*Published by the West Virginia Chamber of Commerce; HR JOURNAL (SUMMER 2015)

By Constance H. Weber and William M. Swann
Kay Casto & Chaney PLLC

The West Virginia Wage Payment and Collection Act (“WPCA”) has historically been a steady source of revenue for trial attorneys. These entrepreneurial spirits would find clients recently separated from their employment, examine the manner in which the separated employee’s wages were paid and file suit if desired. At the time, the Act essentially required employers to cut the employee’s final paycheck at the time the employee separated from employment, regardless of the reason for separation in order to avoid penalties. Employment relationships end for a variety of reasons. The former WPCA sought to enrich certain employees and their attorneys for the ebb and flow of employment at the expense of uninformed employers. The WPCA was one of a myriad of contributions to the image that West Virginia is a “Judicial Hellhole.”

Some trial attorneys would use the WPCA in conjunction with the class action mechanism to enhance their awards. This tactic was a particular cause for concern for employers because it would aggregate the alleged errors and significantly increase penalties. Employers spent time meticulously tracking payroll and other benefits to make sure payments were timely made. Out of state employers could be at a particular disadvantage under the WPCA. Choice of law provisions created jurisdictional conundrums for businesses and their lawyers.

While benefiting select members of the bar, the WPCA was generally a headache for employers and those performing HR functions. As previously stated, the best practice under the old law was to cut an employee a check at the time of employment separation. Any delay in payment could run afoul of the strictures of the WPCA. The 2015 West Virginia Legislature sought to amend the more troublesome and punitive provisions of the WPCA in an effort to protect employers from needless lawsuits. The predictable (albeit lamentable) result of the amendments to the WPCA has been a push by many trial attorneys to have their clients file suit before the law goes into effect on June 11, 2015.

Why the rush to the courthouse? The changes to the WPCA alter existing law to require payment of a final paycheck, regardless of how the employee separates from an employer, on or before the next regular payday on which the wages are otherwise due and payable.  The prior version of the WPCA required an employer to pay a terminated employee all wages and benefits due within 72 hours of separation. (Aptly designated the “72 hour rule.”) If violated the employer could be liable to pay three times the amount due upon termination plus attorney’s fees. Hence, the attraction by trial lawyers.

The WPCA was thereafter amended to require payment within four days or the next payday, whichever was sooner.  The 2015 amendments trump the previous iterations of the WPCA because the WPCA now simply requires employers to pay separated employees by the next regular payday. The 2015 WPCA amendments also reduce the amount of liquidated damages from three to two times the amount due to the employee at the time of separation. It also allows the employee to request that final wages be delivered by mail.

The new WPCA clarifies that it does not apply to bonuses or other fringe benefits, an issue that was frequently litigated under the prior WPCA.  It also clarifies that it does not apply if to disputes involving overtime.  The new law specifies that liquidated damages are not available if the employee claims that the employee was misclassified under state or federal wage and hour laws.

There is no doubt that the amendments to the WPCA will help make West Virginia a kinder venue for businesses. The WPCA was an administrative nightmare for employers in that it sought to punish otherwise lawful conduct based on arbitrary cut-off dates and murky statutory provisions. Hopefully, the potential for fewer lawsuits based on unrealistic and truly unnecessary legal standards will incentivize economic growth throughout the state.

In sum, the WPCA reduces penalties on employers and encourages payment of a separated employee’s wages through the standard payroll process. The law encourages prompt payment of a separated employee’s wages by establishing firm, common-sense dates for payment. In the long run, the work performed by the 2015 West Virginia Legislature in reforming the WPCA and troublesome laws like it will only serve to benefit the overall business climate of West Virginia.

 

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