Highlights of Legislation Affecting WV Employers Enacted During the 2015 Regular Session
The 2015 Regular Session of the West Virginia Legislature produced substantial tort reform and other legislation significantly benefitting employers who conduct business in West Virginia. Assuming this legislation is signed into effect by Governor Earl Ray Tomblin, employers will be able to operate in a more efficient and predictable business environment. Moreover, this legislation will align West Virginia with a majority of other states on several important employment law matters. This publication highlights the legislation which will generally impact employers in all industries.
Revised Uniform Arbitration Act (Senate Bill 37)
Arbitration has become a much more common process for resolving employment disputes between employers and employees. Today, for instance, many employment contracts typically contain provisions requiring the parties to arbitrate their employment disputes. Likewise, some non-union employers conducting business in West Virginia have implemented Alternative Dispute Resolution (ADR) programs requiring at-will (non-contract) employees to resolve their employment-related claims through binding arbitration.
Adopted in 1926, West Virginia's Arbitration Act has not been amended since 1931, and has not kept pace with the movement to adopt the 1955 Uniform Arbitration Act or the more recent 2000 Revised Uniform Arbitration Act. With the passage of Senate Bill 37, West Virginia joins the 18 states that have already enacted the 2000 Revised Uniform Arbitration Act. This legislation creates a more modern and effective arbitration process.
Assuming Governor Tomblin signs this bill, the Revised Uniform Arbitration Act will control all agreements to arbitrate made on or after July 1, 2015, or agreements to arbitrate made prior to July 1, 2015, with the parties' consent.
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Prevailing Wage Bill (Senate Bill 361)
The "Prevailing Wage Bill" changes how West Virginia's prevailing wage rate is calculated and to which projects the rate applies. "Prevailing wages" must be paid to all workers who, on behalf of a public authority, are engaged in the construction of public improvement projects costing more than $500,000. Projects costing $500,000 or less are now exempt from using the prevailing wage. The prevailing wage rates were previously calculated by the Department of Labor and were based primarily on union wages. This new law now requires the prevailing wage to be calculated by WorkForce West Virginia, in coordination with economists at West Virginia University's Bureau of Business and Economic Research and Marshall University's Center for Business and Economic Research. These entities have until June 1 of this year to determine the methodology for annually calculating the prevailing wage, and they have until July 1 of this year to determine the prevailing wage that shall be in effect for the remainder of 2015. Each year, these entities shall determine the following year's prevailing hourly wage by September 30, and the methodology for computing the hourly wage will be re-evaluated every three years.
This bill has been signed into law by Governor Tomblin and will take effect on April 13, 2015.
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Wage Payment and Collection Act (Senate Bill 12 and Senate Bill 318)
Senate Bills 12 and 318 amend the Wage Payment and Collection Act by modifying the time periods for the payment of wages and the penalty for an untimely payment under the Act.
Senate Bill 12 affects the amount of time in which an employer may pay final wages to a separating employee. Under this bill, whenever an employee is discharged or resigns, the employer is required to pay the employee for work performed on or before the next regular payday. Prior to this bill, employers were required to pay discharged employees by the next regular payday or within four business days, whichever occurred first. Likewise, under the prior version of the Act, employers were required to pay employees all wages earned by the date of resignation if the employer received at least one pay period's written notice of an employee's intention to quit. By establishing a uniform time period, Senate Bill 12 removes the different time periods that previously existed for paying discharged employees and employees who quit or resign their employment.
Senate Bill 12 also reduces the amount of liquidated damages that must be paid to an employee when the employer does not pay final wages within the time limits required by the Act. If Senate Bill 12 becomes effective, an employer who does not pay an employee on time in accordance with this law will now be liable to the employee for two, instead of three, times the outstanding amount of wages due. Significantly, this bill also provides that liquidated damages are not available to employees who claim they were misclassified as exempt from overtime under state and federal wage and hour laws.
Senate Bill 318 requires every employer (with the exception of railroad companies) to pay its employees at least twice every month and with no more than 19 days between payments. This bill replaces the language in the old law, requiring employers to pay its employees once every two weeks.
Both Senate Bills 12 and 318 have completed legislation and are awaiting Governor Tomblin's signature.
