Minimum Wage Increase in West Virginia Has Unexpected Consequences

While some see the boost in the minimum wage as good news for the West Virginia's lowest-paid workers, the new law is causing headaches for some employers and the Legislature.

Governor Earl Ray Tomblin signed House Bill 4283 on Tuesday that hikes the minimum wage to $8 an hour as of Jan. 1, 2015, and another 75 cents as of Jan.1 the next year. But the bill had some unintended consequences, as it struck language from the State Code that kept higher paid workers, as well as some municipal and county employees, from earning overtime.

Tomblin called for a special session of the Legislature in May to rectify that situation.

“I signed this bill because I believe it is a positive step toward helping more than 100,000 hardworking West Virginians earn a fair wage — including mothers, fathers, working adults, as well as teens working their first jobs,” Tomblin said. “In the last decade, the face of the minimum wage worker has changed while the minimum wage has stayed the same.

“However, I'm aware there may be some unintended consequences relating to overtime compensation and maximum hours worked, which give me great pause,” he added. “I will call the Legislature into extraordinary session during the May interims, beginning May 19, 2014, to address the issues of great concern to businesses large and small — including the fiscal challenges expected to affect our local governments.”

Senate President Jeff Kessler, D-Marshall, said those concerns can be taken care of in a brief special session before the bill's effective date of July 1.

According to Delegate Margaret Staggers, D-Fayette, the language was eliminated because of the effect on “managers” of convenience stores or fast-food restaurants, for example, who make minimum wage, but are considered exempt from earning overtime because of their elevated status.

Staggers said she favored the bill because it brings workers to an income level that may allow them to stop receiving state assistance.

“The dignity of work — not glamorous work — (is important),” Staggers said. “We all want people willing to work and make it possible for them to get by without taking a handout.”

She said she was not aware of the changes in State Code and no one brought concerns about overtime to her attention during discussions about the bill.

Likewise, Sen. Daniel Hall, D-Wyoming, voted in favor of the bill. And while Hall said he favored higher pay for state residents, he thought the Senate's version of the bill was better.

“I don't think we passed the right (bill),” Hall said.

Hall said the higher chamber's bill phased in the wage hike at 25-cent, 50-cent and 75-cent increments over three years instead of $1.50 in two years. He said that the gradual increase would give businesses more time to compensate for higher wages.

He said he wasn't aware of the overtime glitch until last week. But Hall said he suspects business leaders were aware of it and didn't raise concerns until after the session in hopes of a gubernatorial veto.

“I believe they knew there was a problem and didn't tell us,” he said.

The Senate's version of the bill also maintained language concerning overtime, Hall said, but the House of Delegates stood their ground on the last night of the session for their version of the bill, which passed in the House 89-5, and in the Senate 20-14.

Sen. Mike Green, D-Raleigh, voted against the measure because of that “11th-hour” push for a bill with which he didn't agree. Green said he “whole-heartedly” believes minimum wage workers should make more money; however, he said, the Senate Committee on Finance worked for its version of the bill for weeks, hearing from both business and labor proponents.

“I didn't like how it came across (from the House of Delegates) — 'take it or leave it,'” Green said.

One delegate was ready to “leave it” before it left the House.

Delegate Marty Gearheart, D-Mercer, said he voted against the bill because he was afraid of its ultimate bad effect on businesses and the resulting decrease in employment.

Gearheart said he finds it interesting that the governor is now interested in how the bill affects public entities, but wasn't concerned about how it would affect private employers.

Although he voted against the bill, he said he would vote in favor of the changes that will help with employers' overtime concerns.

West Virginia Chamber of Commerce President Steve Roberts said there are plenty of those concerns.

Roberts agreed with Hall that the Senate's version was a better bill because it kept those federal exemptions for overtime in place.

West Virginia will have the fifth-highest minimum wage in the nation, behind California, Washington, Oregon and Connecticut. Massachusetts will be tied with the Mountain State for fifth place, he said.

Including the State Chamber, about a dozen groups asked Tomblin to veto the bill, Roberts said, so “we could start from scratch.”

He called the House bill “draconian” for West Virginia businesses, although he said the chamber favors increased wages for state workers.

“Our goal is to see everyone in West Virginia earn more,” he said. “We're not opposed to an increase in the standard of living.”

But, he said, the bill goes too far.

“It's probably going to hurt consumers,” he said.

Most chamber members already pay their employees more than minimum wage, he said.

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