Utah Legislature’s amendments to two wage statutes now in effect

Ryan B. Frazier

May 2017
Utah Employment Law Letter

Although the origin of the phrase “jumping through hoops” is uncertain, it is generally accepted that it probably was a reference to circus animals jumping through hoops to please their trainers. The phrase is often used to refer to steps—usually ones deemed unnecessary—that must be un­dertaken before something can be achieved or attained. Many employment claims have hoops employees must jump through to achieve legal redress. For example, antidiscrimination laws typically require employees to seek redress with a federal or state agency before filing a lawsuit.

Utah has extended that requirement to many wage claims. During the 2017 legislative session, the Utah Legisla­ture revised certain provisions of the Utah Wage Claims Act (UWCA) and the Utah Payment of Wages Act (UPWA). Al­though the changes are not the greatest show on earth, they will have a significant impact on how employers pay wages in Utah. The changes took effect May 9.

Exhausting administrative remedies

In the past, employees had a choice of whether to pursue a wage claim directly in court or before the Utah Labor Commission. However, that changed sig­nificantly during the 2017 legislative session. The leg­islature passed amendments to the UPWA expressly providing employees a private claim. At the same time, the changes require wage claims of $10,000 or less to be filed with the labor commission before they can be pur­sued in court.

The requirement to first seek redress with an agency is known as exhaustion of administrative remedies. Under most laws that require employees to exhaust their administrative remedies prior to filing a lawsuit, the failure to first pursue a matter with an agency often results in dismissal of the lawsuit. There are a couple of exceptions to that new statutory rule. A wage claim of $10,000 or less may be filed directly in state court if it is coupled with nonwage claims against the employer. In addition, multiple employees may aggregate their wage claims, skip the labor commission, and proceed directly to court. The total amount of the wage claims must ex­ceed $10,000, or they will be dismissed.

Exhausted of exhausting administrative remedies

Forget the carrot. The Utah Legislature decided the best way to ensure wages are timely paid is to use a stick. Under the revisions to the UWCA, em­ployees who file a wage claim can seek not only un­paid wages but also other damages. Now, employ­ees can seek actual damages (which may be more than the unpaid wages) and an amount equal to 2.5 percent of the unpaid wages for the lesser of (1) a period beginning on the day the court issues a final order and ending on the day wages are paid or (2) 20 days after the court issues a final order. Finally, a court may award a penalty to employees.

‘Employer’ defined

The new statute also revises the definition of “em­ployer” in the UPWA. The definition used in the federal Fair Labor Standards Act (FLSA) has now been specifically incorporated into the UPWA. The change expands the group of employees who can be considered an “employer.” For example, as with the FLSA, a company’s officers and directors can now be considered the employer and be held liable for wage payment claims under the UPWA.

Lessons learned

The changes to the UPWA took effect May 9. Obvi­ously, employers must timely pay wages in accordance with the Act. Failing to do so may result in liability for both the company and individual officers and directors. Liability now comes with stronger penalties. Employers, including officers and directors, should take very seri­ously their obligation to ensure that wages are timely and correctly paid.

You can contact the author at rfrazier@kmclaw.com or 801-323-5933.

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