H. B. 2025
(By Delegate Linch)
[Introduced February 12, 1997; referred to the
Committee on Finance then the Judiciary.]
A BILL to amend and reenact section five, article two, chapter twenty-three of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to workers'
compensation fund subscribers; requiring employers to pay
premium taxes and report gross wages paid to employees;
requiring premium deposits; providing for automatic
delinquency and default of employers failing to timely
perform specified duties; permitting reinstatement of
defaulting employers under certain conditions; requiring
defaulting employers to give notice to employees; and
imposing certain criminal and civil penalties.
Be it enacted by the Legislature of West Virginia:
That section five, article two, chapter twenty-three of the code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted to read as follows:
ARTICLE 2. EMPLOYERS AND EMPLOYEES SUBJECT TO CHAPTER;
EXTRATERRITORIAL COVERAGE.
§23-2-5. Application; payment of premium taxes; gross wages;
payroll report; deposits; delinquency; default; reinstatement; payment of benefits; notice to employees; criminal provisions; penalties.
(a) For the purpose of creating a workers' compensation
fund, each employer who is required to subscribe to the fund or
who elects to subscribe to the fund shall pay premium taxes
calculated as a percentage of the employer's gross wages payroll
at the rate determined by the workers' compensation division and
then in effect. At the time each employer subscribes to the
fund, the application required by the division shall be filed and
a premium deposit equal to the first quarter's estimated premium
tax payment shall be remitted. The minimum quarterly premium to
be paid by any employer shall be twenty-five dollars.
(1) Thereafter, premium taxes shall be paid quarterly on or
before the last day of the month following the end of the
quarter, and shall be the prescribed percentage of the entire
gross wages of all employees, from which net payroll is
calculated and paid, during the preceding quarter: Provided,
That the division may permit employers who shall qualify under
the provisions of rules to be promulgated and made effective on
or after the first day of July, one thousand nine hundred ninety-six, by the compensation programs performance council to
report gross wages and pay premium taxes at other intervals.
(2) At the time each premium is paid, every subscribing
employer shall make a gross wages payroll report to the division
for the preceding quarter. The report shall be on the form or
forms prescribed by the division, and shall contain all
information required by the division.
(3) After subscribing to the fund, each employer shall remit
with each gross wages payroll report and premium tax payment an
amount calculated to be sufficient to maintain a premium deposit
equal to the previous quarter's premium payment: Provided, That
the division may reduce the amount of the premium deposit
required from seasonal employers for those quarters during which
employment is significantly reduced. The premium deposit shall
be credited to the employer's account on the books of the
division and used to pay premiums and any other sums due the fund
when an employer becomes delinquent or in default as provided in
this article.
(4) All premium taxes and premium deposits required by this
article to be paid shall be paid by the employers to the
division, which shall maintain a record of all sums so received.
Any such sum mailed to the division shall be deemed to be
received on the date the envelope transmitting it is postmarked
by the United States postal service. All sums received by the division shall be deposited in the state treasury to the credit
of the workers' compensation division in the manner now
prescribed by law.
(5) The division may encourage employer efforts to create
and maintain safe workplaces, to encourage loss prevention
programs, and to encourage employer provided wellness programs,
through the normal operation of the experience rating formula,
seminars and other public presentations, the development of model
safety programs and other initiatives as may be determined by the
commissioner and the compensation programs performance council.
(b) Failure of an employer to timely pay premium taxes, to
timely file a payroll report, or to maintain an adequate premium
deposit, shall automatically cause the employer's account to
become delinquent and in default, and shall deprive the
defaulting employer of the benefits and protection afforded by
this chapter, including the provisions of section six of this
article, and the employer shall be liable as provided in section
eight of this article. The defaulting employer's liability shall
be retroactive so as to include the entire calendar quarter for
which the defaulting employer failed to timely pay premium taxes
in the proper amount, to timely file a payroll report or to
maintain an adequate premium deposit. For purposes of this
section, the term "failure to file a payroll report" includes,
but is not limited to, an employer's failure to report the wages paid to all employees as defined by section one, article two of
this chapter. No employer will may be declared delinquent or be
assessed any penalty therefor if the division determines that
such delinquency has been caused by delays in the administration
of the fund. The division shall, in writing, within sixty days
of the end of each quarter notify all delinquent employers of
their failure to timely pay premiums, to timely file a payroll
report, or to maintain an adequate premium deposit. Each
employer who shall fail to timely file any quarterly payroll
report or timely pay the premium tax due with such report, or
both, for any quarter commencing on and after the first day of
July, one thousand nine hundred ninety-five, shall pay a late
reporting or payment penalty of the greater of fifty dollars or
ten percent of the premium tax due, but not to exceed five
hundred dollars, with such report. Such late penalty shall be
paid with the most recent quarter's report and payment and is due
when that quarter's report and payment are filed. If such late
penalty is not paid when due, the same may be charged to and
collected by the division from the employer's premium deposit
account or otherwise as provided for by law. The notification
shall demand the filing of the delinquent payroll report and
payment of delinquent premium taxes, the penalty for late
reporting or payment of premium taxes or premium deposit, the
interest penalty and an amount sufficient to maintain the premium deposit, before the end of the third month following the end of
the preceding quarter. Interest shall accrue and be charged on
the delinquent premium payment and premium deposit pursuant to
section thirteen of this article.
