Senate Bill 224-Eliminating Wage Payment Bonds for Some Employers
In 2017, the West Virginia (WV) Legislature proposed legislation eliminating the requirement for wage payment bonds for some employers. Instead, the Legislature passed a weakened WV Senate Bill 224, amending the Wage Payment and Collection Act to keep the wage bond requirement but shortening the period such bonds are required.
Understanding WV Senate Bill 224
What WV Senate Bill 224 Originally Aimed to Achieve
WV Senate Bill 224 originally sought to repeal § 21-5-14(a) of the WV Wage Payment and Collection Act, which required that "every employer, person, firm or corporation engaged in or about to engage in construction work, or the severance, production or transportation (excluding railroads and water transporters) of minerals" purchase a payment bond, payable to the State of West Virginia, to ensure the payment of wages and benefits to employees "when due." There was already an exception for employers who have been actively in business for at least five consecutive years. For those required to purchase the bond, the required bond amount would have been been based in part on "the total of employer's gross payroll for four weeks at full capacity or production," adjusted as the employer's payroll may increase or decrease if, with respect to any decrease, there are no "outstanding claims against the bond."
WV Wage Payment Bond Requirement Remains
In early 2017, the Legislature passed an amended version of WV Senate Bill 224. Instead of a repeal of wage bond requirements, the amendments to the WV Wage Payment and Collection Act merely shortened the time a WV wage bond would be required of those employers not exempt from the Act. But, as before, the Commissioner of Labor has the authority under §21-5-14(b) to waive the required bond altogether if the employer has "sufficient financial responsibility to pay wages and fringe benefits." The employer need not purchase a bond from a surety if the Commissioner of Labor approves other forms of security, including, but not limited to "collateral bonding..., letters of credit," etc. In addition to other rights of action for unpaid wages, employees who claim that they have not been paid wages and fringe benefits when due have a right to file a claim against the bond.
Criminal Sanctions Possible for Failure to Obtain a Wage Payment Bond
The amendments to the bond requirements did not impact sanctions for violations of the Act. Employers who fail to obtain the required bond are subject to criminal penalties and fines, which fall under §21-5-15. Prime contractors that subcontract out services within the construction or mineral severance, production or transportation industry also are required to notify the Commissioner of Labor of the identity of the subcontractors, the job site location and the principal business location.
Are You an Employer in Need of More Information on the WV Wage Payment and Collection Act?
If your company pays wages to employees in West Virginia, the amendments to the WV Wage Payment and Collection Act passed via WV Senate Bill 224 may have a significant impact on how you run your business. For help navigating the Act’s requirements, contact Charlotte Hoffman Norris, an experienced labor and employment attorney at Jenkins Fenstermaker, PLLC, by completing a contact form or use our toll-free number: 866.617.4736.