The Pennsylvania Wage Payment and Collection Act requires employers to pay wages on regular paydays or face fines or imprisonment.
You must pay regular wages within 15 days of the end of the pay period. Employers must notify employees of paydays and pay period dates at the time of hire. Essentially, this is the legal justification for “holding” back one pay period’s wages.
Employees can file lawsuits under this law individually or in a class action. Upon receiving such a complaint, the Department of Labor may demand that the targeted employer post a bond for the amount in dispute. Liquidated damages of 25 percent of outstanding money or $500 (whichever is greater) is available to employees, should they make their case.
What must you do if you terminate employees or they quit before the end of a regular pay period? If such ex-employees demand their wages immediately, must you cut them a check? The answer is “no.” You don’t need to deliver the final paycheck until the next regularly scheduled payday even if the employee worked only part of the time.
For example, if you have a 14-day pay period and the employee quits on the first day, you would have a total of 28 days to pay him or her (13 days plus 15 days).
The law also makes it illegal to enter into a contract with an employee that would make the waiting period longer. You can, however, agree to pay earnings earlier if you want. For example, nothing prohibits you from paying employees on the last day of the pay period or making the pay period shorter.
Employers who violate the law are subject to $300 fines or up to 90 days in jail.
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