When the West Virginia State Conservation Committee pays per diem compensation to elected conservation district supervisors, can the rate be a range, and should the payments go on W-2 or 1099 forms?

Plain-English summary

West Virginia conservation districts are run by elected supervisors who get paid a per diem for the days they work. The State Conservation Committee sets the rate within a statutory range of $30 to $150 (W. Va. Code § 19-21A-7(c)). In June 2023, the AG had told the Committee that the per diem could not be prorated by the hour: "per diem" means a flat daily rate, not an hourly wage. The Committee asked two follow-up questions: (1) can the rate be set as a range so that different supervisors get different amounts, and (2) should the payments be reported on W-2s (employee wages) or 1099s (independent-contractor compensation)?

The Attorney General said no on the range and W-2s on the tax reporting.

On the range question. The AG repeated the June 2023 reasoning. Section 19-21A-7(c) refers to "a per diem" and "[t]he ... per diem rate" in the singular. That singular phrasing means the Committee picks one rate for everyone, not a range. The Committee can pick $30, $80, $150, or anything in between, but it has to be the same number for all supervisors. The Committee can change the number from year to year, but it cannot say "$30 for some, $150 for others" within a given period.

On the tax-reporting question. The IRS uses W-2s for employees and 1099s for independent contractors. The federal definition of "employee" expressly includes elected officials of any state government or political subdivision (26 U.S.C. § 3401(c)). District supervisors are elected (W. Va. Code § 19-21A-6(a)). So under federal law, they are employees, and their per diems go on W-2s.

State law reaches the same answer through a different path. The West Virginia test for employee versus contractor status looks at "the right to control or supervise the work" (Myers v. Workmen's Comp. Comm'r, 1966). The "determining factor" is the existence of control, not whether it is exercised in a given case (Paxton v. Crabtree, 1990). The opinion catalogs the statutory controls: § 19-21A-8 enumerates supervisors' powers and duties; § 19-21A-7(f)(1)-(3) requires supervisors to obtain surety bonds, keep accurate records, and provide for an annual audit; § 19-21A-4(g)(3) entitles the State Conservation Committee to keep the supervisors organized; § 19-21A-7(d) requires Committee approval before supervisors hire staff; § 19-21A-7(e) requires supervisors to produce documents on request. That cumulative control means supervisors are employees under Cunningham (W. Va. 2012) and Spencer (W. Va. 1963).

The opinion also addresses an antecedent question: are these per diems even taxable income? The AG notes that "per diem" can sometimes refer to expense reimbursement (which is not taxable when at-or-under the federal rate and properly documented). But § 19-21A-7(c) says supervisors are "entitled to reasonable and necessary expenses and a per diem." Because expenses and per diem are listed separately, the per diem is compensation, not reimbursement. Compensation is taxable.

The opinion ends with a budget pressure point. The Committee's underlying concern was that it might not have enough money to pay all supervisors at the $150 rate. The AG points out the Committee has discretion to set a lower flat rate within the $30 to $150 range; the Legislature said the Committee should base this decision on "availability of funds." The Committee can also seek a statutory amendment if it wants more flexibility (such as multiple per diem rates).

What this means for you

If you are a member of the State Conservation Committee

You have to set one rate within $30 to $150, applied uniformly across all supervisors and report the per diems on W-2s. Both points are now binding on Committee practice.

If your budget cannot sustain $150 per supervisor per day, lower the rate. The June 2023 opinion plus this one closes off the workarounds (proration by the hour, range-based rates, contractor classification) that might have stretched a fixed budget further.

If you want different rates for different supervisor classes (such as new vs. experienced), or different rates for different types of district work, you need a statutory amendment. The Legislature can do that, but the Committee cannot.

If you are a conservation district supervisor

Your per diem is taxable wage income reported on a W-2. Plan accordingly: the Committee will withhold federal income tax, FICA, and Medicare, and may also withhold state income tax. If you have been treating the per diem as 1099 income for your tax filings, talk to a tax professional about correcting prior returns.

The flat-rate rule means everyone in your district gets the same per diem. If you have been receiving a different rate from your peers, that practice should change.

If you are a state-government payroll administrator setting up the W-2 process

Issue W-2s to elected supervisors going forward. Withhold federal income tax (per W-4), FICA, and Medicare. Coordinate with the State Treasurer's office on the W-2 generation process if your district has not previously been on the state payroll system.

If you are an elected official of any West Virginia special district receiving per diem

The federal definition at 26 U.S.C. § 3401(c) treats elected state and local officials as employees. The state-law analysis tracks federal: if the entity controls or has the right to control your work, you are an employee. That cuts in favor of W-2 treatment for most elected positions of this type.

