When Virginia workers are paid by the piece (per item produced) rather than by the hour, are they covered by the new Virginia Overtime Wage Act? How is their overtime calculated?

Subject

Pursuant to guidance issued by the Virginia Department of Labor and Industry (DOLI), piece-rate employees are covered by the Virginia Overtime Wage Act.

Plain-English summary

The Virginia Overtime Wage Act (Va. Code § 40.1-29.2) was enacted during the 2021 Special Session I to give Virginia workers a state-law overtime right that parallels (and in some respects exceeds) the federal Fair Labor Standards Act. The statute spells out how to compute the "regular rate" for two scenarios: hourly employees and salaried employees. It doesn't say anything about piece-rate workers (people paid per item produced, common in textiles, agriculture, garment work, and some manufacturing).

Senator Joe Morrissey asked the AG whether piece-rate workers are covered by the Virginia statute and, if so, how to calculate their overtime. The Department of Labor and Industry (DOLI) had already issued FAQ guidance on this exact question. The AG's role was to bless the DOLI position.

The AG endorsed DOLI's guidance. Piece-rate workers who exceed 40 hours in a week are entitled to overtime. Employers can use either of two methods:

1. Pay 1.5x the piece rate for every piece produced after the 40th hour.
2. Compute a regular hourly rate (total weekly earnings divided by total hours worked), then add a half-time premium on top of the piece-rate pay for hours worked beyond 40 (since the piece-rate already covered the base pay for those hours).

The regular rate has to come out at least at the Virginia minimum wage.

What this means for you

For piece-rate workers in Virginia

The opinion holds that piece-rate employees are covered by the Virginia Overtime Wage Act for hours over 40 in a workweek, even though the statute does not name piece-rate work. Under the DOLI guidance the opinion endorses, overtime is computed either as 1.5 times the piece rate for pieces produced after 40 hours, or by dividing total weekly earnings by total hours worked and adding a half-time premium for hours over 40.

For Virginia employers paying piece rates

The opinion holds that piece-rate employees are covered by the Act and that DOLI's two calculation methods (1.5 times the piece rate after 40 hours, or the weekly-average regular rate plus a half-time premium) are valid. It holds that DOLI's guidance is entitled to deference because DOLI administers Title 40.1 and the guidance is not clearly wrong, arbitrary, or capricious.

For HR and payroll administrators

The opinion holds that the regular-rate calculation for piece-rate workers tracks the methodology in FLSA § 207(g), which § 40.1-29.2(B) incorporates by reference.

For employment attorneys

The opinion forecloses the argument that Virginia's silence on piece-rate compensation excludes piece-rate workers from the Virginia Overtime Wage Act. The AG read § 40.1-29.2(B)'s reference to "amounts that are excluded from the regular rate by the federal Fair Labor Standards Act" as bringing in the FLSA methodology for compensation structures the Virginia statute does not list, including § 207(g) on piece rate.

Common questions

What is a piece-rate worker?
Someone paid per item or task completed, rather than by the hour. Common in garment manufacturing, agricultural harvesting, telemarketing, and some assembly work.

Does Virginia overtime law cover them?
Yes, per this AG opinion endorsing DOLI guidance. The statute didn't name them, but its general overtime framework applies, and the FLSA reference incorporated in § 40.1-29.2(B) brings the FLSA's piece-rate methodology with it.

How do you compute overtime for a piece-rate worker?
DOLI accepts two methods:

1. Pay 1.5x the piece rate for every piece produced after the 40th hour of work.
2. Compute the regular hourly rate (total weekly earnings divided by total hours worked), then pay a half-time premium on top of the piece rate for hours over 40.

What if my piece rate is below the Virginia minimum wage when converted to an hourly rate?
DOLI's guidance assumes the rate comes out above minimum wage. If your effective regular rate falls below the Virginia minimum wage, that's a separate violation independent of the overtime rules.

Is the Virginia Overtime Wage Act the same as the federal FLSA?
Closely related but not identical. Virginia incorporates much of the FLSA framework by reference, but Virginia's enforcement, damages, and statute of limitations are state-specific.

Why did the AG defer to DOLI's guidance?
"Attorneys General defer to the interpretations of the law by an agency charged with administering the law, unless the agency interpretation clearly is wrong" (citing the 2006 and 2002 AG opinions on agency deference).

Background and statutory framework

The Virginia Overtime Wage Act was enacted in 2021 Va. Acts ch. 445 (2021 Special Session I). It codified at § 40.1-29.2 a Virginia state-law overtime right. The statute lays out two regular-rate computation rules: for hourly employees, the hourly rate plus other non-overtime wages divided by total hours worked; for salaried employees, one-fortieth of all wages paid for that workweek. Piece-rate compensation is not addressed directly.