(c) Whenever the division notifies an employer of the
delinquent status of its account, the notification shall explain
the legal consequence of subsequent default by an employer
required to subscribe to the fund and the legal consequences of
termination of an electing employer's account.
(d) Failure by the employer, who is required to subscribe to
the fund and who fails to resolve the delinquency within the
prescribed period, shall place the account in default and shall
deprive such default employer of the benefits and protection
afforded by this chapter, including section six of this article,
and the employer shall be liable as provided in section eight of
this article. The default employer's liability under said
sections shall be retroactive to midnight of the last day of the
month following the end of the quarter for which the delinquency
occurs. The division shall notify the default employer of the
method by which the employer may be reinstated with the fund.
The division shall also notify the employees of such employer by
written notice as hereinafter provided for in this section.
(e) Failure by any employer, who voluntarily elects to
subscribe, to resolve the delinquency within the prescribed period shall place the account in default and shall automatically
terminate the election of such employer to pay into the workers'
compensation fund and shall deprive such employer and the
employees of the default elective employer of the benefits and
protection afforded by this chapter, including section six of
this article, and such employer shall be liable as provided in
section eight of this article. The default employer's liability
under said section shall be retroactive to midnight of the last
day of the month following the end of the quarter for which the
delinquency occurs. Employees who were the subject of the
default employer's voluntary election to provide them the
benefits afforded by this chapter shall have such protection
terminated at the time of their employer's default.
(f) (1) Except as provided for in subdivision (3) of this
subsection, any employer who is required to subscribe to the fund
and who is in default on the effective date of this section or
who subsequently defaults, and any employer who has elected to
subscribe to the fund and who defaults and whose account is
terminated prior to the effective date of this section or whose
account is subsequently terminated, shall be restored immediately
to the benefits and protection of this chapter only upon the
filing of all delinquent payroll and other reports required by
the division and payment into the fund of all unpaid premiums, an
adequate premium deposit, accrued interest and the penalty for late reporting and payment. Interest shall be calculated as
provided for by section thirteen of this article. In addition,
for every defaulted or terminated employer whose default or
termination lasts for two consecutive quarters or who has
defaulted or been terminated for two quarters out of the
preceding eight consecutive quarters, then when any such
employer's application for reinstatement is filed or upon any
such employer's restoration to the benefits and protection of
this chapter, for the next eight quarters, including the quarter
in which such restoration occurs, or when any such employer's
application for reinstatement is filed, the employer shall pay
premium taxes to the division at a penalty rate. The applicable
penalty premium tax shall be determined by first calculating the
employer's premium under the provisions of section four of this
article, but including any applicable experience modification,
and then multiplying that premium by one hundred ten percent.
The division shall not have the authority to waive either
accrued interest or the imposition of the penalty premium rate.
Any employer whose default or termination does not last for two
consecutive quarters or who has not been in default two quarters
out of the preceding eight consecutive quarters shall not have a
penalty premium rate imposed. The provisions of section
seventeen of this article apply to any action or decision of the
division under this section. For purposes of section four of this article, the extra ten percent of premium constituting the
penalty shall not be used in determining any entitlement to
experience modification of the employer's premium tax rate for
future years.
(2) The division shall have the authority to restore a
defaulted or terminated employer through a reinstatement
agreement. Such reinstatement agreement shall require the
payment in full of all premium taxes, premium deposits, the
penalty for late reporting and payment, past accrued interest and
future interest calculated pursuant to the provisions of section
thirteen of this article. The reinstatement agreement shall not
permit any modification or waiver of the penalty premium rate
provided for in subdivision (1) of this subsection.
