Eliminating Absurd Outcomes under the Wage Payment and Collection Act
March 6, 2020
On March 6, 2020, the West Virginia Legislature approved an amendment (HB 2646) to the West Virginia Wage Payment and Collection Act (“WPCA”) that will encourage employers and employees to quickly resolve disputes regarding untimely payment of wages without having to pay liquidated damages or attorneys’ fees.
The WPCA requires West Virginia employers to pay all wages to a separated employee by the next regular payday on which wages would otherwise be due and payable. At present, if an employer fails to pay wages under the WPCA, then the employer becomes liable for liquidated damages (double the unpaid amount) and attorneys’ fees, regardless of the cause of the untimely payment. This statutory penalty, and the leverage associated with it, has resulted in class action litigation and strong-arm settlement tactics by several predatory law firms. The problem has been especially acute for small employers that may not be familiar with the requirements of the WPCA.
By way of illustration, assume a discharged employee’s final paycheck of $200 was untimely delivered. The discharged employee received the check, perhaps a day or two late. The former employee lawyers up and the employer receives a draft lawsuit and a letter demanding that the employer pay liquidated damages of $400 and attorneys’ fees of $2,500. The $2,500 figure is absurd because the draft complaint is a form document and the lawyer spent less than an hour meeting with the former employee; however, the employer knows that it will incur its own legal expenses if it refuses the settlement demand. The employee’s lawyer knows this too. Moreover, the employee’s lawyer will attempt to recover more than $2,500 if the parties litigate the dispute. This is not an isolated or hypothetical example. It happens routinely to West Virginia employers.
HB 2646 addresses this perverse outcome by requiring individuals to provide their former employer with an opportunity to remedy a wage dispute before liability is imposed for liquidated damages and attorneys’ fees. Specifically, HB 2646 requires former employees to provide a written demand of any alleged underpayment or nonpayment. The employer has seven calendar days from receipt of the written demand to correct the alleged deficiency. If the employer fails to remedy the wage dispute within those seven days, then the employee will be permitted to seek liquidated damages and attorneys’ fees. A similar requirement is also imposed upon individuals pursuing class actions.
Ensuring employees receive their wages in a timely manner is the primary purpose of the WPCA. HB 2646 advances that goal by encouraging employers to resolve any discrepancies in a timely fashion without having to negotiate exorbitant claims for attorneys’ fees and liquidated damages. West Virginia employers and employees will benefit should Governor Justice choose to sign this bill.