By Thomas Paschos, Esq. of Thomas Paschos & Associates, P.C.

Pennsylvania wage and hour claims are governed by the Pennsylvania Minimum Wage Act of 1968 (PMWA)¹ and Wage Payment and Collection Law (WPCL)² . The PMWA and WPCL are enforced by the Pennsylvania Department of Labor and Industry or through private lawsuits. Pennsylvania's wage and hour laws apply to all individuals who are employees of an employer. Independent contractors are not covered.

Pennsylvania Minimum Wage Act of 1968

The Pennsylvania Minimum Wage Act of 1968 ("Minimum Wage Act" or “PMWA”) establishes a fixed Minimum Wage and Overtime Rate for employees. It also sets forth compliance-related duties for the Department of Labor & Industry and for employers. In addition, the Minimum Wage Act provides penalties for noncompliance. The purpose of the PMWA is similar to that expressed by Congress in enacting the Fair Labor Standards Act of 1938: "to protect all covered workers from substandard wages and oppressive working hours, 'labor conditions [that are] detrimental to the maintenance of the minimum standard of living necessary for health, efficiency and general well-being of workers.'"³ The PMWA while generally modeled after and consistent with the FLSA, has some significant differences which are discussed below.

The Pennsylvania Minimum Wage Act broadly defines employ as "permit[ted] to work."⁴ The two major requirements in Pennsylvania wage and hour laws concern: (1) payment of the minimum wage and (2) payment for overtime hours. Under the minimum wage laws, employers must pay employees an amount that is at least the statutory minimum wage multiplied by the number of hours that the employee worked in any given work week. Under the laws governing overtime, employers must pay most employees additional compensation for overtime hours. The provisions governing minimum wage and overtime pay generally apply to all employees unless specifically exempted or excluded under the statute. For example, Pennsylvania’s Minimum Wage Act does not require overtime pay for “any employee engaged in a bona-fide executive, administrative, or professional capacity” who is paid on a salaried basis instead of an hourly wage.⁵

Pennsylvania employers must comply with the overtime requirements of Pennsylvania's Minimum Wage Act⁶ and regulations.⁷ An “employer” is defined as including “[a]ny individual, partnership, association, corporation, business trust, or any person or group of persons acting, directly or indirectly, in the interest of an employer in relation to any employee.”⁸

Pennsylvania’s current requirements are substantially similar to the earlier federal standards. Employers must follow Pennsylvania’s regulations even if these rules are more stringent for employers than the revised federal requirement. The federal rules specifically state that federal law does not affect enforcement of state overtime requirements,⁹ such as Pennsylvania's requirements. Pennsylvania employers must be aware that the federal or Pennsylvania overtime provision that provides for the greater benefit to the employee is the standard that will be enforced.

Wage Payment and Collection Law

Payment of employees’ wages in general are governed by Pennsylvania’s Wage Payment and Collection Law (“WCPL”). The WPCL does not create a right to compensation, rather it provides employees with a process to recover wages which they have earned, but have not been paid. While the WPCL does govern instances where an employer has failed to pay a current employee in a timely manner, it is more often used where employment has been terminated or an employee has resigned and subsequently does not receive his or her wages through last day of work. In that case, all wages or compensation must be paid no later than the next regular payday on which such wages would otherwise be due and payable.

Under Pennsylvania’s Wage Payment and Collection Law, an employer is defined to include “every person, firm, partnership, association, corporation, receiver, business trust, or any person or group of persons acting, directly or indirectly, in the interest of an employer in relation to any employee, or any agent or officer of any of the above mentioned classes employing any person in this Commonwealth.”¹⁰

Wages like bonuses, vacation, and stock options are wages only as long as there is a contractual right to such wages between the employee and employer.¹¹

Preemption

In addition to the Pennsylvania state laws, there is the federal law, the Fair Labor Standards Act (“FLSA”), under which an employee may assert to recover unpaid wages. As set forth above, Pennsylvania generally follows the FLSA regarding the treatment of wages and the payment of and exemptions from overtime. However, Pennsylvania law differs in that it does not recognize an overtime exemption for computer professionals and outside sales professionals. Furthermore, Pennsylvania employers may not use compensatory time off as a substitute for payment of overtime.

Federal preemption becomes an issue when employees bring state law claims instead of, or in addition to, FLSA claims. Express preemption does not apply because the FLSA does not explicitly address whether states may provide different remedies and procedures.

One of the differences between the FLSA and Pennsylvania's wage and hour laws is that the PMWA does not allow use of the FLSA's fluctuating workweek method to calculate overtime. Under the fluctuating workweek method, an employee receives a guaranteed fixed weekly salary for all straight-time earnings, regardless of the number of hours worked, and an additional one-half of the employee's regular rate for all hours worked over forty in the workweek. The fluctuating workweek method is expressly permitted by the FLSA regulations, but the Court for the Western District held that the method violated the PMWA's overtime compensation requirements.¹² As such, Pennsylvania employers who continue to use the fluctuating workweek method to calculate overtime are subjecting themselves to risk of liability under the PMWA.

