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July 14, 2025
On May 27, 2025, Philadelphia Mayor, Cherelle Parker, signed the Protect Our Workers, Enforce Rights Act (the “POWER Act” or “Act”) into law and it became effective immediately. The POWER Act, the first legislation of its kind in the country, provides sweeping protections for the more than 750,000 employees who work within the City’s geographic boundaries. The Act amends Title 9 of the Philadelphia Code regarding, among other things, wage theft, fair workweek law, paid sick leave, victims of retaliation, domestic and immigrant worker protections, recordkeeping requirements, and enforcement of worker protection ordinances.
The POWER Act also authorizes Philadelphia’s Office of Work Protections (“OWP”), within the City’s Department of Labor, to investigate and enforce all of the Act’s provisions, perform more thorough and proactive workplace investigations, and hold employers accountable for violations of other local employment laws. The Act focuses on making consistent the various retaliation standards in several local laws and revising substantive provisions of those laws.
Anti-Retaliation Protections
The Act prohibits employers from retaliating against employees who exercise their rights under the Act. While many of the laws affected by the Act already prohibited retaliation, the Act streamlines these anti-retaliation provisions. The Act provides for a rebuttable presumption of unlawful retaliation where an employer takes an adverse employment action against an employee within 90 days of the employee filing a complaint, opposing any unlawful employment policy or practice under the Act, advising anyone of their employer’s purported violations of the Act, or cooperating with an OWP investigation. An employer may rebut this presumption only if it can provide clear and convincing evidence that the employer would have taken adverse action against the employee notwithstanding the employee’s protected activity, provided the employer has written documents relating to the alleged adverse action. The Act expands the application of the anti-retaliation provisions to “any person associated with the employer.”
Extended Limitations Period and Elimination of Administrative Remedy Barriers
The POWER Act extends the statute of limitations for retaliation claims—from one year for administrative complaints and two years for private causes of action—to three years.
Significantly, the Act eliminates, as a prerequisite to filing a private lawsuit, the requirement for an employee to exhaust all of their administrative remedies with the applicable enforcement agency. While the Act does require employees to provide their employer with written notice of an alleged violation and allows employers 15 days to remediate the violation, if the alleged violation involves retaliation or willful misconduct by the employer, such notice is not required.
Wage Theft Protections
The Act shifts the burden of proof from employees to employers on allegations of wage theft and increases penalties for such violations. Moreover, the Act encourages independent contractors and immigrant workers (regardless of immigration status), who believe their employment status has been misclassified, to submit wage theft complaints.
Paid Sick Leave Expansions
The Act defines “paid sick time” as time that is compensated at the same hourly rate with the same benefits (including health care benefits) as the employee normally earns from their employment at the time the employee uses the paid sick time.
The Act requires employers to provide paid sick leave to probationary employees covered by a collective bargaining agreement. For tipped workers, it expands the definition of who qualifies as a “tipped” worker by increasing the hourly rate for tipped workers for paid sick leave under Philadelphia’s Paid Sick Leave Ordinance from $30 to $50 per month in tips.
The hourly rate for paid sick time for tipped workers is calculated by taking the numerical average of the hourly wage for “Bartenders,” “Waiters & Waitresses,” and “Dining Room & Cafeteria Attendants & Bartender Helpers,” as defined under the Standard Occupational Classification Code and published for Philadelphia County by the Pennsylvania Department of Labor.
Domestic Worker Protections
The Act defines “domestic worker” as any worker who: (i) works for one or more hiring entities; and (ii) is an individual who works in residence for the purposes of: caring for a child, serving as a companion or caretaker for a sick convalescing person, elderly person, or person with a disability; housekeeping or house cleaning; cooking; providing food or butler service; parking cars; cleaning laundry; gardening; personal organizing, or for any other domestic service purpose.
The Act requires employers of domestic workers to execute written contracts, no later than the first day the worker is expected to start their job, governing the worker’s specific job duties, hourly wage and overtime wage, weekly schedule, manner and frequency of payment, break/meal periods, sick leave time, modes of transportation required and/or provided, paid holidays, other benefits provided, and the length of the contract.
