Utah 2017 Legislative Update – Employment Law Issues

by Payne & Fears

The 2017 session of the Utah Legislature produced few bills affecting employment law; but two bills recently signed by the Governor and one bill that was not passed this year may have an impact on Utah businesses.

Summary of Bills and Suggested Action

1. HB0238S01 Payment of Wages Act Amendment

Bill summary: This bill, signed on March 17, 2017, modifies the definition of “employer” under the Utah Payment of Wages Act (UPWA) to include “any person acting directly or indirectly in the interest of an employer in relation to an employee,” other than a labor organization.

The bill was partly a response to a 2015 case, Heaps v. Nuriche, LLC, 345 P.3d 655, 2015 UT 26 (2015), which held that managers of limited liability companies were not “employers” under the UPWA, and thus were not personally liable for unpaid wages. This bill brings Utah law into harmony with the Fair Labor Standards Act, making individual officers and directors potentially subject to personal liability.

The bill also clarifies that a private cause of action may be filed against an employer for wage claims. Employees may recover actual damages or 2.5% of unpaid wages per day for up to 20 days, and possibly penalties. For claims seeking $10,000 or less, an employee must first exhaust the administrative remedies set forth in the amended UPWA before filing any action in district court. 

Taking action: Utah employers are advised to review their practices and procedures regarding payment of wages, including timing of payment, permissible withholding, and payment of bonuses. As the fiscal note for this bill estimated that it could generate an additional 100 wage claims with the Utah Anti-Discrimination and Labor Division, employers should ensure that they are in compliance with Utah law in order to avoid corporate and individual liability.

2. SB0170 Workers' Compensation Workgroup

Bill summary: This bill, also signed on March 17, 2017, establishes a workgroup to make recommendations on several elements of Utah’s workers’ compensation system: (a) the award of attorney fees in workers’ compensation cases; (b) medical examinations by insurance companies; (c) a general guideline for claims adjusters in handling claims; (d) medical panel utilization and consistency;(e) the change in dependent compensation amounts for temporary partial disability, temporary total disability, permanent partial disability, and permanent total disability; (f) improving injured workers’ accessibility to the Division of Industrial Accidents, including the feasibility of the Division of Industrial Accidents making the initial contact with an injured worker rather than relying on the injured worker to make the initial contact; and (g) the prevalence of and possible penalties for bad faith denials of workers’ compensation claims by insurance carriers. The workgroup is to issue a Report by November 30, 2017.

Taking action: The workgroup established by this bill might recommend significant changes to Utah’s workers’ compensation system, including a more proactive approach to injury claims by the Division of Industrial Relations. Utah employers are advised to ensure that employees are aware of their workers’ compensation rights, that they are not discouraged from filing claims for workplace injuries, and that insurance carriers are not encouraged to deny employees’ claims, which could result in enhanced penalties for bad faith denial. 

3. SB210 Equal Pay Amendments

Bill summary: This bill, which was not passed out of Committee, would have required the Utah Department of Workforce Services to (1) conduct a study on whether there is a difference in pay between men and women in the state, and (2) create and maintain pay indices for certain occupations, stating the current pay range in the state for each occupation, controlling for variables including education, years of experience, occupation, and industry.

The bill also would have required Utah businesses with 15 or more employees working at least an average of 30 hours per week to adopt and disclose to each employee the written criteria used to determine whether to change an employee’s compensation or benefits based on the employee's performance. The employer would be allowed to adopt different criteria for each type of position, but would be required to demonstrate that it has applied the criteria “uniformly” to each employee in that position. Employers would have been prohibited from changing the criteria for an employee’s position less than six months before the date on which the employer considers whether to change an employee's compensation or benefits based on performance.

Taking action: Although this bill was not passed, it reflects an ongoing concern about gender equity in compensation that will likely continue to generate litigation and legislation. Utah employers are advised to (1) ensure that job positions and criteria for raises and bonuses are clearly defined, using objective criteria to deter managers from using considerations that favor one gender over another, (2) review their policies and practices to ensure that managers and supervisors with authority to hire and promote are aware of the company’s anti-discrimination policies, and (3) review the scale of compensation within positions and between similar positions, to determine whether there are gender disparities that cannot be explained by the type of objective criteria considered by this bill, including education, years of experience, occupation, and industry.

Review the full text of a bill in the Utah Legislature here >>


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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