Thursday, March 2, 2017

PA Court Decision Assists Employees in Litigating Wage Claims

The Pennsylvania Wage Payment and Collection Law (WPCL) requires employers in Pennsylvania to pay wages to employees at regularly defined intervals. An employer's failure to pay employees wages or benefits on time can result in significant monetary damages. Furthermore, if an employee sues under the WPCL and is successful, a reasonable attorneys' fees award to the employee is mandatory. 

On March 1, 2017, in the case of Grimm v. Universal Medical Services, Inc., the Pennsylvania Superior Court addressed what effect an employee's agreement to limit his or her recoverable damages to $25,000 or less under a mechanism in the PA Rules of Civil Procedure had on a subsequent award of attorneys' fees. In other words, if an employee agrees to cap his or her damages at $25,000, does that limitation only apply to the amount of wages and penalties the employee can recover, or does it apply to wages, penalties, and attorneys fees?

In a win for future plaintiffs, the Superior Court held that a self-imposed damages limitation of $25,000 under PA Rule of Civil Procedure 1311.1 does not limit the amount of attorneys' fees a trial court may award to a successful claimant, even if the effect of that award brings the plaintiff's total recovery to over $25,000. 

In Grimm, for example, the plaintiff sued his ex-employer for failure to reimburse business expenses charged on his personal credit card prior to the end of his employment. Before trial, the plaintiff agreed to limit his damages to less than $25,000 under PA Rule of Civil Procedure 1311.1. The jury eventually found in the plaintiff's favor and awarded him more than $14,000 in unpaid reimbursements and liquidated damages. Following the verdict, the plaintiff requested an award of almost $26,000 in reasonable attorneys' fees from the trial court under the WPCL. The employer objected, arguing that because the plaintiff already agreed to limit his damages to $25,000, he could only recover attorneys' fees equal to the difference of $25,000 and the amount of the jury's verdict, or $11,000 ($25,000 cap - $14,000 jury award = $11,000). The trial court disagreed and awarded the entire amount of the requested attorneys' fees. 

The Pennsylvania Superior Court affirmed, holding that an award of attorneys' fees to a successful plaintiff under the WPCL does not constitute "damages recoverable" under PA Rule of Civil Procedure 1311.1. Rather, such an award is in addition to a jury's verdict and designed to make the successful plaintiff whole. The Superior Court also noted that accepting the employer's argument could result in a situation where WPCL plaintiffs could be discouraged from filing lawsuits for unpaid wages and benefits for fear of accruing burdensome legal costs that would offset any award they might obtain.