Category Archives: Employment Agreements

Should Nurses Be Classified as Independent Contactors?

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The misclassification of nurses and nurse practitioners as “1099 employees” is drawing intense scrutiny in Virginia and across the country. For medical practices, staffing agencies, and facilities, classifying RNs, LPNs, or NPs who function like employees in day‑to‑day operations as contractors is exceedingly risky under both federal and Virginia law.

In Chavez‑DeRemer v. Medical Staffing of America, LLC d/b/a Steadfast Medical Staffing, the U.S. Court of Appeals for the Fourth Circuit recently affirmed a judgment against a Virginia‑based staffing company that had treated more than 1,000 nurses and nursing assistants as independent contractors. The Department of Labor’s investigation showed that the staffing company required the workers to complete an “employment” application, controlled their schedules and rates of pay, placed non‑compete restrictions on them, and provided liability and workers’ compensation coverage, all while paying them on a day‑rate basis without overtime.

Applying the familiar “economic realities” test, the Fourth Circuit agreed that the nurses were economically dependent on the staffing company.  The business exerted extensive control over their work; the nurses had minimal opportunity for profit or loss beyond working more hours; the nurses own capital investment was negligible; the relationship was ongoing rather than project‑based; and the nursing services were integral to the company’s business. The mere label of an “independent contractor agreement” did not defeat entitlement to overtime under the Fair Labor Standards Act.

Virginia has layered an additional level of protection on top of these federal standards under Va. Code § 40.1‑28.7:7, its worker‑misclassification statute. Virginia law creates a presumption that anyone paid to perform services is an employee of the payor unless the putative employer can prove independent‑contractor status under IRS guidelines, effectively shifting the burden of proof onto the practice or staffing agency that wants to classify a clinician as 1099. A misclassified worker can sue for lost wages, salary, benefits, plus reasonable attorney’s fees and costs.  Employers also may face additional exposure for unpaid taxes, workers’ compensation, and unemployment contributions.

For nurses and nurse practitioners working in Virginia, where the actual working relationship reflects employee‑like control and dependence, the law presumptively treats the clinician as an employee regardless of the employer’s efforts to shift “employee” expenses using a 1099 contract structure. To support legitimate independent‑contractor status, the clinician ideally would operate a real business with multiple clients, exercise meaningful control over when and how work is performed, bear some entrepreneurial risk, and avoid restraints that tether them to a single entity.

dsgordonlaw.com

Richmond Employment Lawyer

2025 Amendments to the Virginia Non-Compete Statute

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Effective July 1, 2025, Virginia will expand its restrictions on non-compete agreements, broadening the definition of employees protected from non-competition covenants. Under current law, Virginia Code § 40.1-28.7:8, employers already are prohibited from entering into or enforcing non-compete agreements with “low-wage employees,” defined as those earning less than the Commonwealth’s average weekly wage. This threshold figure adjusts annually and was set at $76,081 annually for 2025.


Under the statutory amendments (Senate Bill 1218), the new definition of “low-wage employee” now expands to include all employees classified as non-exempt under the Fair Labor Standards Act (FLSA), regardless of their earnings. Non-exempt employees typically are eligible for overtime. With the amendment, new non-compete agreements will be banned for any employee who does not qualify for an FLSA exemption (such as executive, administrative, professional, outside sales, or certain computer employees), even if they earn more than the average weekly wage. However, employees whose pay is primarily from sales commissions, incentives or bonuses remain excluded from the definition of “low-wage employee”.

Existing Non-Compete agreements in place prior to July 1, 2025 are not voided and still could be enforced if they meet other reasonableness tests. The law and these amendments do not prohibit nondisclosure agreements (NDAs) or agreements protecting trade secrets, confidential, or proprietary information, provided they do not function as de facto non-competes.