If your district has been issuing 1099s, the AG opinion provides a basis to revisit that practice. The opinion is specific to conservation districts, but the federal definition and the state-law control test apply more broadly.

If you are an attorney advising an elected special-district board

The opinion's analysis of statutory control is a useful template. When a state statute lays out powers and duties, requires bonds, records, audits, and approval procedures, courts read the entity as exercising "control" over the office-holder. That conclusion has employee-status consequences not just for tax reporting, but potentially for workers' compensation, unemployment insurance, and other benefit-eligibility questions.

Common questions

Q: Can the Committee pay different per diems to different supervisors?
A: No. The statute uses singular phrasing ("a per diem", "the per diem rate") and the AG reads that as one rate for everyone.

Q: Can the Committee set a $50 rate this year and a $100 rate next year?
A: Yes. The opinion does not prevent year-to-year changes, only same-period variation among supervisors. Year-to-year changes within $30 to $150 are explicitly allowed.

Q: Are conservation district supervisors employees of the State or of the district?
A: The opinion treats them as employees subject to State Conservation Committee control. The W-2 issuer in practice will depend on the State payroll structure; the legal point is that they are not independent contractors.

Q: What if a supervisor is paid through the local conservation district rather than the state?
A: The opinion's federal-law point (26 U.S.C. § 3401(c)) reaches elected officials of any state political subdivision, so the conservation district itself qualifies as the employer for federal purposes. The state-law analysis would also apply.

Q: Are reimbursable expenses (mileage, lodging) reported separately from the per diem?
A: Yes. The statute treats expenses and per diems as distinct. Properly documented expense reimbursement is not taxable income. The per diem itself is taxable compensation.

Q: What happens if a district has issued 1099s in past years?
A: The opinion does not address the retroactive question. As a practical matter, the supervisor and the issuing entity may want to consult a tax professional about correcting prior returns, since the AG opinion makes the W-2 treatment clear going forward.

Q: Could the Committee classify supervisors as contractors anyway and accept the legal risk?
A: That would be inconsistent with this opinion and with federal tax law. The IRS and the West Virginia State Tax Department can challenge mischaracterization; back taxes, penalties, and interest can apply.

Q: Can the Committee impose a residency-based per diem (such as a higher rate for supervisors who travel further)?
A: The opinion does not address this directly, but the singular-rate logic suggests that any variation in the per diem itself across supervisors is impermissible. Travel distance is reasonably handled through expense reimbursement (a separate component), not through the per diem rate.

Q: Why does the federal employee definition include elected officials?
A: Congress amended the tax code to make this explicit so that elected state and local officials are subject to standard federal employment tax withholding. Without that fix, jurisdictions varied widely on whether elected officials were treated as employees or contractors.

Q: Where does the second per diem opinion fit relative to the first?
A: The June 2023 opinion ruled out hourly proration. This December 2023 opinion rules out range-based variation among supervisors and addresses tax reporting. Both opinions are binding on Committee practice.

Background and statutory framework

West Virginia conservation districts operate under W. Va. Code Chapter 19, Article 21A. Supervisors are elected (§ 19-21A-6(a)) and exercise powers and duties enumerated in §§ 19-21A-7 and 19-21A-8. They serve as the local governing body for soil and water conservation, working with landowners on agricultural conservation practices, watershed management, and erosion control.

Section 19-21A-7(c) sets supervisors' compensation: "expense and per diem rate" with a $30 to $150 statutory range, set by the State Conservation Committee, with discretion based on "availability of funds." The June 2023 AG opinion (referenced in this opinion) addressed proration: a per diem cannot be prorated by the hour because per diem means a flat daily rate.

The December 2023 opinion adds two more rules. First, the singular-rate rule: the statute uses singular phrasing, so the Committee sets one rate at a time, not a range. Second, the W-2 rule: supervisors are employees, both under federal tax law (26 U.S.C. § 3401(c) expressly includes elected officials) and under West Virginia common-law control test (Myers, 1966; Paxton, 1990; Cunningham, 2012; Spencer, 1963).

The control test traces to Myers v. Workmen's Comp. Comm'r (1966), syl. pt. 3: "If the right to control or supervise the work in question is retained by the person for whom the work is being done, then the person doing the work is an employee and not an independent contractor." Paxton (1990) confirmed this is "the determining factor" and emphasized that what matters is the existence of control, not its actual exercise. Cunningham (2012) applied the same test in the context of medical-staff classification.

Applied here, the AG's catalog of statutory controls (powers, duties, bonds, records, audits, approval requirements, document production on request) makes the case for employee status comfortably. The federal-law backstop in 26 U.S.C. § 3401(c) makes the result certain regardless of any close call on the state-law side.