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A Former Employee's Duty to Mitigate Damages in Employment Lawsuits (Senate Bill 344)
Peculiar to West Virginia's common law (judicially created law), a plaintiff pursuing back pay and front pay damages in employment lawsuits could obtain a jury award for such damages without a reduction for actual or potential income (i.e., mitigation) if the plaintiff was discharged with actual "malice." The malice concept is not defined by West Virginia courts, but such a finding nevertheless permits plaintiffs to obtain both unmitigated back pay and front pay damages. Furthermore, a recent decision by the West Virginia Supreme Court of Appeals allows a plaintiff to receive unmitigated back pay and front pay damages, along with punitive damages. This rule has created the unique situation in which a plaintiff pursuing a wrongful discharge claim in a West Virginia court could win not only punitive damages, but also front pay extending years, even decades, into the future with no obligation to mitigate the front pay award.
Senate Bill 344 corrects this situation by: (1) imposing an affirmative duty upon a plaintiff to act with reasonable diligence to mitigate past and future lost wages; (2) abolishing the "malice exception" to a plaintiff's duty to mitigate; (3) directing that any award of back or front pay by a commission, court or jury be reduced by the amount the plaintiff could have earned with reasonable diligence; (4) requiring trial courts to make a preliminary ruling on the appropriateness of front pay as an alternative remedy to reinstatement and, if the trial court concludes that front pay is the appropriate remedy, requiring the trial court, and not the jury, to determine the amount of the front pay award.
Senate Bill 344 has passed both houses and is expected to be signed into law by Governor Tomblin. Assuming the bill is signed by Governor Tomblin, it will take effect on June 8, 2015.
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Punitive Damages in Civil Actions (Senate Bill 421)
Punitive damages are an available form of relief to prevailing plaintiffs who assert various types of common law and statutory employment claims in civil actions filed in West Virginia courts. The amount of punitive damages that may be awarded by a jury can be significant and unpredictable.
Senate Bill 421 corrects this situation by modifying the standard of proof necessary to prove punitive damages and placing new limits on such damages in civil actions. Senate Bill 421 specifies that to merit an award of punitive damages, a plaintiff must establish by clear and convincing evidence that he or she suffered damages due to the defendant's conduct that was carried out with actual malice, or with a conscious, reckless, and outrageous indifference to the health, safety and welfare of others. The new section also permits defendants to request a bifurcation of the trial into two phases. The first phase would determine liability. If the jury finds against a defendant on the issue of liability, then the second, subsequent phase would allow a jury to consider whether to award punitive damages. Finally, the new section also caps the amount of punitive damages a jury may award at four times the amount of compensatory damages or $500,000, whichever amount is greater.
Senate Bill 421 has passed both houses and it is expected to be signed into law by Governor Tomblin. Assuming Governor Tomblin signs this bill, it will become effective 90 days from its passage on March 10, 2015.
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Amendments to "Deliberate Intent" Personal Injury Lawsuits Filed by Employees Against Employers (House Bill 2011)
Generally, employers who have workers' compensation coverage under the Workers' Compensation Act are immune from tort liability arising from an employee's on-the-job injury. However, the West Virginia Code contains a significant exception commonly referred to as the "deliberate intention" statute. Broadly, that statute permits a plaintiff to pursue damages beyond the amount of compensation benefits provided under the Act, if the plaintiff can prove that the employer acted with the deliberately formed intention to injure him or her. There are two specific ways a plaintiff can make that showing: (1) proving that the employer acted with the specific intent to injury the plaintiff; or (2) proving a five-part test.
Among other changes, House Bill 2011 tightens up the requirements for being able to prevail on a deliberate intent claim under the five-part test. The bill strengthens the "actual knowledge" requirement, clarifying that it may not be proven by constructive knowledge or by proof of what an employee's immediate supervisor or management personnel should have known of that specific unsafe working condition and the risk it posed had they exercised reasonable care. The bill also requires more stringent proof that a specific unsafe working condition violates commonly accepted or well-known safety standards or a state or federal safety statute, rule or regulation. Additionally, the bill also specifies three new methods by which a plaintiff may establish that he has suffered a "serious, compensable injury. "
House Bill 2011 has passed both houses and is expected to be signed into law by Governor Tomblin. Assuming Governor Tomblin signs this bill, the amendments will apply to all workplace injuries occurring on or after July 1, 2015.
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