/or the number of employees in the company.

Employee Records

Under Virginia employment laws, an employer is either required to or should maintain the following records on each employee:

Working Hours for Minors-Under Virginia Code §40.1-81.1, every employer employing minors under sixteen years old must keep a time book or time cards showing the time that the minor begins and ends work each day and showing the amount of time that the minor has for a free-from-duty meal period. A record for the proceeding twelve months of the minor’s employment must be kept on the employer’s premises for three years from the date of the latest work period recorded for the minor.

Employee Access to Records-Private employers are not generally required to provide employees with access to or copies of their personnel records. However, public employees may have the right to greater access. A teacher challenging a recommendation of dismissal or probation shall be permitted to inspect his or her personnel file. Governmental employees or former employees requesting their own personnel files under Virginia’s Freedom of Information Act shall not be denied such privilege.

In general, under federal laws, an employer is either required to or should maintain the following records on each employee:

1 year – documents related to hiring, accommodations, promotions, discipline, and discharge, including: job applications, resumes, or any other form of employment inquiry whenever submitted in response to an advertisement or notice of job opening, including records pertaining to failure or refusal to hire any individual; records relating to promotion, demotion, transfer, selection for training or apprenticeship, layoff, recall, or discharge of any employee; job orders submitted to an employment agency or labor organization for recruitment of personnel; test papers completed by applicants or candidates for any position; results of any physical examination if such is considered in connection with a personnel action; advertisements or notices relating to job openings, promotions, training, or opportunities for overtime work; requests for reasonable accommodation for disability or religious observance and what accommodation, if any was granted. This will cover the limitations period of claims under Title VII of the Civil Rights Act of 1964 (“Title VII”), the Americans with Disabilities Act (“ADA”) and the Age Discrimination in Employment Act (“ADEA”). See the Federal Laws Regarding Employment section for summaries of these and other federal laws.

3 years – Payroll records listing employee’s full name, home address, date of birth, sex (for Equal Pay Act purposes), occupation/job title, time of day and day of week on which workweek begins, regular rate of pay, the basis for determining regular rate of pay (including any payments excluded from the regular rate of pay), straight-time earnings, overtime premium earnings, additions/subtractions from wages for each pay period, total wages for each pay period, and date of payment and pay period covered by each payment. This is for claims under the ADEA and Fair Labor Standards Act (“FLSA”).

2 years – Supplementary payroll records such as basic time sheets or production records that contain the daily starting and stopping times of individual employees and/or amount produced that day, wage rate tables for computing piece rates or other rates used in computing straight-time earnings, wages, salary, or overtime, and any records needed to explain the wage rate differential based on sex within the establishment (e.g., production, seniority, or other bona fide business criteria). Such information may be necessary in responding to claims under the FLSA, including the Equal Pay Act.

1 year after plan terminates – Employee benefit plan records including: pension plans, insurance plans, seniority systems, merit systems. This includes benefit plans covered by ERISA as well as set plans for advancement, layoff, or reinstatement based on seniority, merit, or some other formula which will be pertinent to either an issue under a collective bargaining agreement or claims of age or other discrimination.

3 years – Records related to qualified family and medical leave including: basic payroll and employee data (used to determine qualification for protection under the Family and Medical Leave Act (“FMLA”), dates and hours FMLA leave is taken, hours worked in 12 months prior to start of leave, copies of employee notices furnished to employer, copies of notices provided to employee of rights and responsibilities under FMLA, employer polices applicable to use of family and medical leave, documents verifying premium payments of employee benefits (both employer paid and employee portion of premium), records of any disputes with employees over use of FMLA leave. These documents will assist in supporting compliance with FMLA.

30 years – Records of employee exposure to toxic substances. Such records are required by the Occupational Safety and Health Act (“OSHA”).

5 years – Occupational illness or injury records. These records, required by OSHA, should be kept for 5 years after the year in which the injury was sustained or treatment ended, whichever is longer.

3 years or 1 year after termination – I-9 Employment Eligibility Verification Form. These forms must be kept for a minimum of 3 years or 1 year after the employee’s employment ends, whichever is longer.

4 years – Tax records related to income tax withholdings. This is required by the Federal Insurance Contribution Act and the Federal Unemployment Tax Act.

At a minimum, social sector organizations should maintain one or more personnel files for each employee, containing any offer letters and agreements signed by the employee, required wage and hour records, records regarding promotion, additional compensation, termination, disciplinary action, and any documents used to determine the employee’s qualifications for employment. Medical records, immigration information, and other confidential documents, such as reference checks and investigative files for harassment claims, should be kept separately from an employee’s regular personnel file and should be kept confidential.

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