If the OWP, or other enforcement agency, provides an employer of domestic workers written notice of alleged violations of the Act, and the employer fails to cure such violations within 30 days of notice, the employer is liable for penalties and damages provided for in the Act.
Immigrant Worker Protections
The Act authorizes the OWP to certify applications and submit statements of interest on behalf of immigrant workers, including those subject to unlawful retaliation, who may be eligible for certain visas.
Recordkeeping Requirements
The Act requires employers to maintain true and contemporaneous records for at least three years—up from two years under the prior law—of hours worked (including dates worked, start/end times, and break/meal periods), wages and benefits paid (including dates paid), rate of pay, sick leave earned and taken (including whether it was paid or unpaid), whether a written contract with a specific employee exists (including all versions of said contract), and disciplinary actions against employees. Employers are required to provide such records to OWP upon request.
Mandatory Notice and Posting Requirements
Prior to the enactment of the POWER Act, Philadelphia employers were required to issue mandatory notices concerning employees’ rights directly to employees by way of a displayed poster and in the employer’s handbook. While the Act eliminates the requirement for employers to include the mandatory notice language in their handbooks, employers still are required to provide employees with notice of their rights under the Act, including paid sick leave (and the terms of the use of sick leave under the Act), wage theft protections, and anti-retaliation.
The required notice to employees must be in writing and must be provided to employees in English and in any other language that is the first language spoken by at least five percent (5%) of the employer’s workforce.
If an employer fails to provide the required notice, the Act equitably tolls the statute of limitations for filing an administrative complaint or civil lawsuit during the period in which the employer failed to comply.
The Worker Justice Fund and the “Bad Actors” Database
Because of “usual-suspect” employers, the Act authorizes the creation of the Worker Justice Fund, which collects fines levied on employers for violations of the Act and provides that money to retaliation victims.
The Act also establishes a publicly available “bad actors” database of all employers who fail to comply with judgments or have multiple labor law violations. The database lists employers with three or more violations of the Act.
Increased Penalties for Violators
If the OWP finds an employer is in violation of the Act, it can seek civil penalties of $2,000 for each violation and up to $2,000 for each violation of the mandatory notice and posting requirements. Further, employees are entitled to liquidated damages equivalent to other monetary damages determined to be owed by the employers. The Act also expressly authorizes employees to seek damages for emotional or physical harm suffered as a result of the conduct giving rise to an employer’s violation. In certain situations, employers may be required to display written notices at their place of business that they violated the Act.
In addition to the substantial fines and “bad actors” database, the OWP now has the power to deny, revoke, or suspend business licenses (and applications) and procurement contracts for employers who repeatedly violate the Act.
IMPACT ON PHILADELPHIA EMPLOYERS
The POWER Act’s goal is to hold employers publicly accountable for violations of local labor laws. With the Act taking effect immediately, employers had no grace period to prepare for and implement any required changes to their policies and procedures. Thus, it is paramount for Philadelphia employers to quickly familiarize themselves with the Act’s requirements and take immediate action to ensure compliance.
For example, employers should analyze their existing policies to confirm compliance with the Act and other Philadelphia labor laws, maintain accurate employment records, be acutely aware of the increased penalties for violations and non-compliance, apprise their managers and executives of the new requirements, and stay abreast of changes and guidance issued by the Philadelphia Department of Labor.
As the Act is still in its infancy, expect the City of Philadelphia to issue additional guidance in the near future for both employers and employees on the Act’s requirements, enforcement procedures, and penalties.
KEY TAKEAWAYS
For employers, the POWER Act presents an opportunity to mitigate or eliminate possible cases of retaliation, implement necessary revisions to workplace policies and practices, and to take steps to insulate themselves from avoidable, costly employment-related lawsuits and the resulting penalties.
For employees, the Act represents a much needed commitment to defending workers’ rights at the local level, which appears to be in stark contrast to the ongoing assault on labor laws at the federal level.
While it remains to be seen whether the Act will embolden other local jurisdictions across the country to take action to revamp labor protections for their employees, Philadelphia has certainly taken a step in the right direction to create a more equitable workplace and give POWER to its workers.
This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice. Always consult an attorney with specific legal issues.
