Employers Beware: Wage Payment and Collection Law

The Pennsylvania Wage Payment and Collection Law (“WPCL”) provides a statutory cause of action for employees against employers and responsible individuals; it allows an employee to sue for unpaid wages and recover additional damages of 25% of the unpaid amount and counsel fees. The WPCL is a remedial statute designed to encourage prompt payment of wages, and it contains serious penalties for nonpayment.

Here are the highlights of the WPCL:

  • It defines wages to include not only base pay, but also employee benefits such as vacation pay, pension payments, expense reimbursements, holiday pay and similar benefits.
  • If the employer is a corporation or similar entity, the individuals controlling the entity can also be held responsible for wage payments. These persons typically include the president, treasurer, controlling shareholders and any other individuals who are found to be in a decision-making capacity.
  • Courts are authorized to impose an additional penalty of 25% of the amount of unpaid wages and award a successful claimant attorneys’ fees. In some cases, the attorneys’ fees can exceed the amount of wages at issue.
  • Employers can justifiably withhold wages if a bona-fide dispute exists, such as failure to return employer property, employee embezzlement, failure to repay a loan from the employer, etc.

We have handled WPCL cases for both employers and employees. The stakes are often high, and courts tend to err on the side of employees where nonpayment seems clear. For employers, the watchword is “caution” in view of the steep penalties for nonpayment.

— Kevin Palmer

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