The statute, however, refers expressly to "amounts that are excluded from the regular rate by the federal Fair Labor Standards Act, 29 U.S.C. § 201 et seq., and its implementing regulations." That cross-reference brings federal methodology into the Virginia analysis. FLSA § 207(g) details the calculation for piece-rate compensation when overtime is due, and DOLI's FAQ guidance tracks § 207(g).

DOLI administers Title 40.1 under a delegation of authority from the General Assembly. Under the AG's standard deference rule, DOLI's interpretation controls unless it is clearly wrong. Here, DOLI's guidance matches FLSA's longstanding piece-rate methodology, so the AG endorsed it without modification.

Citations

• Va. Code § 2.2-505 (AG advisory opinions)
• Va. Code § 40.1-29.2 (Virginia Overtime Wage Act)
• 29 U.S.C. § 201 et seq. (Fair Labor Standards Act)
• 29 U.S.C. § 207 (FLSA overtime)
• 29 U.S.C. § 207(g) (FLSA piece-rate methodology)
• 2021 Va. Acts ch. 445 (Virginia Overtime Wage Act enactment)
• DOLI, FAQs - Virginia Overtime Law
• 2002 Op. Va. Att'y Gen. 186 (agency deference standard)
• 2006 Op. Va. Att'y Gen. 150 (agency deference standard)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: http://www.oag.state.va.us/files/Opinions/2021/21-046-Morrissey-Issued.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

COMMONWEALTH of VIRGINIA

Office of the Attorney General

Mark R. Herring
Attorney General
202 North Ninth Street
Richmond, Virginia 23219
804-786-2071
Fax 804-786-1991
Virginia Relay Services

December 17, 2021

The Honorable Joseph D. Morrissey
Member, Senate of Virginia
701 German School Road
Richmond, Virginia 23225

Dear Senator Morrissey:

I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issue Presented

You ask whether the Virginia Overtime Wage Act, § 40.1-29.2, impacts the calculation of overtime pay for employees compensated at "piece-rate" under 29 U.S.C. § 207(g).

Applicable Law and Discussion

The Virginia Overtime Wage Act was enacted during the 2021 Special Session I of the General Assembly. As relevant to your inquiry, subsection (B) provides:

For any hours worked by an employee in excess of 40 hours in any one workweek, an employer shall pay such employee an overtime premium at a rate not less than one and one-half times the employee's regular rate, pursuant to 29 U.S.C. § 207. An employee's regular rate shall be calculated as follows:

1. For employees paid on an hourly basis, the regular rate is the hourly rate of pay plus any other non-overtime wages paid or allocated for that workweek, excluding any amounts that are excluded from the regular rate by the federal Fair Labor Standards Act, 29 U.S.C. § 201 et seq., and its implementing regulations, divided by the total number of hours worked in that workweek.

2. For employees paid on a salary or other regular basis, the regular rate is one-fortieth of all wages paid for that workweek.

Your question concerns the calculation of overtime wages when an employee is compensated at a piece rate. Piece rate employees are not specifically provided for in the Virginia Overtime Wage Act, nor are they defined. However, the federal Fair Labor Standards Act (FLSA) provision referenced in § 40.1-29.2(B) details the calculations necessary for compensation of piece-rate employees when they work in excess of 40 hours during a work week.

The Virginia Department of Labor and Industry (DOLI) has issued guidance that directly addresses your question and is consistent with the provisions of 29 U.S.C. § 207(g) regarding piece-rate employees. DOLI advises that, under the Virginia Overtime Wage Act,

[a] piece-rate employee who works more than 40 hours in a week is entitled to overtime for all hours over 40. The regular rate for piece rate employees can be calculated two ways. They can be paid either one and one half times their piece rate for all pieces produced after 40 hours. The other option is their regular rate can be calculated by taking their total earnings for that week and dividing those earnings by the hours worked (similar to hourly employees). They shall then be paid an overtime premium of half the regular rate for all hours worked over 40. The piece rate compensation has already covered their base pay for those hours, assuming it results in a rate above the Virginia minimum wage.

Pursuant to a delegation of authority from the General Assembly, DOLI administers all aspects of Title 40.1, including the Virginia Overtime Wage Act. "Attorneys General defer to the interpretations of the law by an agency charged with administering the law, unless the agency interpretation clearly is wrong." In my opinion, DOLI's guidance gives appropriate steps to calculate overtime compensation for piece-rate employees and is not arbitrary or capricious nor is it an abuse of DOLI's delegated discretion.

Conclusion

Accordingly, it is my opinion that piece-rate employees are covered by the Virginia Overtime Wage Act, as explained by DOLI.

With kindest regards, I am,

Very truly yours,

Mark R. Herring
Attorney General