The opinion also confirms that the per diem is taxable income, not reimbursement. The statute treats expenses ("reasonable and necessary expenses") and the per diem as separate categories. Reimbursement-style per diems can be tax-free under federal rules, but only when they substitute for actual expenses, are at or under the federal per diem rate, and are documented through expense reports. Compensation-style per diems are wage income.

Citations and references

Statutes:
- W. Va. Code § 5-3-1 (AG opinions)
- W. Va. Code § 19-21A-4(g)(3), § 19-21A-6(a), § 19-21A-7(c), (d), (e), (f), § 19-21A-8 (conservation district framework)
- 26 U.S.C. § 3401(c) (federal definition of employee includes elected officials)

Cases:
- Myers v. Workmen's Comp. Comm'r, 150 W. Va. 563, 148 S.E.2d 664 (1966)
- Paxton v. Crabtree, 184 W. Va. 237, 400 S.E.2d 245 (1990)
- Cunningham v. Herbert J. Thomas Mem'l Hosp. Ass'n, 230 W. Va. 242, 737 S.E.2d 270 (2012)
- Spencer v. Travelers Ins. Co., 148 W. Va. 111, 133 S.E.2d 735 (1963)

Prior AG opinion referenced:
- Letter from Patrick Morrisey, W. Va. Att'y Gen., to Kent A. Leonhardt, W. Va. State Conservation Comm. Chairman (June 8, 2023) (per diem cannot be prorated by the hour)

Source

• Landing page: not separately published (the PDF is the official record)
• Original PDF: https://ago.wv.gov/media/17566/download?inline

Original opinion text

State of West Virginia
Office of the Attorney General
Patrick Morrisey
Attorney General

Phone: (304) 558-2021
Fax: (304) 558-0140

December 18, 2023

The Honorable Kent A. Leonhardt
Chairman
West Virginia State Conservation Committee
1900 Kanawha Blvd. E, Bldg. 1, Rm 28E
Charleston, WV 25305
Dear Chairman Leonhardt:

You have asked for an Opinion of the Attorney General about the rate and tax implications
for conservation district supervisors' per diem compensation. This Opinion is being issued
pursuant to West Virginia Code § 5-3-1, which provides that the Attorney General "shall give
written opinions and advice upon questions of law … whenever required to do so, in writing, by …
any … state officer, board or commission." Where this Opinion relies on facts, it depends solely
on the factual assertions in your correspondence with the Office of the Attorney General.

Under West Virginia Code § 19-21A-7(c), the State Conservation Committee shall set
"[t]he expense and per diem rate" for district supervisors. Last year the Committee set that rate at
the statutory maximum of $150. Earlier this year, you asked us whether the statute allowed for
prorating the per diem or if a per diem truly refers to a flat, daily rate. We advised that "per diem"
has its ordinary meaning in Section 19-21A-7(c): It means a rate for each day worked, and
prorating would effectively turn a per diem into an hourly wage. See Letter from Patrick Morrisey,
W. Va. Att'y Gen., to Kent A. Leonhardt, W. Va. State Conservation Comm. Chairman (June 8,
2023), https://bit.ly/3sTBDLT.

Your second letter now raises similar questions:

(1) Is the per diem a flat rate, or is a range within the $30 to $150 statutory
range permitted?

(2) For tax purposes, is a W-2 or a 1099 form appropriate for reporting the
per diem?

For the first question, we reiterate our previous conclusion that a per diem is a single daily
rate. For the second question, we conclude that W-2 forms are appropriate to report supervisors'
per diems as the per diem is a wage and supervisors are not independent contractors.

Discussion

I. Under West Virginia Code § 19-21A-7(c), A Per Diem Means A Single Rate.

The June 2023 Opinion answers your first question. There, we explained that because a
per diem rate is a rate "by the day" or "for each day," the Committee may not prorate it by
calculating how many hours a supervisor worked on a given day. Letter, supra, at 1. Though we
gave this answer in the context of prorating by the hour, the same result holds for any approach that
would allow paying some supervisors more than others each day. As we also explained in the
previous letter, Section 91-21A-7(c) refers to a singular per diem rate, "a per diem" versus "per
diems," and "[t]he … per diem rate" versus "per diem rates." See Letter, supra, at 3. The
Legislature's choice confirms that the per diem may be any amount between $30 and $150, but it
must be a single rate and cannot vary among supervisors, including by setting a range instead of
one rate. A per diem is daily compensation as opposed to an hourly rate or an annual salary.

