Washington’s New Statutory Wage Privilege: The Next Lobbying Tactic Against AO Employers | Miller Nash LLP
As we look to 2022, it’s time to remind Washington employers that the Washington Wage Recovery Act (the “Act”) comes into effect on January 1, 2022. Under the Act, employees can attach a lien ( that is, legal detention) on certain property. for allegedly unpaid wages. The purpose of the wage privilege is to guarantee the payment of wage claims. In practice, the law will allow employees to grant a lien on property even before a wage claim is filed or pending. As of January 1, 2022, employers in Washington may find that they receive a notice of wage claim lien even before notice of legal action or filing with the Department of Labor & Industries.
This new law broadly defines “employer” to include individuals, partnerships, associations, corporations, commercial trusts or any person or group of persons acting directly or indirectly in the best interests of an employer in relation to an employee. Also included are individuals or entities that are not the direct employer if they share a business relationship with the direct employer whereby they act in the “interest” of the direct employer, such as agencies. staff, sub-contractors and co-employers. The Act leaves open the question of whether a wage lien can be attached to the property of an officer, deputy director or agent of the employer when that individual willfully and intentionally commits certain wage violations.
“Salary claims” are also broadly defined to include claims for any unpaid wages owed to the employee, as well as any other compensation, interest, statutory damages, statutory holidays with pay, damages, fees. and legal fees or penalties. It does not include vacation, severance pay, paid time off not prescribed by law, or contributions to a benefit plan.
“Highly paid employees” are excluded from coverage. Any employee who owned five percent (5%) of the business in the current or previous year, or who received compensation in the previous year in excess of the “highly paid employee” indexed salary under 26 USC § 414 (q) for the purposes of a qualifying pension plan ($ 130,000 in 2021) is considered a “highly paid employee” under the Act.
Unlike most laws affecting wage claims which allow claims for three years after they expire, the wage lien is limited to two years from the date wages were first due.
Prepare for the fight to come
To prepare for the law, Washington employers with existing debt should work with their bank to determine whether the existence of a wage lien or filing a related lawsuit will result in a default under the documents. loan from the employer.
Second, the requirements of the Act for the establishment and exclusion of wage privileges are detailed and specific. If a wage lien is received, Washington employers should familiarize themselves with the language of the law or consult with a competent lawyer to confirm that the lien was properly filed and is valid. Failure to follow all of the steps and procedural requirements of the Act may be grounds for employers to extinguish a wage lien. For more details on the steps and procedural requirements of the Act, please consult a blog post series prepared by the Miller Nash Financial Services team.
Finally, as a best practice, Washington employers should conduct regular audits of time and payroll records for compliance, retain records for the required period, and review business policies annually to reflect and comply with new changes. in state and federal laws.