The NLRB’s Evolving Stance on Employment Noncompete Agreements

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The National Labor Relations Board (NLRB) has taken a clear stance on employment noncompete agreements, challenging their legality under the National Labor Relations Act (NLRA). The NLRB General Counsel’s memorandum, released in May 2023, asserts that such agreements infringe upon employees’ rights outlined in Section 7 of the Act. This development has far-reaching implications for both employers and employees, prompting a reevaluation of traditional employment practices.

The NLRB argues that overbroad non-compete agreements violate the NLRA by impinging on employees’ ability to exercise their Section 7 rights. These agreements, which traditionally aim to protect employers’ investments in employee training and intellectual property, are potentially unlawful when they restrict workers from engaging in collective action to improve working conditions. The memorandum specifically highlights instances where non-compete agreements hinder employees from seeking alternative employment, thereby limiting their bargaining power during labor disputes and undermining solidarity among workers.

The NLRB emphasizes that non-compete provisions are problematic when construed by employees as denying them the freedom to quit or change jobs, limiting their access to other employment opportunities commensurate with their skills and preferences. This denial of access has potential ripple effects, such as a weakened bargaining position during labor disputes and a loss of solidarity among workers.

The GC’s opinion is not currently settled law, but it is being implemented into NLRB policy. For example, a recent NLRB complaint alleges that a medical clinic violated the NLRA by imposing non-compete and non-solicitation provisions on employees, hindering their ability to engage in certain activities for 24 months post-employment termination. The NLRB now seeks to rescind these agreements.

Virginia’s New Law Limiting Nondisclosure Agreements Relating to Sexual Assault and Harassment

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In a significant move towards promoting transparency and accountability in the workplace, Virginia recently enacted Virginia Code § 40.1-28.01, which places limitations on employers’ use of nondisclosure and confidentiality agreements concerning claims of sexual assault and harassment. The statute provides that no employer shall require an employee or a prospective employee to execute or renew any provision in a nondisclosure or confidentiality agreement, including any provision relating to non-disparagement, that has the purpose or effect of concealing the details relating to a claim of sexual assault or a claim of sexual harassment as a condition of employment. Any such provision is against public policy and is void and unenforceable.

While the term “sexual assault” is not explicitly defined in the statute, the law specifically applies to claims arising under Virginia laws related to rape, forcible sodomy, aggravated sexual battery, and sexual battery. The statute defines sexual harassment as “unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when such conduct explicitly or implicitly affects an individual’s employment, unreasonably interferes with an individual’s work performance, or creates an intimidating, hostile, or offensive work environment.”

Crucially, the law is narrowly tailored to apply to applicants and current employees, arguably leaving room for nondisclosure or confidentiality agreements with former employees. This means that provisions commonly found in severance and settlement agreements, which are executed post-employment, will likely remain unaffected by this legislation.

Virginia Law to Strengthen Ban on Employment Contracts that Limit Disclosure of Sexual Harassment in the Workplace.

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Virginia code Section 40.1-28.01 currently prevents employers from using non-disclosure or confidentiality agreements to conceal the details of sexual assaults occurring in the workplace. As recently signed into law, the statute will be amended to include broader claims of sexual harassment. The modified statute also will void non-disparagement provisions that could be asserted to stifle free speech of victims of sexual assault or harassment. While “sexual assault” is already defined in various criminal statutes, the modified provision will apply the definition of “sexual harassment” found in Virginia Code Section 30-129.4, which states:

Sexual harassment” means unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when such conduct explicitly or implicitly affects an individual’s employment, unreasonably interferes with an individual’s work performance, or creates an intimidating, hostile, or offensive work environment.

The final version of the amendment does not go so far as to void provisions that limit the disclosure of other discrimination complaints.

Are Non-Competes Enforceable in Virginia?

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For years, companies have required that new employees sign covenants not to complete as a way blocking them from seeking work with competitors. If taken to an extreme, these provisions can substantially limit employment opportunities for workers in their chosen field within their own locality. As of 2020, Virginia law now protects “low wage” employees from being restricted in their future employment.

