Supreme Court of Pennsylvania Rejects Standalone Liquidated Damages Claims Under the WPCL

In Aita v. NCB Management Services, Inc., the Supreme Court of Pennsylvania held that an employee may not recover liquidated damages under the Pennsylvania Wage Payment and Collection Law (WPCL) based on the untimely payment of wages when the employer paid all wages due before the employee filed suit.

The decision clarifies an important question under the WPCL and gives Pennsylvania employers another reason to investigate and correct wage underpayments promptly, before litigation begins.

The Dispute

The defendant employed the plaintiff as its CEO. Under a written bonus agreement, the defendant agreed to pay the plaintiff a retention bonus in a series of 18 monthly installments. The defendant paid the first six installments on time but delayed the remaining payments because of cash-flow issues.

In 2017, the defendant paid the outstanding installments plus 6% interest (the legal rate of interest in Pennsylvania). Approximately 16 months after the final payment, the plaintiff sued the defendant for breach of contract and under the WPCL. Although the defendant had already paid the outstanding bonuses and interest, the plaintiff sought WPCL liquidated damages and attorneys’ fees for the late payments.

The trial court awarded the plaintiff $60,000 in liquidated damages. A divided superior court affirmed, holding that “an employee can bring an action for liquidated damages under the WPCL regardless of whether the employer has paid all outstanding wages by the time the legal action is commenced.”

The Supreme Court of Pennsylvania reversed.

No Unpaid Wages, No Standalone Liquidated Damages

The Supreme Court of Pennsylvania majority’s analysis began and ended with the WPCL’s text. Section 260.9a(b) permits an employee to bring an action “to recover unpaid wages and liquidated damages.” The court held that wages are “unpaid” only if they remain unpaid when the employee files suit. Wages paid late but before suit do not qualify.

Similarly, section 260.10 permits an employee, under specified circumstances, to recover liquidated damages “in addition” to unpaid wages. The court reasoned that liquidated damages supplement a claim for unpaid wages; they are not an independent claim that survives payment of the wages.

Finally, the court rejected the plaintiff’s reliance on the WPCL’s three-year statute of limitations, which applies to actions involving “unpaid wages or liquidated damages.” That provision sets the time for filing suit; it does not create or expand the underlying cause of action.

Because the defendant had paid the plaintiff all wages due before he sued, he could not maintain a WPCL claim solely for liquidated damages.

What Does This Mean for Employers?

Aita clarifies the importance of correcting a wage payment issue before litigation. If an employer pays all wages (and interest) due before an employee files suit, the employee cannot later sue under the WPCL solely for liquidated damages arising from the earlier delay.

To be sure, the decision does not excuse late wage payments. If the plaintiff had sued the defendant before the defendant paid all wages due, the result would likely have been different. 

Instead, the decision provides Pennsylvania employers with additional incentive to remedy wage payment issues promptly. Employers that discover a potential wage underpayment or receive a pre-suit demand should assess the claim without delay. If wages are owed and are not genuinely disputed, Aita makes the timing of corrective payment particularly important.