Damages Recoverable

Pennsylvania Minimum Wage Act of 1968

Under the Minimum Wage Act, if any employee is paid by his or her employer less than the minimum wages provided by the statute, he or she may recover the full amount of such minimum wage less any amount actually paid to the worker by the employer.¹³ This includes recovery of back wages and liquidated damages.¹⁴ A plaintiff who prevails on claims for unpaid wages under the PMWA is entitled to prejudgment interest,¹⁵ costs and reasonable attorney's fees.¹⁶ Failure to pay the legal minimum wage or other violations may result in other civil or criminal action where warranted.

Wage Payment and Collection Law

Pennsylvania courts have ruled that such items as bonuses earned under a contract, accrued but unpaid vacation time, stock options and even an employee’s equity interest in a corporation provided in exchange for a reduction in his pay all constitute “wages” under the WPCL. The WPCL permits an employee the right to file a civil action to recover such unpaid wages and liquidated damages, equal to 25% of the total amount of wages due, or $500, whichever is greater.¹⁷ In addition to any judgment awarded to the plaintiff, the WPCL allows costs for reasonable attorneys' fees of any nature to be paid by the defendant.¹⁸

Under WPCL provisions¹⁹ an employer’s “active decision maker” may be personally liable for the wages due. Additionally, if the employer is a corporation, the president, secretary, treasurer, or similar officer may be found guilty of a summary offense and charged with a $300 fine, up to 90 days in jail, or both for violating the WPCL.

Defenses

There are several defenses available to employers who are subject to claims under the Minimum Wage Act and the WPCL.

Pennsylvania Minimum Wage Act

The employee filing the claim under the Minimum Wage Act may fall into one of the many exemptions provided by statute. The following employees are not covered by Pennsylvania's state minimum wage law: ²⁰

• Farm workers
• Domestic workers employed in or about the private home of their employers
• Delivery of newspapers to the consumer;
• Employees connected with the publication of any weekly, semiweekly, or daily newspaper with a circulation of less than 4,000
• Executive, administrative, or professional employees, including elementary and secondary school teachers and administrators
• Volunteers for educational, charitable, religious or nonprofit organizations
• Seasonal employees under 18 (or under 24 if students) if employed by nonprofit health or welfare agencies engaged in activities for handicapped or exceptional children, or if employed by a nonprofit day or resident recreational camp operating for less than three months out of the year
• Employees of public amusement or recreational establishments that operate for no more than seven months per year or that make most of their money in only six months out of the year.
• Golf caddies
• Switchboard operators for small telephone companies
• Employees (not subject to civil service laws) of elected officials, or elected officials themselves

Anyone who is not covered by Pennsylvania's minimum wage is also not covered by the state's overtime provisions. In addition, the following individuals who are covered by the state minimum wage requirement are not covered by the overtime requirement:²¹

• Seamen
• Any salesman, parts person or mechanic primarily engaged in selling and servicing automobiles, trailers, trucks, farm implements or aircraft, if employed by a non-manufacturing establishment primarily engaged in the selling of such vehicles to ultimate purchasers. (Example: 51% of business is selling as opposed to 49% in servicing such vehicles)
• Taxicab drivers
• Any employee of a motor carrier the Federal Secretary of Transportation has power to establish qualifications and maximum hours of service under 49 U.S.C. Section 3102 (b)(1) and (2) (relating to requirements for qualifications, hours of service, safety and equipment standards)
• Announcers, news editors, or chief engineers at small TV and radio stations, the major studio of which is located in:
  • City or town of 100,000 population or less, if it is not part of a standard metropolitan statistical area having a total population in excess of 100,000; or
  • City or town of 25,000 population or less, which is part of such an area but is at least 40 airline miles from the principal city in the area
• Employees engaged in processing maple sap into sugar (other than refined sugar) or syrup
• Movie theater employees
• The hours of an employee of an air carrier subject to the provisions of Title II of the Railway Labor Act (Public Law 69-257, 44 Stat. 577, 45 U.S.C. § 181 et seq.) when:

1. the hours are voluntarily worked by the employee pursuant to a shift-trading practice under which the employee has the opportunity to reduce hours worked in any workweek by voluntarily offering a shift for trade or reassignment; or
2. the required hours of work, wages and overtime compensation have been agreed to either in a collective bargaining agreement between the employer and labor organization representing employees for purposes of collective bargaining or pursuant to a voluntary agreement or understanding arrived at between the employer and employee.

In addition, a three year statute of limitations is applicable to claims brought under the PMWA. ²² If a plaintiff files a claim under the PMWA claims for unpaid wages outside the three year statute of limitations the case will be dismissed.

