WHEELING - Red flags are being raised over West Virginia's plan to raise the minimum wage, as lawyer Brian Peterson has pointed out what he believes are several flaws with the pending law that could cost businesses and taxpayers a substantial amount of additional overtime funding.
House Bill 4283, passed on the legislative session's final day, calls for an increase in the state's minimum wage from its current $7.25 per hour to $8 per hour in 2015, and $8.75 in 2016. The legislation currently is awaiting Gov. Earl Ray Tomblin's signature to become law.
But Peterson, a member of the Charleston-based Bowles Rice law firm, wrote in an employment law alert sent out by his firm that the legislation will do much more than raise the minimum wage; he predicts it will reshape how businesses and municipalities pay overtime to many of their employees.
"Most employers in West Virginia currently are not covered by the state's minimum wage and maximum hours law because 80 percent or more of their employees are covered by the federal Fair Labor Standards Act," Peterson said. "But, if Gov. Tomblin signs the new minimum wage bill into law, the 80-percent exemption will be eliminated, and all West Virginia employers with six or more employees will be required to comply with the state's minimum wage and overtime requirements" along with continuing to comply with the federal law.
Peterson said current state law on wages and overtime "lacks many of the exemptions" found in the federal law. He listed several professions where he believes state law would not grant an overtime exemption but the federal law does:
-- Computer professionals
-- Commissioned sales employees of retail/service establishments
-- Seasonal and recreational establishments, except summer camps and whitewater outfitters
-- Companions for the elderly
-- Employees that make $100,000 per year or more.
Municipalities also could be affected, he said.
"The state law also lacks many of the narrower, but important, exemptions such as the exemption for firefighters and law enforcement employees, which allows employers to calculate overtime on periods longer than a work week, and the similar exemption for hospitals and residential care facilities that allows so-called '8 and 80' overtime plans," he said. "Once the state bill is signed, all of these currently exempt workers will be entitled to overtime based on a 40-hour work week like everyone else."
One of the main problems, Peterson said, is that federal regulations were updated in 2004, while West Virginia's last received an update in 1982.
"Unlike the federal regulations, which consist of hundreds of pages of detailed guidance and interpretation on such things as tip pooling, fluctuating workweeks, deductions from pay for lost tools, etc., the state regulations consist of a 14-page set of rules last updated in 1982," he said. The new law would "require West Virginia employers to re-evaluate all of their exempt employees to ensure that they will remain exempt under state law."
The overtime changes, if signed into law by Tomblin, will take place June 6, he said, leaving businesses little time to prepare.
"This will require employers to review their classified and exempt employees, and it's just going to be a headache in terms of reviewing all (this) against another set of standards. ... Employers are going to have to look at this carefully and it may involve hiring an accountant or other outside professional help, and there's not a lot of time to do it," he said.
Senate President Jeff Kessler, D-Marshall, expressed concern with Peterson's findings, noting he wished the overtime matter had been brought to his attention during the session and not as the bill is awaiting the governor's signature.
Kessler said he would review the findings with his legislative team before discussing the matter with the governor.
"This is only one legal opinion, he may be presenting a worst-case scenario," Kessler said. "But it certainly does raise some issues that we have to take a look at, and I'm certain the governor's staff is looking at this as well."
When informed of the issue Thursday, Tomblin's office did not respond to a request for comment.
All Northern Panhandle senators and delegates voted for the minimum wage increase. Delegate Phil Diserio, D-Brooke, was one of the bill's sponsors. He did not immediately return messages seeking comment Thursday.
Editor's note: This story updates an earlier version that incorrectly stated the minimum wage increase would take place over three years. The increase will take place over two years.