Section 40.1-28.7:7 creates a private way for workers to directly sue employers for misclassified them as independent contractors instead of an employee. Virginia law will now assume that those who provide services for a fee are automatically considered employees. That is why the employer now has the burden of proving that a worker is rather qualified as a self-employed contractor in accordance with the IRS guidelines for self-employed contractors and 26 C.F.R. § 31.3121(d)-1. Sometimes an employer classifies workers as contractors instead of workers. In these cases, contract workers are responsible for paying their own payroll taxes, including federal and state income taxes and employers` and workers` share of social security taxes. In most cases, contractors are responsible for providing their own workers` compensation insurance and are not entitled to unemployment insurance when their services are no longer needed. Under Virginia law, a competition agreement is interpreted strictly against employers and deemed enforceable if the agreement as a whole is deemed appropriate. The courts require that competition agreements be as narrow as possible in order to protect the vital interests of the employer while allowing a former worker to pursue a career. A non-competition clause is applied when the agreement is closely adapted to the protection of the employer`s legitimate commercial interests; (2) that the agreement does not overburden the worker`s ability to earn a living and (3) that the agreement is appropriate from the point of view of public policy.
The employer bears the burden of proof of these factors. In determining whether an employer has met the burden of proof of these factors, the Tribunal considers the restriction function, the geographic scope of the restriction and the duration of the restriction. The Tribunal analyzes these aspects together and not as separate investigations. Although the competition bans are applicable in Virginia, they are considered unfavorable trade restrictions. In this context, the employer bears the burden of proof of any ambiguity in the agreement. In addition, the courts will interpret all ambiguities in the agreement in favour of the worker. If a provision in a presumption of competition agreement is more than a reasonable interpretation, a court will find it ambiguous. If a provision is clear, it is read according to its simple meaning. This new law makes it illegal to sign an agreement or a document that leads to a mischaracterization of a worker or that constitutes an imprecise relationship between the employer and the worker and prohibits any retaliatory measures against workers who exercise their rights in accordance with this section. In addition, the law creates a new remedy that allows Virginia workers to sue an employer for wrongly considering them independent contractors, with the potential for the worker to recover her attorney fees. If successful, these legal challenges transform the worker from an independent classification of subcontractors into a worker with full benefits.. .