For the second time, a Pennsylvania Appeals Court has ruled that employees can seek liquidated damages under the state’s Wage Payment and Collection Law (WPCL) even if they have already been paid all outstanding wages before filing a lawsuit issuing the ruling in a case involving a collection agency and its former chief executive. In a 5-4 decision, the court affirmed a lower court’s order awarding the plaintiff $60,000 in liquidated damages.
The background: The plaintiff was employed by the defendant as its CEO from June 2008 until July 2017. In 2014, the two parties entered into a Private Sale Bonus Agreement, under which the plaintiff was entitled to a retention bonus of $60,000 per month for 17 months, provided he remained with the company during the period. Initially, the defendant made timely payments but stopped after July 2015, citing cash flow problems.
- In 2017, the defendant made lump-sum payments for most of the outstanding bonuses, but still left one payment unpaid until October of that year. In 2019, the plaintiff filed a complaint seeking liquidated damages and attorneys’ fees, arguing that the late payment violated the WPCL. While the defendant claimed that since it eventually paid the bonuses, no damages were due, the court disagreed, ruling in favor of the plaintiff.
- Both sides appealed the initial ruling to the Pennsylvania Appeals Court, which issued its order in 2023 affirming the lower court’s ruling. But the defendant filed an en banc petition, which was granted, thus throwing out the original Appeals Court ruling and sending the case before the entire Court.
The ruling: The majority of the appeals court focused on the statutory language and purpose of the WPCL. They interpreted the law as allowing an employee to bring an action for liquidated damages even if all outstanding wages had been paid before the lawsuit was filed. The court reasoned that this interpretation aligns with the WPCL’s purpose of protecting employees and discouraging employers from delaying wage payments.
- The majority emphasized that the WPCL provides for liquidated damages as a penalty for employers who fail to pay wages on time without good cause. They argued that allowing employees to seek liquidated damages even after receiving late payments serves as a deterrent against employers deliberately delaying wage payments.
- The dissenting judges, however, argued that the plain language of the statute only allows actions to be brought by employees “to whom any type of wages is payable.” They contended that once an employer pays all outstanding wages plus interest, there are no longer any wages payable, and thus the employee should not be able to bring a WPCL action solely for liquidated damages.
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