Notwithstanding the filing of a reinstatement application or the
entering into of a reinstatement agreement, the division is
authorized to file a lien against the employer as provided by
section five-a of this article. In addition, entry into a
reinstatement agreement is discretionary with the division. Such
discretion shall be exercised in keeping with the fiduciary
obligations owed to the workers' compensation fund. Should the
division decline to enter into a reinstatement agreement and
should the employer not comply with the provisions of subdivision
(1) of this subsection, then the division may proceed with any of
the collection efforts provided for by section five-a of this article or as otherwise provided for by this code. Applications
for reinstatement shall: (A) Be made upon forms prescribed by
the division; (B) include a report of the gross wages payroll of
the employer which had not been reported to the division during
the entire period of delinquency and default, which gross wages
information shall be certified by the employer or its authorized
agent; and (C) include a payment of a portion of the liability
equal to one half of one percent of the gross payroll during the
period of delinquency and default or equal to another portion of
the liability as may be determined from time to time by rule but
not to exceed the amount of the entire liability due and owing
for the period of delinquency and default. An employer who
applies for reinstatement shall be entitled to the benefits and
protection of this chapter on the day a properly completed and
acceptable application which is accompanied by the application
payment is received by the division: Provided, That if the
division reinstates an employer subject to the terms of a
reinstatement agreement, the subsequent failure of the employer
to make scheduled payments or to pay accrued or future interest
in accordance with the reinstatement agreement or to timely file
current quarterly reports and to pay current quarterly premiums
within the month following the end of the quarter for which the
report and payment are due, or to otherwise maintain its account
in good standing or, if the reinstatement agreement does not require earlier restoration of the premium deposit, to restore
the premium deposit to the required amount by the end of the
repayment period shall cause the reinstatement application and
the reinstatement agreement to be null, void and of no effect,
and the employer shall be denied the benefits and protection of
this chapter effective from the date that such employer's account
originally became delinquent.
(3) Any employer who fails to maintain its account in good
standing with regard to subsequent premium taxes and premium
deposits after filing an application for reinstatement and prior
to the final resolution of an application for reinstatement by
entering into a reinstatement agreement or by payment of the
liability in full as provided for in subdivision (1) of this
subsection shall cause the reinstatement application to be null,
void and of no effect, and the employer shall be denied the
benefits and protection of this chapter effective from the date
that such employer's account originally became delinquent.
(4) Following any failure of an employer to comply with the
provisions of a repayment agreement, the division may then make
and continue with any of the collection efforts provided for by
this chapter or elsewhere in this code even if the employer files
another reinstatement application.
(g) With the exception noted in subsection (h), section one
of this article, no employee of an employer required by this chapter to subscribe to the workers' compensation fund shall be
denied benefits provided by this chapter because the employer
failed to subscribe or because the employer's account is either
delinquent or in default.
(h) (1) The provisions of this section shall not deprive any
individual of any cause of action which has accrued as a result
of an injury or death which occurred during any period of
delinquency not resolved in accordance with the provisions of
this article, or subsequent failure to comply with the terms of
the repayment agreement.
(2) Upon withdrawal from the fund or termination of election
of any employer, the employer shall be refunded the balance due
the employer of its deposit, after deducting all amounts owed by
the employer to the workers' compensation fund and other agencies
of this state, and the division shall notify the employees of
such employer of said termination in such manner as the division
may deem best and sufficient.
(3) Notice to employees in this section provided for shall
be given by posting written notice that the employer is defaulted
under the compensation law of West Virginia, and in the case of
employers required by this chapter to subscribe and pay premiums
to the fund, that the defaulted employer is liable to its
employees for injury or death, both in workers' compensation
benefits and in damages at common law or by statute; and in the case of employers not required by this chapter to subscribe and
pay premiums to the fund, but voluntarily electing to do so as
herein provided, that neither the employer nor the employees of
such employer are protected by said laws as to any injury or
death sustained after the date specified in said notice. Such
notice shall be in the form prescribed by the division and shall
be posted in a conspicuous place at the chief works of the
employer, as the same appear in records of the division. If said
chief works of the employer cannot be found or identified, then
said notices shall be posted at the front door of the courthouse
of the county in which said chief works are located, according to
the division's records.
Any person who shall, prior to the reinstatement of said
employer, as hereinbefore provided for, or prior to sixty days
after the posting of said notice, whichever shall first occur,
remove, deface or render removes, defaces or renders illegible
said notice, shall be is guilty of a misdemeanor, and, upon
conviction thereof, shall be fined one thousand dollars, and said
notice shall state this provision upon its face. The division
may require any sheriff, deputy sheriff, constable or other
official of the state of West Virginia, who may be authorized to
serve civil process, to post such notice and to make return
thereof of the fact of such posting to the division, and any
failure of such officer to post any notice within ten days after he or she shall have received the same from the division, without
just cause or excuse, shall constitute a willful failure or
refusal to perform a duty required of him or her by law within
the meaning of section twenty-eight, article five, chapter sixty- one of this code. Any person actually injured by reason of such
failure shall have an action against said official, and upon any
official bond he or she may have given, for such damages as such
person may actually have incurred, but not to exceed, in the case
of any surety upon said bond, the amount of the penalty of said
bond. Any official posting said notice as herein required shall
be entitled to the same fee as is now or may hereafter be
provided for the service of process in suits instituted in courts
of record in the state of West Virginia, which fee shall be paid
by the division out of any funds at its disposal, but shall be
charged by the division against the account of the employer to
whose delinquency such notice relates.
NOTE: The purpose of this bill is to provide that an
employer is automatically delinquent and in default on payment of
workers' compensation premium taxes if it fails to timely pay
premium taxes, to timely file a payroll report or to maintain an
adequate premium deposit with the Workers' Compensation Division.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.