With the West Virginia Legislature’s 2021 Regular Session recently concluded, the team at Bowles Rice LLP is analyzing the potential impact of some of this year’s more notable pieces of legislation.
In all, the Legislature passed 282 bills during the 60-day regular session. Governor Jim Justice signed a total of 280 bills while allowing another two to become law without his signature. Governor Justice ultimately vetoed only one bill for technical reasons, which was fixed during the regular session before being passed by the Legislature and signed into law by the Governor.
Today’s State of Affairs blog focuses on three pieces of legislation in the labor and employment area, two of which were signed by the Governor (Senate Bills 272 and 277) and the other (Senate Bill 11) which became law without the Governor’s signature.
Senate Bill 272 – Relating to the WV Employment Law Workers Classification Act
Senate Bill 272, the West Virginia Employment Law Workers Classification Act (“SB 272”), becomes effective June 9, 2021 and is meant to provide clarity in determining who is an employee and who is an independent contractor for purposes of four areas of state employment law: workers’ compensation, unemployment compensation, the Human Rights Act, and the Wage Payment and Collection Act.
Historically, the legal standards used to differentiate between employees and independent contractors have differed depending on the area of law in question. These standards were confusing and sometimes led to a worker being classified as an independent contractor under one law while also being classified as an employee under others. With SB 272, the Legislature sought to bring uniformity and certainty to how workers are classified for purposes of these four specific areas of state employment law.
If a worker meets the four requirements set forth in SB 272, the worker can be classified as an independent contractor. First, the worker must have signed a contract that acknowledges the principal’s intent to hire an independent contractor. That contract must acknowledge:
- the worker’s understanding that he or she provides services as an independent contractor;
- the worker will not be treated as an employee;
- the worker will not be provided workers’ compensation or unemployment compensation benefits;
- the worker will be obliged to pay his or her applicable federal and state taxes; and
- the worker is responsible for the majority of his or her supplies and expenses.
Second, the worker must either: (a) file, or be contractually required to file, in regard to the fees earned from the work, tax returns for a business or for self-employment earnings; or (b) provide his or her services through a business entity such as an LLC, partnership, or corporation, or through a sole proprietorship registered with a “doing business as” name as required under state or local law.
Third, except as necessary to comply with government or other regulatory requirements, to protect persons or property, or to protect a franchise brand, the worker must actually and directly control the manner and means by which the work is accomplished. This requirement is met even if the worker is required to use certain safety equipment, or if the principal provides legally required training or provides orientation, information, guidance, or other suggestions about its business, services, customers, or operating systems.
Finally, the worker must meet at least three of the following requirements:
- except for an agreement as to a final completion or delivery deadline, range of work hours (or if the work is for entertainment, the time the entertainment is to be presented), the worker controls the amount of time spent providing services;
- except for services that can only be performed at specific locations, the worker controls the location where services are performed;
- the worker may work for more than one principal unless prohibited by law or by a license or permit required to perform the work;
- the worker may solicit others to purchase services;
- the worker may hire others to perform some or all of the work;
- the worker cannot be required to perform additional services without a new or modified contract;
- the worker obtains a license to utilize the principal’s workspace;
- the worker has not been reclassified by the IRS as an employee in an employment audit; or
- the worker maintains and bears the costs of any licenses or certification required to perform the services.
SB 272 also provides that anyone who meets the definition of a “direct seller” under Section 3508(b)(2) of the Internal Revenue Code may also be classified as an independent contractor.
Notably, the classification test set forth in SB 272 will not apply in other areas of law, such as for determining independent contractor status when the issue is vicarious liability to a third party in tort. SB 272 also does not change how workers are classified under federal laws, such as the Internal Revenue Code. Additionally, SB 272 has no application regarding drivers provided by transportation network companies, such as Uber or Lyft. It is important to emphasize the determination of employee and independent contractor status as defined in SB 272 is strictly for purposes of four areas of state employment law: workers’ compensation, unemployment compensation, the Human Rights Act, and the Wage Payment and Collection Act.
Senate Bill 277 – CREATING COVID-19 JOBS PROTECTION ACT
The purpose of the COVID-19 Jobs Protection Act (“SB 277”) is to broadly eliminate most liability arising from the COVID-19 pandemic, including that of individuals, health care providers, health care facilities, institutions of higher education, businesses, and manufacturers. Extending retroactively to January 1, 2020, SB 277 precludes nearly all suits and claims arising from COVID-19. A concurrent purpose is to provide assurances to businesses that reopening will not expose them to liability for a person’s exposure to COVID-19.
SB 277 offers wide-scale protection from liability for nearly all businesses and individuals. Except as provided in SB 277, there is no claim for loss, damage, physical injury, or death arising from COVID-19 or from healthcare related to COVID-19 care. Even if a person’s health care was impacted through the delaying or changing of an unrelated procedure due to COVID-19, there is still no claim for the affected patient. The only exceptions recognized under SB 277 are for knowingly distributing defective products for use in responding to COVID-19, or for engaging in intentional conduct with actual malice. Through these measures, SB 277 recognizes the gravity and suddenness of the COVID-19 pandemic and the importance of an expansive “blanket” protection for businesses and workers.
SB 277 explicitly limits employees to workers’ compensation as the only remedy for a work-related injury, disease, or death caused by or arising from COVID-19, unless the employee can prove “deliberate intention” under West Virginia Code § 23-4-2.
Senate Bill 11 – Declaring work stoppage or strike by a public employee to be unlawful
Senate Bill 11 ("SB11"), effective June 2, 2021, creates express legislation that prohibits a work stoppage or strike by a public employee. Specifically, SB11 declares a strike by public school teachers to be unlawful.
An employee of a county board of education is considered to be participating in a concerted work stoppage or strike if, on any day during a concerted work stoppage or interruption of operations, the public employee:
- does not report to work as required by their contract;
- is not on leave as specifically permitted by any West Virginia Code provision, except that personal leave may not be used in connection with a work stoppage or strike; and
- is not otherwise prevented from reporting to work based on circumstances beyond the employee’s control and unrelated to their participation in the ongoing stoppage or strike.
Moreover, participation in a concerted work stoppage or strike is a ground for terminating an employee’s contract. If not terminated, the employee must forfeit their prorated pay for each day they participated in the stoppage or strike. Further, this bill does not allow the use of accrued and equivalent instructional time and the delivery of instruction through alternative methods to cancel days due to concerted work stoppages and strikes.
The passage of SB11 was a response, in large part, to the collective teachers’ strike of 2018. The Legislature cited the serious disruption to the thorough and efficient system of free schools as the basis for this legislation.
In the coming weeks, the Bowles Rice State of Affairs blog will review additional pieces of legislation and analyze their impact for businesses and individuals alike. In the meantime, the Bowles Rice Labor and Employment and Government Relations groups are heavily involved in both the employment and legislative processes and stand ready and willing to assist clients with any questions they may have as new legislation becomes effective.
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