State bill addresses payment deadline
A worker is fired. Should the worker receive a final paycheck within 72 hours, as state law currently requires?
Or should the business have the flexibility of waiting until the next regular payday to issue the final check?
That's the debate that has sprung up over legislation backed by Gov. Earl Ray Tomblin.
An employer in West Virginia must pay a fired employee his or her final check within 72 hours of dismissal or face legal penalties, according to state code that appears to have been in place since 1975.
That timeframe is a burden on business, Tomblin said during his State of the State address.
"Small businesses do not need the hassle of re-running payroll every time an employee moves on. Employers should be permitted more flexibility to pay these employees," Tomblin said.
Legislation introduced Friday in both the House and Senate on Tomblin's behalf would offer employers the option to deliver an employee's wages either within the 72-hour window or "no later than the next regular payday," explained Amy Shuler Goodwin, the governor's spokeswoman.
It's a change businesses need and a challenge most other states don't face, said Steve Roberts, president of the West Virginia Chamber of Commerce.
"We've been astonished that the Legislature didn't want to deal with this before," Roberts said Friday. "It's just another one of those red flags . . . why would West Virginia want to be this different?"
Many times, companies run their payroll departments from outside West Virginia. Logistically, it can be very difficult to get that money to a person in the current time window, Roberts said. The employee would be paid at the same time anyway, he argued. And the financial ramifications are hefty.
"If the employee is owed $1,000 and the business misses their 72-hour deadline, then the employee is owed $3,000," Roberts said.
That penalty goes up with every day that payment isn't made, he said.
Tom Crouser, who runs the Mink Shoals-based business consulting firm Crouser & Associates Inc., has seen the issue firsthand. Although he said there isn't a great deal of turnover in his company, he remembers a fired employee leaving town immediately after being terminated.
The person came back outside the 72-hour window and was paid, Crouser said. Then he sued Crouser, who had to pay the person another $5,000 in addition to legal fees.
"The way we do payroll these days, it's very difficult for any business to produce a check," Crouser added. "We're not usually working with our checkbook in our desk drawer."
Convenience stores or fast food chains might go through employees rapidly, making the timeframe even more of a hassle for them, Crouser added.
That's a misrepresentation that skews the issue in favor of businesses, said Donna Morgan, president of the West Virginia Public Workers Union.
On Friday afternoon, she said she had no idea Tomblin was advocating for a change or that a bill had been introduced that would take away the window. She was especially upset the governor supported such a measure after stating he wouldn't give state employees raises this year.
"The only thing the governor's concerned about is it's going to save him in preparation time for payroll," Morgan said. "They're not concerned about the person. It just makes it easier for the state."
Morgan agrees there's a problem with the 72-hour window: It's too much time. Given the anxiety and uncertainty that goes along with job loss, Morgan said a person needs that money to get by or find a different job.
A business typically doesn't fire people in droves, Morgan said, so she doesn't think cutting a check should be a big deal. She doubts it would be a problem to write a check, especially when leaders at a company know for some time they want to fire an employee.
"If you're being fired and you're being escorted out, you should have your paycheck in hand," Morgan said.
That money can be used to retain an attorney if an employee feels he or she was let go illegally, she added.
It's those lawsuits and lobbying with legislators that have kept the rule in effect, in Roberts' opinion.
"We think it's as simple as there's a whole sub-industry out there of plaintiffs' lawyers who troll for wage and hour collection cases, and they have had too much say at the Legislature," Roberts said.
Legislative leadership has agreed the Senate will discuss the bill first.