GOVERNMENT CONTRACTOR ALERT: NEW VIRGINIA EMPLOYMENT LAW

Attention federal contractors with operations in Virginia! There has been a sea change in Virginia employment law that greatly increases your exposure to lawsuits in Virginia state courts.

Read on…

Virginia has long been extremely protective of the at-will employment doctrine and (apart from narrow public policy exceptions) barred direct lawsuits by employees alleging that their termination or other adverse employment action constituted an impermissible reprisal on account of “whistleblowing” activities.

Whistleblower reprisal complaints were instead largely the business of federal agencies in the first instance – such as OSHA (which administers more than twenty whistleblower protection laws), or Offices of Inspector General within other federal agencies (pursuant to 10 U.S.C. § 2409) that the contractor does business with or is otherwise being inspected, investigated, or audited by.
I know many of you have had the unwelcome and costly experience of having your private employment decisions second-guessed in federal investigations that drag on for months or years.
Well, unfortunately things are about to get even more complicated and costly. Without any of the previously mentioned complaint channels going away, Virginia’s new comprehensive whistleblower protection law (codified as Va. Code § 40.1-27.3) will go into effect on July 1, 2020.

This law is the first of its kind in Virginia. It creates significant new risks and potential liabilities for Virginia’s employers. It is in certain respects much broader than the assurances given to contractor employees under federal law. Moreover, it creates a beeline for disgruntled employees into Virginia’s state court system, where claims are far less likely to be found wanting and dismissed before trial than they would be in the federal court system.

We expect to see a lot of cases filed under the new Virginia law in the coming years.

In brief, the new law prohibits an employer from discharging, disciplining, threatening, discriminating against, penalizing an employee, or taking other retaliatory action affecting an employee’s compensation, terms, conditions, location, or privileges of employment because the employee:

1. Or a person acting on behalf of the employee in good faith reports a violation of any federal or state law or regulation to a supervisor or to any governmental body or law-enforcement official;
2. Is requested by a governmental body or law-enforcement official to participate in an investigation, hearing, or inquiry;
3. Refuses to engage in a criminal act that would subject the employee to criminal liability;
4. Refuses an employer’s order to perform an action that violates any federal or state law or regulation and the employee informs the employer that the order is being refused for that reason; or
5. Provides information to, or testifying before, any governmental body or law-enforcement official conducting an investigation, hearing, or inquiry into any alleged violation by the employer of federal or state law or regulation.

The law does not:

1. Authorize an employee to make a disclosure of data otherwise protected by law or any legal privilege;
2. Permit an employee to make statements or disclosures knowing that they are false or that they are in reckless disregard of the truth; or
3. Permit disclosures that would violate federal or state law or diminish or impair the rights of any person to the continued protection of confidentiality of communications provided by common law.

A person alleging a violation of this new law may file suit in Virginia state court within one year of the employer’s allegedly prohibited action. Court ordered remedies may include:

1. an injunction to restrain continued violations;
2. reinstatement of the employee to the same position held before the retaliatory action or to an equivalent position; and
3. compensation for lost wages, benefits, and other remuneration, interest thereon, as well as reasonable attorney fees and costs.

Federal contractors in Virginia need to take a hard look at their existing HR policies and procedures, as well as their whistleblower protection and broader compliance programs, in order to mitigate these new risks. Contractors should also brace themselves for parallel proceedings where they are forced to concurrently defend their actions in state court and federal investigations.
Ward & Berry has extensive experience representing federal contractors in this chaotic intersection of legal and compliance issues: contractor ethics and compliance, governmental investigations, whistleblower retaliation claims, and trial practice in Virginia state courts. Give us a call if we can be of assistance. Getting things right the first time can save a lot of headaches and cost down the road.