Understanding U.S. Virgin Islands Wage and Overtime Laws
The U.S. Virgin Islands does have certain labor laws that differ from the federal Fair Labor Standards Act (FLSA), including a requirement for payment of daily overtime. Whichever law (local or federal) is more favorable to the worker will apply. In most instances, however, U.S.V.I. law will cover issues involving overtime pay and minimum wage.
U.S. Virgin Islands minimum wage is $10.50 per hour and the federal minimum wage is $7.25 per hour. When the local minimum wage is higher than federal minimum wage, the higher local pay rate will apply. U.S. Virgin Islands’s Wage laws require that employees who work for tips must be compensated no less than $4.20 per hour in direct wages and receive at least $10.50 per hour with wages and tips combined. If tips are not sufficient to bring wages to minimum wage, the employer shall pay the difference to the tipped employee.
U.S. Virgin Islands labor laws regarding the payment of overtime are more favorable to workers that the federal overtime laws and require time and a-half the regular hourly rate be paid for all hours worked:
- Over 8 hours per day
- Over 40 hours per week
- Any hours on the sixth (6th) and/or seventh (7th) consecutive day
Tourist and Restaurant Industries Workers are paid:
- Overtime on the 6th and 7th day, only if 40 hours were first worked during the first five or six consecutive days.
- Overtime on the 7th consecutive day
- NOTE: In the tourism and Restaurant industries overtime is exempt on the 6th consecutive day providing 40 hours of work is not exceeded during said work week
The federal FLSA only requires employers to pay time and a-half for all hours worked over 40 per workweek, unless an employee is properly classified as exempt. For minimum wage workers in U.S. Virgin Islands, the overtime pay rate amounts to $15.75 per hour (1.5 x $10.50).
Which Employees are Entitled to Overtime Pay
Most workers in U.S. Virgin Islands are entitled to overtime pay when they work more than 40 hours per week. In certain circumstances, however, there are exemptions. Employees engaged in executive, administrative, or professional capacities (and paid at least $455 per week on a salary basis) are exempt from the overtime requirement. Note that new minimum salary requirements for these overtime exemptions that take effect in January 2020 and increase the minimum salary threshold to $684 per week (or $35,568 annually) will not likely apply to most workers in U.S. Virgin Islands when making the determination of whether they are classified as exempt or non-exempt from the overtime pay laws. The DOL believes that the U.S. territories face unique economic challenges and that an increase in the salary level affects them differently than the States, and to promote special salary level consistency across U.S. territories, the Department also set a special salary level of $455 per week for CNMI, Guam, and the U.S. Virgin Islands. Under the new overtime salary rules, employers may satisfy up to 10 percent of the special salary requirements ($45.50 per week for Puerto Rico, CNMI, Guam and the U.S. Virgin Islands, and $38 per week for American Samoa) with nondiscretionary bonuses, incentive payments, and commissions. Each pay period an employer must pay the exempt executive, administrative, or professional employee on a salary basis at least 90 percent ($409.50 per week for Puerto Rico, CNMI, Guam, and the U.S. Virgin Islands, and $342 for American Samoa) of the applicable special salary level. The remaining portion of the required special salary level (up to 10 percent) may be fulfilled through payment of nondiscretionary bonuses or incentive payments, so long as the payments are paid at least annually. Where larger bonuses are paid, however, the amount attributable toward the special salary level is limited to 10 percent of the required salary amount for the workweek. There is a special rule for highly compensated employees (HCE) who pass a minimal duties test. Under the new rule, to be exempt as an HCE, an employee must receive total annual compensation of at least $107,432 and must also receive at least the new standard salary amount of $684 per week on a salary or fee basis. The special salary levels that apply to CNMI, Guam, and the U.S. Virgin Islands do not apply to the HCE exemption.
Misclassification of Independent Contractors
Misclassification occurs when a business treats its workers as independent contractors (or subcontractors) rather than employees to avoid legal obligations such as social security taxes, worker’s compensation, unemployment insurance and overtime pay. While there are situations in which workers are legitimately running their own business and properly treated as independent contractors who are not entitled to receive overtime, employers are not allowed to mischaracterize employee roles to avoid paying overtime compensation. Merely labeling a worker as an independent contractor, or even entering into a written agreement, is not enough to avoid the labor laws on overtime pay. There are several factors to be considered in determining if a worker in U.S. Virgin Islands is an employee or independent contractor (a/k/a 1099 employee). Virgin Islands labor law states, in part, that independent contractors are not subject to the will and control of the employer and the employer does not have the right to control the manner or method of performance, although the results are controlled. Independent contractors hold themselves out as such and generally furnish materials as well as labor and use their own tools. If properly classified as an independent contractor under U.S. Virgin Islands law, workers are typically eligible for only the specific compensation bargained for in a contract.
An employer doesn’t violate overtime laws by requiring employees to work overtime, (ie “mandatory overtime”), as long as they are properly compensated at the premium rate required by law.
Meal and Rest Breaks
The U.S. Virgin Islands Wage and Hour Laws do provide that certain employees are eligible to receive mandatory meal and rest periods by their employers except as otherwise provided for in a written contract or contained in a collective bargaining agreement. An employee may voluntarily agree to forgo any rest period or meal period. The employer has the burden of proving the existence of the agreement with the employee. The federal Fair Labor Standards Act does not require that an employer give employees any mandatory rest breaks or meal breaks.
Statute of Limitations
U.S. Virgin Islands’s deadline for filing an overtime claim adheres to the FLSA, which requires those seeking to recover unpaid back overtime wages file a lawsuit within two years from the date of the employer’s wage violation. So, a lawsuit filed today would be able to seek recovery of back overtime for only the prior 2 (sometimes 3) years. As an example, suppose you believe that your employer has failed to pay you proper overtime wages since January 1, 2016. Waiting until June 1, 2019, to file your lawsuit means you are only allowed to seek unpaid wages from June 1, 2017, to June 1, 2019. The statute of limitations may be extended to three years if an employer’s violation of the FLSA was willful. An FLSA violation is deemed willful if the employer knew that its conduct was prohibited by the FLSA or showed reckless disregard.
Penalties for Violations
Under federal law, employers who fail to pay proper overtime wages may be liable for up to double the amount of unpaid back wages plus costs and attorney’s fees incurred by employees. These cases can be brought by overtime pay lawyers on a class or collective basis on behalf of all workers who were subjected to the same illegal pay practices.
Lore Law Firm is On Your Side
At the Lore Law Firm, we represent salaried, hourly, and day-rate workers in an array of employment litigation matters, including unpaid overtime compensation claims in U.S. Virgin Islands. Our attorneys, and the U.S. Virgin Islands overtime law attorneys we associate with, are passionate about protecting the rights of workers and have helped recover millions of dollars in unpaid overtime wages for our clients. Contact us for a free and confidential review of your situation.