As a business owner, one of your biggest expenses is payroll, so you are careful to make sure it is accurate. You know this area is highly regulated, from the federal Fair Labor Standards Act and the Pennsylvania Minimum Wage Law to payroll tax laws. But are you aware of the Pennsylvania Wage Payment and Collection Law (“WPCL”)? This important law provides a way for employees to enforce their contractual rights concerning the payment of wages and benefits.
The WPCL does not require that employers pay any particular wage; instead, it provides a way for employees to recover wages they are owed as set forth by contract or agreement. Even if an employee is hired on an at-will basis with no written contract, he or she is entitled to be paid pursuant to the understanding between the parties. This understanding may be in writing, such as in a letter of hire, or it may be communicated orally at the time of hire or thereafter. While changes to the wage amount may be made at any time, unless there is a prior contract providing otherwise, the WPCL requires that pay cuts may only be made prospectively.
The WPCL mandates that employers have regular set pay days and that they notify employees in advance as to when their pay days will be. Pay days must occur at least every fifteen days, or longer if customary in the particular industry. Employers also must notify employees at the time of hire of any fringe benefits they may receive.
If an employee resigns or is laid off or terminated before pay day, he or she must be paid accrued wages, as well as any accrued benefits due at separation. That payment must be made no later than the next pay day if the employee is not separated on a pay day.
Employers need to be particularly concerned about the WPCL because of its potential penalties. The Secretary of Labor and Industry can enforce actions under the WPCL, but employees also may bring suit on their own. If an employee has not been paid appropriately and brings a claim for breach of contract, the employee is entitled to the pay they are owed, with interest. But if the employee additionally brings a successful WPCL claim, he or she may be entitled to liquidated damages of an extra 25% of the wages due, and also would recover reasonable attorneys’ fees. The WPCL also provides for criminal penalties for egregious conduct.
There are a number of nuances in the WPCL. For example, employees are entitled to recover only wages for time actually worked. If an employee brings a claim for breach of contract asking for future wages, while these wages may be recoverable in a breach of contract claim, they are not recoverable under the WPCL. This is important because of the extra damages recoverable under the WPCL, such as liquidated damages and attorneys’ fees.
Additionally, while many people think of the WPCL in terms of wages, employees also may bring claims for promised fringe benefits that have not been paid or made available, such as paid vacation or break time.
You should be aware that owners or officers involved in the decisions that underlie a WPCL verdict against the company may be held personally responsible for any damages awarded.
While the WPCL allows employers to make deductions from pay, its regulations specify that an employer cannot choose on its own the items appropriate for deduction from paychecks. Many deductions require prior written authorization by the employee, precluding an employer from deducting from the employee’s paycheck, for example, the cost of a mistake made by the employee or the cost of uniforms supplied to the employee.
The WPCL also prohibits employers from holding a final paycheck until an employee returns employer property. Instead, any final pay owed must be paid out no later than the next pay day following the employee’s last day of work. If the termination is made on a pay day, the final paycheck must be provided at that time. Employers who seek to have property returned may pursue claims against the former employee in court.
The WPCL is often overlooked by employers, but it is an important law with substantial penalties. If you have questions about your responsibilities under the WPCL or any other employment or labor law issue, our employment lawyers are here to help. Please contact S. Whitney Rahman at (717) 509-7237, firstname.lastname@example.org, Grace Bond at (717) 509-7226, email@example.com, or Jill Laskowitz at (717) 509-7261, firstname.lastname@example.org for assistance.
**This update is provided for informational purposes only and should not be construed
as legal advice or as creating an attorney-client relationship where one does not
already exist. This article was published on November 12, 2020.
Please check back or contact us for the most up-to-date information.**