Philadelphia’s New Wage Theft Ordinance Takes Effect

In November 2015, Philadelphia’s City Council passed the Philadelphia Wage Theft Ordinance, which took effect July 1, 2016.

Perhaps most significantly, the ordinance creates a new position—wage theft coordinator—within the city government and gives employees the ability to file wage theft complaints with the city. The wage theft coordinator is responsible for investigating wage theft allegations and may impose penalties for non-compliance with the ordinance. The ordinance establishes the following procedure for review of complaints submitted to the wage theft coordinator:
  • The wage theft coordinator reviews a complaint to determine whether the elements of the ordinance have been met.
  • If so, the wage theft coordinator informs the employer that it has 30 days to provide an answer to the complaint. The employer’s response must include all available records of the hours worked by the parties, amounts paid to the parties, and any lawful credits or deductions taken from the compensation to the parties.
  • The ordinance provides that the wage theft coordinator must issue written findings of fact and conclusions of law within 60 days of receiving the employer’s answer or within 110 days of receipt of the complaint—whichever is earlier.
  • The wage theft coordinator’s decision is appealable to a court within 30 days.
The ordinance also creates a private right of action enabling both employees and “any member of an entity or group alleging wage theft” (including unions) to file suit against a non-compliance employer. The statute of limitations for claims arising from the ordinance is three years. The private right of action does not require exhaustion of administrative remedies (e.g., filing a complaint with the wage theft coordinator or Equal Employment Opportunity Commission).

The ordinance also establishes new notice and posting obligations and sets minimum ($100) and maximum ($10,000) limitations on claims. The wage theft coordinator may also order the payment of unpaid wages and deny, suspend, or revoke any license or permit issued by the city to a non-compliance employer for one year.

Philadelphia’s ordinance is one of the most recent and perhaps far-reaching local wage theft regulations, but it is not unique. Localities such a Miami-Dade County, Florida; Cincinnati, Ohio; Seattle, Washington; and Santa Clara County, California, have enacted wage theft statutes in recent years. Additionally, legislatures in 16 states and the District of Columbia have passed wage theft laws. Employers operating in multiple locations should be aware not only of federal and state laws, but also city, county and municipal regulations as well. As reflected by Philadelphia’s Wage Theft Ordinance, local regulations featuring new administrative proceedings and increased penalties can have serious consequences on unwary employers.

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