"Legislature Fixes Flawed Minimum Wage Bill, Restoring Federal Overtime Exemptions"

By: Brian M. Peterson
Employment Law Alert
May 21, 2014

The West Virginia Legislature passed a bill in special session today, restoring a broad exemption that excludes most public and private employers from coverage under the state's overtime law.

On March 19, 2014, we alerted you to the unintended consequences of HB 4283, a bill that raised the minimum wage, but inadvertently eliminated a host of federal overtime exemptions. Today, both houses of the Legislature passed HB 201, which fixes the unintended overtime changes made by HB 4283.

The intent of HB 4283 was to increase the state's minimum wage to $8.00 per hour, effective January 1, 2015, and to $8.75 per hour effective January 1, 2016.  But a key amendment to the definition of "employer" under the state law had the unintended effect of making the state's antiquated overtime rules applicable to nearly every employer beginning June 6, 2014. The state's more generous overtime rules would have trumped the federal overtime rules, causing numerous federal overtime exemptions to be lost. Some employers estimated the lost overtime exemptions would have cost their organizations hundreds of thousands of dollars in additional payroll.  Upon signing the minimum wage bill on April 1, the Governor, Speaker of the House, and Senate President vowed to fix the unintended consequences of the bill before it could take effect.

True to their word, on May 19, the Legislature convened for a Second Special Session, and bills were introduced in both chambers to fix the problem. The bills restored the exemption language to the definition of "employer," but narrowed it so that it only exempts employers from the overtime provisions, not the minimum wage provisions. Once the bill is signed by the Governor, HB 201 will effectively place employers in the same position they were in prior to HB 4283 for overtime purposes. An employer will continue to remain exempt from the state's overtime law if 80 percent of his employees are subject to any federal act relating to maximum hours and overtime compensation, such as the federal Fair Labor Standards Act.

HB 201 also contains other clarifications regarding the state's minimum wage and training wage, and it delays the effective date of HB 4283 until January 1, 2015. The Governor is expected to sign the bill immediately.