April 2021 West Virginia HR Legal Updates

West Virginia Enacts Worker Classification Legislation.

Update Applicable to:
All West Virginia employers.

What happened?
Passed on March 19, 2021, Governor Justice signed into law SB 272, which will go into effect on June 9, 2021.

What are the details?
The legislation provides standards for determining who is an employee and who is an independent contractor under certain West Virginia statutes.  The Act states, “clarity in a worker’s classification allows businesses to comply with applicable laws, provides workers with certainty as to their benefits and obligations, and minimizes unnecessary mistakes, litigation, risk, and legal exposure laws concerning worker’s compensation, … unemployment compensation, … Human Rights Act rights, and wage payment and collections.” The Act applies only to workers’ compensation, unemployment compensation benefits, Human Rights Act rights, and wage payment and collection provision of the West Virginia Code. The Act excludes on-demand drivers, which are governed by a different labor code.

The Act outlines specific standards for determining whether someone is an independent contractor.  Specifically, a person shall be classified as an independent contractor if there is a written contract between the principal and the individual that states the principal’s intent to engage the services of the person as an independent contractor and contains acknowledgments that the person understands: (1) they are providing services as an independent contractor; (2) they will not be treated as an employee; (3) they will not be provided either workers’ compensation or unemployment benefits; (4) they are obligated to pay all applicable federal and state income taxes and that no tax withholdings from payments will be made by the principal; and (5) they are responsible for the majority of the supplies and other variable expenses incurred in connection with the contracted services unless the expenses are for non-local travel, the contract specifically provides for reimbursement, or they are commonly reimbursed under industry practice.

The Act further requires that to be classified as an independent contractor the person must file or be contractually obligated to file an income tax return regarding the fees earned from the work, or the person provides their services through a business entity and directly controls the manner and means by which the work is to be accomplished and the person satisfies three or more of the following nine criteria:

  1. the person has control over the amount of time personally spent providing services;
  2. the person has control over where the services are performed;
  3. the person is not required to work exclusively for one principal;
  4. the person is free to exercise independent initiative in soliciting others to purchase their services;
  5. the person is free to hire employees or to contract with assistants to perform all or some of the work;
  6. the person cannot be required to perform additional services without a new or modified contract;
  7. the person obtains a license or other permission from the principal to utilize any workspace of the principal to perform the work;
  8. the principal has been subject to an employment audit by the IRS and the IRS has not reclassified the person to be an employee; or
  9. the person is responsible for maintaining and bearing all costs of any required business licenses, insurance, certification, or permits required to perform the work.

The Senate bill can be found here.

What do employers need to do?
West Virginia employers should consult with their employment attorney should they consider changing an employee’s status due to the passage of this bill. Otherwise, employers should review employee and contractor workplace practices and responsibilities to ensure they are in line with the state’s definition of the worker status. 

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West Virginia Passes COVID-19 Liability Shield

Update Applicable to:
All employers operating within West Virginia.

What happened?
On March 19, 2021, Governor Justice signed legislation enacting Senate Bill 277, the COVID-19 Jobs Protection Act (“the Act”).

What are the details?
The new law provides that there is “no claim against any person, essential business, business, entity, health care facility, health care provider, first responder, or volunteer for loss, damage, physical injury, or death arising from COVID-19, COVID-19 care, or impacted care.” Under the Act, “arising from COVID-19” also includes, “implementing policies and procedures designed to prevent or minimize the spread of COVID-19.” The Act also protects those who design, manufacture, label, sell, distribute, or donate defined products in response to COVID-19, and those who repurposed businesses to provide household disinfectants, cleaning supplies, and personal protective equipment in response to COVID-19.

The Act does not, however, protect from liability to a person who had knowledge of a defect in the product and “acted with conscious, reckless, and outrageous indifference to a substantial and unnecessary risk that the product would cause serious injury to others; or acted with actual malice.”  Any claim made under this exception must be brought within one year of the date of injury.

Senate Bill 277 can be found here.

What do employers need to do?
West Virginia employers should continue to follow the guidance of the applicable regulatory agencies to take advantage of the protection afforded by this legislation.