West Virginia Bill Would Authorize Portable Benefits for Independent Contractors

Quick Hits

• West Virginia legislators passed a bill (HB 4009) that permits companies to provide portable benefit accounts for workers without needing to classify those workers as employees.
• Governor Patrick Morrisey has not signed or vetoed the bill yet.
• If enacted, the bill would take effect for taxable years starting on January 1, 2026, or later.

Portable benefits are benefits that stay with the individual and accumulate based on hours worked or a percentage of transaction fees. They can function similar to a 401(k), paid time off program, or health savings account (HSA). Instead of benefits offered by one employer, portable benefits allow workers to receive funding from multiple companies in a single account. Often, a third-party administrator handles the contributions from the various employers.

Unlike employees, independent contractors are not legally entitled to minimum wage, overtime pay, unemployment benefits, and workers’ compensation. Some states require certain employers to provide paid sick leave and/or disability insurance to employees, but not independent contractors.

The West Virginia bill would provide an income tax deduction for contributions to and funds received in portable benefits accounts.

Utah and Alabama recently enacted similar laws on portable benefits for independent contractors.

Next Steps

The West Virginia bill will take effect in June 2026 if Governor Patrick Morrisey does not veto it. It would be effective for taxable years starting on January 1, 2026, and thereafter. It is unclear how many employers would start providing portable benefits that were not doing so already, but this bill could foster interest in doing so.

Employers in West Virginia may wish to track the number of independent contractors they use and carefully document the legitimate reasons for classifying each worker as an independent contractor, rather than an employee. Employers that misclassify workers as independent contractors may face federal or state fines and liability for unpaid wages, overtime pay, unpaid taxes, or workers’ compensation. It is unclear how this law will impact classification arguments under federal law. 

Ogletree Deakins will continue to monitor developments and will post updates on the Employee Benefits and Executive Compensation, Wage and Hour, and West Virginia blogs as additional information becomes available.

Information on state and federal independent contractor laws is also available on the Ogletree Deakins Client Portal. If this proposed rule is adopted, the Client Portal will provide updates in the Federal Independent Contractors law summary. Snapshots and updates are available for all registered client users. Detailed information is available for Premium and Advanced subscribers. For more information on the Client Portal or a Client Portal subscription, please reach out to clientportal@ogletree.com.

Bethany S. Wagner is a shareholder in Ogletree Deakins’ Pittsburgh office.

This article was co-authored by Leah J. Shepherd, who is a writer in Ogletree Deakins’ Washington, D.C., office.

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