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7/6/2016 | Construction Blog

A new Philadelphia ordinance, effective July 1, 2016, will have a significant effect on employers who fail to pay wages to their employees for work performed in Philadelphia. Titled Wage Theft Complaints, the ordinance provides for administrative and court remedies, and penalties for “wage theft”, defined by the ordinance as any violation of the Pennsylvania Wage, Payment and Collection Law, Minimum Wage Act, or any other federal or state law regulating the payment of wages, for work performed in Philadelphia.

The ordinance applies to unpaid wage claims in an amount between $100 and $10,000. It allows a “claimant” to file a claim with a “Wage Theft Coordinator”, a new administrative office to be administered by the City’s Managing Director’s Office. A claimant is defined as either an employee with an unpaid wage claim, or an “authorized organization” on behalf of the employee. An authorized organization can include a labor union or other organization or party acting on behalf of an employee. After the employer files an answer to the complaint, the Coordinator conducts an investigation and is to provide a written adjudication within 60 days, or 110 days after the complaint is filed, if no answer to the claim is filed.

The complainant’s burden of proof is merely to present “sufficient evidence” to show the amount of work performed and the amount of unpaid compensation due. It meets its burden if the employer is required to keep records of hours worked and compensation paid, but does not do so, or if the records are imprecise or inadequate. Subpoena power is granted to the wage theft coordinator to subpoena documents from any party to the complaint.

If an adjudication of wage theft is made, a written order requiring payment will be issued, which includes findings of fact and conclusions of law. The adjudication may be appealed by either party to a court of competent jurisdiction within 30 days by filing a “new lawsuit”. However, the ordinance provides that the investigative notes, documents, and complaint and answer will be provided to both parties on any appeal. Significantly, the ordinance also creates a private right of action, allowing a claimant to file an action directly in court to enforce rights under the ordinance, without first bringing a claim before a Wage Theft Coordinator.

If a violation of the ordinance is found, the complainant is entitled to recover its attorney’s fees. In addition, administrative penalties can be assessed, with each week of non-payment of wages being considered a separate violation. More significantly, the ordinance gives the City of Philadelphia the option to “deny, suspend, or revoke” any license or permit, issued or pending, to any employer which, during the prior 3 years, has been found to have violated the ordinance, the PA Wage, Payment, or Collection Law, or the PA Minimum Wage Law. Such suspensions are to last for one year, although they would be subject to appeal under the provisions of the Philadelphia Code.

The ordinance also prohibits “retaliation” by an employer for the filing of a complaint under the ordinance. It allows the wage theft coordinator to maintain the confidentiality of the identity of an employee claimant until the complaint is adjudicated, if the complainant alleges that there is a “substantial risk” of employer retaliation.

The Philadelphia Wage Theft Law poses significant additional risk and potential liability to Philadelphia employers who do not pay their employees as they are required to do either by law, or by contract. Apart from the unpaid wage liability, it exposes employers to additional attorney’s fees and penalties, a streamlined process for the defense of claims, and the possibility of a suspension or revocation of their right to conduct business in Philadelphia for at least one year. For employees, the ordinance offers those who have been denied payment for work performed in Philadelphia a much easier and quicker option to commence an official action to recover allegedly unpaid wages, without having to file a lawsuit. Please feel free to contact the author of this article or Kaplin Stewart if you have questions or concerns about this new law.