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New state law on overtime wages causing headaches, proving costly for municipalities
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New state law on overtime wages causing headaches, proving costly for municipalities

DOLI

A new state law regarding overtime is causing confusion and concern for local governments across Virginia.—

The Virginia Overtime Wage Act went into effect July 1, and it was presented as a change allowing workers to pursue overtime claims against their employers in state court instead of federal court.

But in June local governments began to realize some issues with the changes, including that compensatory time, or “comp time,” was no longer included as an option to provide employees as compensation for overtime work instead of wages.

In a frequently asked questions page on its website, the state Department of Labor and Industry posted its interpretation of the law, stating that employers cannot provide comp time instead of pay.

“Overtime wages must be paid in legal tender of the United States or checks or drafts on banks negotiable into cash on demand or upon acceptance at full value,” the department page says.

The Virginia Association of Counties surveyed its membership and found that if the DOLI interpretation were applied to those localities, there would be “a multimillion-dollar unbudgeted fiscal impact to county governments during Fiscal Year 2022,” Jeremy R. Bennett, director of intergovernmental affairs for VACo, said in an email.

“This could also impact the scheduling and wages of thousands of local government employees and impact the ability of local governments to deliver vital services and provide flexibility to their employees,” he said. “We have been in contact with the patron of the legislation to confirm that this was not the intent of the legislation, and have requested that the patron and the administration seek to rectify this unintended consequence during the upcoming special session.”

The comp time concerns could be addressed in budget language amendments that will come before the General Assembly during its special session that began Monday.

A budget bill filed Friday afternoon added language clarifying that for the purposes of the Virginia Overtime Wage Act, the terms “wages” and “pay” also would mean overtime compensatory time in lieu of wages for overtime pay by public agencies.

In Accomack County, officials said the elimination of comp time could cost the county an estimated $241,000, and recommended that the county consider a new revenue source to cover the costs.

At a board meeting in June, County Administrator Michael Mason said some have said the solution is simple — don’t allow overtime.

“Certainly careful and frequent management of employee time is part of the solution, but adopting county policy essentially banning overtime — it’s not a practical solution in a small government with a lean amount of staff. Simply put, we rely on our employees to work hours in excess of their regular schedule in order to accomplish the strategic goals identified by the board, some of which were mandated upon you,” Mason said, pointing to early voting requirements.

Some localities, such as Albemarle County, aren’t seeing as big of a financial impact from the comp time changes. Albemarle CFO Nelsie Birch said the elimination of comp time will cost county government about $75,000 and the school division about $77,000 based on prior years.

“When you’re at that level, it’s a budget management exercise and so we’ll look and monitor and make sure that that doesn’t cause any issue, but I am comfortable that both budgets can support just monitoring it and changing our behavior a little bit in terms of authorization of overtime,” she said.

However, Albemarle is experiencing some effects from the law’s change in how overtime must be calculated.

“We’re completely revamping our pay practices and our pay policies over the next six months,” Birch said. “Starting next January, we’re going to have a completely different approach — it’s much more in line with best practices and it will be much easier to implement these things.”

Currently, the base pay rates of non-exempt employees are not entered in the county’s time and attendance system.

As a result of the new law, Louisa County has decided to suspend a longtime practice of allowing employees of the county’s fire and EMS to volunteer with Louisa’s volunteer fire and EMS stations in their off time.

“The ordinance does not preclude people from volunteering; it puts the county in a position of liability for up to three years of back overtime pay,” Supervisor Toni Williams said at a board meeting in June. “The county and the county residents could potentially have a three-year look back period for unpaid work, aka volunteering, at the overtime rate.”

The board passed a resolution asking the county attorney to ask for an opinion from state Attorney General Mark Herring regarding the changes, how the amendments apply to Louisa and if it’s possible for the county to get written waivers from fire and EMS employees so it could reinstitute the practice of allowing them to volunteer.

Supervisor Duane Adams said this was an issue of unintended consequences.

“Our friends in Richmond did not realize all the consequences of some of the legislation that they passed,” he said. “I think this action we’re taking this evening by trying to get the attorney general’s opinion will continue to strengthen the volunteer and career blended staff that we have in fire and EMS, which is what we all want to see. … Right now, it’s a very bad situation, so I hope we can get it resolved.”

Board Chairman Bob Babyok said the county was trying to get clarification and “make the best of a bad situation.”

“Hopefully, we can get a waiver or some kind of allowance to not have to comply with this, what we call unfair, ridiculous rule,” he said.

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“I think we need to do some sort of analysis of what would happen if Crozet had a governmental system similar to what Scottsville has, where we would control our own planning for the future. I feel that the county is too big, it's too populous, it's too diverse to be effectively governed.”

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