As defined by the statute, a “covenant not to compete” means a covenant or agreement, including a provision of a contract of employment, between an employer and employee that restrains, prohibits, or otherwise restricts an individual’s ability, following the termination of the individual’s employment, to compete with his former employer. the new lay strictly prohibits employers from requiring or enforcing non-competes for low wages employees and provides a private cause of action for violations.

A “low wage employee” means an employee whose average weekly earnings are less than the average weekly wage of the Commonwealth as determined pursuant to subsection B of § 65.2-500. In 2022, that number was set at $1,290 or $67,080 annually.

Not everyone is covered by the new law. Besides those who earn in excess of the threshold, the law does not cover persons whose earnings are derived primarily from sales commissions, incentives, or bonuses paid to the employee by the employer. The law also does not apply retroactively to persons who signed non-competes prior to 2020.

Virginia Statute Limits Certain Provisions in Confidentiality Agreements

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Virginia Code Section 40.1-28.01 was passed in 2019 to prohibit any provision in a nondisclosure or confidentiality agreement that has the purpose of concealing the details of a sexual assault. The new section is not retroactive, but it does ensure that employers will not be able to rely upon non-disclosure agreements to conceal sexual assaults occurring in the workplace. At present, the language is narrowly drafted to cover current and prospective employees only. Accordingly, confidentiality agreements executed by former employees in consideration for severance or settlement payments may not be covered by the statutory protection.

Can the NLRB outlaw confidentiality clauses in severance agreements?

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The National Labor Relations Board has reversed its prior precedent, holding that confidentiality and non-disparagement clauses in severance agreements for non-managerial employees can violate an employees basic right to discuss terms and conditions of employment under Section 7 of the National Labor Relations Act – even if the employee is not covered by a union. Though traditionally linked to union activity, Section 7 of the National Labor Relations Act guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” as well as the right “to refrain from any or all such activities.”

The new standard was set forth in McLaren v. Macomb, 372 NLRB 58, as issued in February 2023. The decision does not, on its face, outlaw all confidentiality provisions, but it does take issue with broad language that prohibits the employee from discussing the terms of the agreement with any third party. The Board reasoned that an absolute ban that prohibits employees from discussing the terms of the agreements with co-workers or union representatives could produce a chilling effect that would discourage employees from bringing charges before the Board, co-operating with Board investigations or assisting their co-workers who were subjected to unlawful actions. Note that the NLRB’s ruling generally does not pertain to Supervisory personnel who have general managerial authority such as the right to hire, discipline and fire employees.

Blue Penciling of Non-Competes in Virginia?

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Non-competition agreements, AKA non-competes, are presently enforceable in Virginia provided that they are drafted in terms that are reasonable with regard to duration, geography and scope.  [Update: Virginia law now limits non-competes to employees meeting higher wage thresholds. 2020]. When a non-compete is facially unreasonable because it is vague or overbroad with regard to one of those components, Virginia Courts will refuse to enforce the entire restrictive covenant.

Enter the concept of “Blue Penciling …  Blue Penciling is a practice where a Court can in effect redraft or “limit” unreasonable terms of an agreement in a manner that would make the agreement otherwise acceptable and enforceable.  Virginia Courts have never endorsed this practice, though it is permitted in other states.  As a result, Virginia employers typically do not get a second chance to reform an unreasonable agreement.

Enter the concept of “Choice of Law” …  Virginia law does permit contracting parties to elect or choose the law of the State that applies to their contract, provided that it does not offend Virginia public policy.   In the case of Edwards Moving and Rigging, Inc. v. W.O. Grubb Steel Erection, Inc., the Richmond U.S. District Court was presented with a non-competition agreement that stipulated to the application of Kentucky law – a State that does permit Blue Penciling.   While the Court was not asked to reform the agreement in the context of a 12(B)(6) Motion to Dismiss, it did hold that Kentucky’s Blue Penciling policies were not repugnant to the public policies of Virginia, thereby opening the possibility that a Virginia Court could consider Blue Penciling at a later stage in application of Kentucky law.