Virginia Supreme Court hears dispute over sovereign immunity and state-employee overtime claims

The Virginia Supreme Court heard oral argument over whether sovereign immunity bars state employeesovertime suits created under a 2021 statute and later altered in 2022. Graham K. Bryant, counsel for the Commonwealth and the Virginia Department of Corrections, told the court that "two basic legal principles govern this interlocutory appeal: First, sovereign immunity is jurisdictional. And second, jurisdiction is determined at the time of filing." He urged the court to reverse the circuit courts denial of a plea in bar and remand for dismissal because the employees filed their complaint in 2024 when, he said, "the Virginia overtime wage act did not contain a waiver of the Commonwealth sovereign immunity."

Craig Kerwood, counsel for the state employees who work at a state prison, disputed that framing. He told the court the waiver has a substantive effect on the Commonwealths liabilities and that the legislature tied any waiver to particular claims under the 2021 act: "The waiver of sovereign immunity affects the purse strings of the Commonwealth," Kerwood said, arguing that the 2021 law created a set of claim rights that deserve a retroactivity analysis before they could be extinguished by later legislation.

Several justices pressed both sides on practical consequences. A questioner on the bench summarized the core issue as whether a later-enacted or reworked statutory waiver could "look back in time" so that courts would have had subject-matter jurisdiction for earlier filings. Another questioner emphasized the traditional description of sovereign immunity as "an immunity from suit" and expressed skepticism about importing retroactivity analysis into the courts power inquiry. Counsel on both sides pointed to precedent the court has used in related matters (including Schaeffer and decisions the parties cited) to frame whether waivers must be read with "exacting certitude" from legislative text.

The argument turned on two connected points: (1) whether sovereign immunity is purely jurisdictional (assessed at filing) or has a substantive component when the legislature defines specific claim rights, and (2) whether the 2022 amendment-and-reenactment of the overtime law showed the general assemblys intent to withdraw earlier waivers or instead created a distinct statutory scheme that leaves earlier claims governed by the law in effect when they were filed. Counsel debated whether the 2022 acts language reflected a prospective-only change or an explicit retroactive withdrawal of consent to be sued.

The bench also explored a hypothetical scenario the justices used to test the partiespositions: if an employee had filed on June 30, 2022, would the court retain jurisdiction the next day after a July 1 effective date? Bryant said that hypothetical would raise a different retroactivity argument; Kerwood said the narrow band of potentially preserved claims counsels in favor of treating some rights as vested under the 2021 scheme.

No final ruling was announced during the argument. The court took argument time limits into account, and counsel reserved rebuttal time where applicable. The case will return to the court for decision on whether the circuit court had subject-matter jurisdiction and whether the 2021 and 2022 statutes should be read to permit or bar these overtime claims.