By Mark Grigoraci, Robinson & McElwee PLLC

Recent amendments to the West Virginia minimum wage law may have you questioning whether your employees must be paid the state or federal minimum wage.  Though it may seem fairly straightforward, making this determination is more difficult than you might think.  These points should help you navigate the relevant law.   

First, it is noted that the federal minimum wage law, the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., establishes the floor for minimum wage rates.  States are free to enact more generous minimum wage rates.  29 U.S.C. § 218; Pacific Merchant Shipping Ass’n v. Aubry, 918 F.2d 1409, 1422 (9^th Cir. 1990).  West Virginia is one of those states.  

On July 1, 2007, the state minimum wage increased from $5.85 to $6.55 per hour.  W. Va. Code § 21-5C-2(a)(2).  It increases to $7.25 per hour on July 1, 2008.  § 21-5C-2(a)(3).  Once the federal minimum wage equals or exceeds $7.25 per hour, the state minimum wage mimics the federal wage, as adjusted from time to time.  § 21-5C-2(a)(4).  In contrast, the federal minimum wage, as of July 24, 2007, is $5.85 per hour.  29 U.S.C. § 206(a)(1)(A).  This increases to $6.55 per hour on July 24, 2008.  § 206(a)(1)(B).  Exactly one year later, the federal minimum wage will be $7.25 per hour.  § 206(a)(1)(C).  So, which minimum wage applies to your employees? 

The phrase “subject to any federal act relating to minimum wage, maximum hours, and overtime compensation” is not defined by the statute; and the regulations promulgated by the West Virginia Division of Labor (WV DOL) fail to offer guidance.  The West Virginia Supreme Court has done a little better, hinting that an employer does not have to pay the state minimum wage if eighty percent of their employees are covered by or subject to FLSA.  See Haney v. County Comm’n of Preston County, 575 S.E.2d 434 (W. Va. 2002) and Adkins v. City of Huntington, 445 S.E.2d. 500 (W. Va. 1994).

In an apparent effort to resolve the confusion, the WV DOL states on its website that the West Virginia minimum wage law does not apply if: (1) an employer is engaged in interstate commerce and grosses more than $500,000 annually (the FLSA standard is $500,000 or more annually); or (2) at least eighty percent of an employer’s workforce is engaged in interstate commerce.  These categories are essentially a simplified version of the employers that are subject to FLSA.  Thus, the WV DOL’s position is that “subject to any federal act relating to minimum wage, maximum hours, and overtime compensation” means subject to the FLSA

Employers are subject to the FLSA in two general ways:  Enterprise coverage and individual coverage. 

Enterprise coverage refers to employees who are employed in an “enterprise” engaged in interstate commerce or involved in the production of goods for interstate commerce and the employer’s enterprise has yearly gross sales of at least $500,000.  29 U.S.C. §§ 206(a) and 203(s)(1)(A).  The following enterprises are subject to the FLSA, regardless of their gross annual sales:  (1) hospitals; (2) institutions that primarily care for elderly, sick, or mentally disabled individuals residing at the institution; (3) schools for gifted or physically disabled children; (4) elementary and secondary schools; (5) institutions of higher learning; and (6) government agencies. §§ 203(s)(1)(B) and (C).

An “enterprise” may include more than one business or establishment, so long as the businesses (1) conduct related activities (2) performed under unified operations or common control (3) for a common business purpose.  29 U.S.C. § 203(r)(1); Brock v. Hamad, 867 F.2d. 804, 806 (4^th Cir. 1989).  All three conditions must be met or there is no enterprise.  Griffin v. Daniel, 768 F. Supp. 532, 536 (W.D. Va. 1991).           

As noted above, employees may also be covered under the FLSA on an individual basis. Individual coverage applies to employees who, during any workweek, are engaged in interstate commerce or the production of goods for interstate commerce.  29 U.S.C. § 206(a).  The focus here is on the activities of the employee, not the employer’s business.  Mitchell v. Lublin, McGuaghy & Associates, 358 U.S. 207, 210 (1959).  In other words, the covered employees, not the employer for whom they work, must be engaged in interstate commerce or the production of goods for interstate commerce.  Examples include employees who work in communications or interstate transportation; those who conduct business across state lines by telephone, mail, facsimile, or e-mail; and those who drive motor vehicles across state lines, or handle, ship, or receive goods moving in interstate commerce.

Certain categories of employees, however, are expressly exempt from FLSA coverage.  These include executive, administrative, and professional employees; outside sales employees; and employees engaged in newspaper delivery.  These exempt employees should not be included when calculating whether at least eighty percent of an employer’s employees are covered by the FLSA. 

In summary, a West Virginia employer who has six or more employees must pay the state minimum wage unless at least eighty percent of its employees are covered by the FLSA, either through enterprise or individual coverage.

About the author: Mark Grigoraci is an associate in Robinson & McElwee's Labor & Employment department where his practice focuses primarily on the represenation and counseling of employers in matters relating to workers' compensation, federal black lung and labor and employment law. Mr. Grigoraci may be contacted by phone at (304) 347-8304 or by e-mail.