LEHMAN V. UNITED BANK, INC.: WHAT CONSTITUTES A “LAY-OFF” UNDER THE WAGE PAYMENT AND COLLECTION ACT

The West Virginia Supreme Court of Appeals has just handed-down an opinion reviewing provisions of the Wage Payment and Collection Act (“WPCA”) that all employers will find interesting.  In Lehman v. United Bank, Inc., Number 101486, (November 10, 2011), the Court was faced with reviewing a Circuit Court’s dismissal of a case filed by two former United Bank employees who alleged that they were owed liquidated damages for failure to pay severance pay within the WPCA’s 72-hour window when the employees’ positions were eliminated as a result of a merger.

In analyzing this issue, the Court noted the various time limits prescribed by the WPCA for the final payment of wages.  Depending upon very specific circumstances, these range from a minimum of 72 hours from discharge to not later than the next regular payday when employee is laid-off or when an employee quits without giving at least one pay period’s notice of intention to quit.   In this case, the two Plaintiffs were employed by Premier Community Bankshares and their positions were eliminated as result of Premier’s merger with United Bank.  After the merger, their last day of work for United was on August 3, 2007, and they received their final payment for their last days of earned pay, unused vacation, bonus and an allotted “severance pay” on August 10, 2007 – what would have been their next regular pay day.

In an effort to avoid litigation, United actually paid both women liquidated damages for their regular earnings, vacation and a bonus payment.  United refused to pay any liquidated damages on the severance payments, asserting that the severance pay did not amount to wages subject to the WPCA 72 hour rule.  The two former employees filed lawsuits seeking to recover liquidated damages related to the severance pay.

Affirming the Circuit Court’s analysis, the Supreme Court of Appeals held that these two employees were “laid   off” as opposed to discharged.  The Court turned to Legislative Rules promulgated by the West Virginia Division of Labor and particularly W. Va. C.S.R. § 42-5-2.10 to hold that the term “laid off” under the WPCA is an “involuntary cessation of an employee for a reason not relating to the quality of the employee’s performance or other employee-related reason.”   Further, expressly rejecting the Plaintiff’s arguments that a lay-off should be limited to some type of temporary cessation of work, the Court held that “laid off” under the WPCA involves any situation involving a layoff to an employee, whether the lay-off is temporary or permanent in duration.”    In so doing, the Court affirmed that the two women were timely and fully compensated for all pay due within the WPCA requirements of “not later than the next regular payday.”

Jim Wright concentrates his practice in the area of complex and commercial litigation, particularly in the areas of energy, labor and employment and construction law as well as other business matters. He has also represented professionals before state licensure boards. During his career, he has tried numerous cases in state and federal courts throughout West Virginia and Ohio. He has also argued cases before the United States Court of Appeals for the Sixth Circuit, the West Virginia Supreme Court of Appeals and various appellate courts in the State of Ohio. Jim is a also a recognized leader in the profession, having served as a member of the West Virginia State Bar Board of Governors and currently serving as the State Bar’s Vice President.
 
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