It should be noted that the statute specifically provides that an agreement between the employer and the worker to work for less than such minimum wage shall be no defense to an action.²³

Wage Payment and Collection Law

The Wage Payment and Collection Law does not apply to entities such as boroughs, school district, counties, and municipal employers. Claims filed against such entities will be dismissed.²⁴ The WPCL also does not apply to independent contractors.

In addition, the Pennsylvania Supreme Court has stated that “[t]he Wage Payment and Collection Law provides employees a statutory remedy to recover wages and other benefits that are contractually due to them.” ²⁵ “Accordingly, a prerequisite for relief under the WPCL is a contract between employee and employer that sets forth their agreement on wages to be paid. . . . Relief under the WPCL is implausible without existence of a contract.”²⁶

Similar to the PMWA, a three year statute of limitations is applicable to claims brought under the WPCL. ²⁷ If a plaintiff files a claim under the WPCL outside the three year statute of limitations the case will be dismissed.

It should be noted that while a willful violation of state wage laws is required in some states, it is not in Pennsylvania.²⁸

For additional information, contact TPaschos@paschoslaw.com or 215.636.0555

^{1. 43 P.S. § 333.101 et seq.↩}

^{2. 43 P.S. 2601.1 et seq.↩}

^{3. Masterson v. Fed. Express Corp., 2008 U.S. Dist. LEXIS 99622 (M.D. Pa. Dec. 10, 2008)}

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^{4. 43 P.S. § 333.103(f)}

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^{5. 43 P.S. § 333.105a(5)↩}

^{6. 35 P.S. § 333.101 et seq.↩}

^{7. 34 Pa. Code § 231.1 et seq.↩}

^{8. 43 P.S. § 333.103(g).↩}

^{9. 29 USCS § 218; 29 C.F.R. 541.4↩}

^{10. 43 P.S. § 260.2a.↩}

^{11. 43 P.S. § 260.2a.; Harding v. Duquesne Light Co., 882 F.Supp. 422 (W.D.Pa.1995).}

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^{12. Foster v. Kraft Foods Global, Inc., 285 F.R.D. 343 (W.D. Pa. 2012)}

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^{13. 43 P.S. § 333.113↩}

^{14. Williams v. Securitas Sec. Servs. USA, 2012 U.S. Dist. LEXIS 160092 (E.D. Pa. Nov. 8, 2012)}

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^{15. Signora v. Liberty Travel, Inc., 2005 PA Super 366, 886 A.2d 284 (Pa.Super. 2005).↩}

^{16. 43 P.S. § 333.113; Leclair v. Diakon Lutheran Soc. Ministries, 2013 Pa. Dist. & Cnty. Dec. LEXIS 1 (Pa. C.P. 2013)}

^↩

17. 43 P.S. § 260.10; Terrick v. Pnc Bank, 2001 Pa. Dist. & Cnty. Dec. LEXIS 216 (Pa. County Ct. 2001)

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^{18. 43 P.S. § 260.9a(f); Terrick v. Pnc Bank, 2001 Pa. Dist. & Cnty. Dec. LEXIS 216 (Pa. County Ct. 2001)}

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^{19. 43 P.S. 260.11a(b) and (c).↩}

^{20. 43 P.S. § 333.105↩}

^{21. Id.↩}

^{22. 43 P.S. § 333.108; Curtis v. Cargill Meat Solutions Corp., 2006 U.S. Dist. LEXIS 64634 (M.D. Pa. June 16, 2006); Friedrich v. U.S. Computer Serv., Inc., 833 F. Supp. 470, 477 (E.D. Pa. 1993).↩}

^{23. 43 P.S. § 333.113↩}

^{24. Stump v. Richland Twp., 2005 U.S. Dist. LEXIS 13994, 10 Wage & Hour Cas. 2d (BNA) 1520 (E.D. Pa. July 12 2005), affirmed in part and reversed in part by 278 Fed. Appx. 205, 2008 U.S. App. LEXIS 10277 (3d Cir. Pa. 2008); see also, Huffman v. Borough of Millvale, 591 A.2d 1137, 1138–39 (Pa. Commw. Ct. 1991), Ziegler v. The County of Bucks, Civ. A. No. 89-4561, 1992 WL 129643 at *12–13 (E.D. Pa. June 8, 1992); Philipsburg-Osceola Educ. Ass’n v. Philipsburg-Osceola Area Sch. Dist., 633 A.2d 220, 223 (Pa. Commw.Ct. 1993).}

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^{25. Oberneder v. Link Computer Corp., 696 A.2d 148, 150 (Pa. 1997) (citing Killian v. McCulloch, 850 F.Supp. 1239, 1255 (E.D. Pa. 1994)).↩}

^{26. Lehman v. Legg Mason, Inc., 532 F.Supp.2d 726, 733 (M.D. Pa. 2007).↩}

^{27. 43 P.S. § 260.9a(g). ↩}

^{28. Belcufine v. Aloe, 112 F.3d 633, fn.8 (3d Cir. 1997).↩}