II. Per Diem Payments Should Be Included On Supervisors' W-2 Forms.

Your next question turns to tax reporting. To begin, your letter appears to assume that
Section 19-21A-7(c) per diems are taxable income. That's correct. The term "per diem" can also
refer to a reimbursement for expenses like meals and lodging, and under certain circumstances that
type of per diem is not taxable. See Frequently Asked Questions: Per Diem Payments, IRS,
https://bit.ly/3T5cM2B (last visited Dec. 13, 2023) (explaining that expense-based per diems are
not taxable income when the per diem is "equal to or less than the federal per diem rate" and the
employee submits "an expense report" for the specific trip). Here, however, the statute says
supervisors are "entitled to reasonable and necessary expenses and a per diem." W. VA. CODE
§ 19-21A-7(c) (emphasis added). In this context, then, payments for expenses and per diem
compensation are distinct.

So your question is about where to report per diem compensation. W-2s and 1099s are
both IRS tax forms, and thus we start by looking to how the IRS defines who should receive which
form. For W-2s, the IRS says they should be given to "employee[s]." About Form W-2, Wage
and Tax Statement, IRS (July 14, 2023). And 1099s are given to anyone who performs services
but "is not your employee." Am I Required to File a Form 1099 or Other Information Return?,
IRS (Nov. 2, 2023). In other words, W-2s go to employees and 1099s go to independent contractors.

Sticking with federal law for the moment, the federal tax code provides that the "term
'employee' includes an … elected official of the United States, a State, or any political subdivision
thereof." 26 U.S.C. § 3401(c). District supervisors are employees under this definition since
"voters in each county in a district shall elect" their supervisors. W. VA. CODE § 19-21A-6(a). As
such, their per diems should go on W-2 forms for tax purposes.

State law says the same. The crux of the inquiry is whether "the right to control or
supervise the work in question is retained by the person for whom the work is being done." Syl.
pt. 3, Myers v. Workmen's Comp. Comm'r, 150 W. Va. 563, 148 S.E.2d 664 (1966). If someone
other than the individual worker retains that control, then "the person doing the work is an
employee and not an independent contractor." Id. Further, "the determining factor" is "the
existence" of control or supervision and not whether it is exercised in a given case. Id.

Here, numerous statutory constraints show that district supervisors are employees under
this "determinative" factor. Syl. pt. 5, Paxton v. Crabtree, 184 W. Va. 237, 400 S.E.2d 245 (1990).
The statute contains an entire section enumerating the "[p]owers and duties of conservation[]
districts and supervisors." W. VA. CODE § 19-21A-8. This section says that supervisors "shall
have the following powers and duties, in addition to the others granted in other sections of this
article." Id. In other words, the statute lays out directly what supervisors are expected to do. The
statute also explains some of the particulars when it comes to how supervisors must exercise these
duties. See id. § 19-21A-7(f)(1)-(3) (supervisors must require "surety bonds" in certain
circumstances, keep "full and accurate record of all proceedings and of all resolutions, rules and
orders," and "[p]rovide for an annual audit").

Further, the Legislature made the supervisors responsible to the State Conservation
Committee. One section entitles the Committee to keep the supervisors "organized under the
provisions of this article." W. VA. CODE § 19-21A-4(g)(3). Another demands that supervisors get
the "approval of the State Conservation Committee" before hiring any "officers, agents and
employees, permanent and temporary, either with or without compensation." Id. § 19-21A-7(d).
Though less demanding, yet another mandates that "upon request," the supervisors must "furnish
to the State Conservation Committee" a number of "documents they adopt or employ ... concerning
their activities required in the performance" of their "duties under this article." Id. § 19-21A-7(e).
All of this indicates "a level of control over [supervisors] such that [they are] … employee[s]."
Cunningham v. Herbert J. Thomas Mem'l Hosp. Ass'n, 230 W. Va. 242, 252, 737 S.E.2d 270, 280
(2012).

So at both a statutory- and Committee-level, a district supervisor does not retain "the right
to control or supervise the work in question." Spencer v. Travelers Ins. Co., 148 W. Va. 111, 117,
133 S.E.2d 735, 739 (1963). He or she "is an employee and not an independent contractor." Id.
Declining to exempt taxes and instead reporting per diems on a 1099 is not appropriate.

We understand that one of the concerns driving both of your letters is lack of funds to pay
all supervisors for all days worked at a $150 per diem rate. We reiterate that the Committee has
statutory discretion to set a different per diem rate within the $30-to-$150 range, indeed, the
Legislature said the Committee should base this decision on "availability of funds." W. VA. CODE
§ 19-21A-7(c). So the Committee remains free to return to last year's $80 per diem or to establish
any other appropriate rate. Similarly, the Committee can seek the Legislature's involvement to
either increase funding or amend the Code to allow for multiple per diem rates. In the meantime,
the Committee must follow the law as written and allow for a single per diem reported as taxable
income to an employee.

Sincerely,

Patrick Morrisey
Attorney General
Lindsay See
Solicitor General
Caleb A. Seckman
Assistant Solicitor General