Pennsylvania Labor and Employment Blog

You've Got the Job, Details Will Follow - Employment Offer Letters & Non-Compete Agreements

Adam Santucci — Sun, 16 Jun 2013 15:10:34 -0500

This post was contributed by Eric N. Athey, Co-Chair of McNees Wallace & Nurick LLC's Labor and Employment Law Practice Group.

In Pennsylvania, a non-compete agreement (NCA) must be supported by legal "consideration" in order to be enforceable. If a newly hired employee signs a NCA at the time of hire as a condition of employment, the new job is the consideration for the agreement not to compete in the future. On the other hand, once an employee is already employed, his employer cannot foist an NCA on him and expect it to be enforceable unless new consideration is given (e.g. a special bonus, job protection, promotion, severance benefits, etc.). These basic principles are well established under Pennsylvania law. But what happens if an employer presents a NCA to a new hire after he accepts a written job offer but before he actually starts work? This scenario was recently addressed by the Supreme Court of Pennsylvania in Pulse Technologies, Inc. v. Notaro.

In Pulse Technologies, the company provided Mr. Notaro with a 2 ½-page offer letter that included a description of the job, salary, benefits, and start date. The letter also stated: "You will also be asked to sign our employment/confidentiality agreement. We will not be able to employ you if you fail to do so." The letter further explained that the employment agreement would contain "definitive terms and conditions" of employment. Mr. Notaro signed and returned his offer letter as instructed. On his first day of employment, he was provided with an "employment/confidentiality agreement" that contained a non-compete provision. Notaro read and signed the agreement without objection, understanding that it contained restrictions on his ability to compete in the future. Significantly, he signed the agreement before he began performing his new job.

Over four years later, Mr. Notaro left Pulse Technologies to take a managerial position with one of the company's competitors.

Pulse Technologies successfully enforced its NCA against Notaro in trial court; however, on appeal, the Superior Court of Pennsylvania found the NCA to be unenforceable. Specifically, the Superior Court found that Pulse Technologies' offer letter did not mention a NCA and the company could not impose one on him after he had started employment.

On appeal to the Supreme Court of Pennsylvania, Pulse Technologies succeeded in having the Superior Court's decision vacated. The Supreme Court disagreed with the lower court's ruling on several counts. First, Mr. Notaro's offer letter explained that he would be required to sign an employment agreement that contained the "definitive terms and conditions" of employment – and nowhere did the letter preclude the possibility of a NCA. Secondly, the offer letter was merely a part of the hiring process and was not itself an employment contract. Third, and most importantly, the Supreme Court found that it was the signing of the employment agreement, and not the offer letter, that signified Mr. Notaro's acceptance of employment. For this reason, Notaro was provided with consideration (i.e. his new job) when he agreed to the NCA provision as necessary for the NCA to be enforceable.

In a nutshell, the Pulse Technologies decision means that a NCA signed before an employee begins his job may be enforceable even if it was not mentioned in the employee's written job offer. However, as a matter of best practice, employers should in most cases avoid surprising new hires by presenting them with NCAs on their start date. Notwithstanding the Pulse Technologies decision, advance notice to new hires of a NCA requirement is advisable – and the best way to provide this notice is often in an offer letter.

NLRB Finds Discussions With Employees of Another Employer Can Constitute Protected Activity

Adam Santucci — Fri, 31 May 2013 15:02:50 -0500

As we discussed with participants in our recent Labor and Employment Law Seminar, despite recent setbacks, the National Labor Relations Board continues to issue decisions that are concerning for employers. These decisions, which impact union and non-union employers alike, often take an expansive view of the protections afforded employees by the National Labor Relations Act. In a recent case involving a complaint filed by an (alleged) independent contractor working for a non-union employer, the Board found that the contractor's electronic communications, directed at employees of a different employer, were protected by the Act because the communications constituted union organizing activity.

In New York Party Shuttle (pdf), the Board first considered whether the complaining party, a tour guide, was an employee or an independent contractor. The Tour Guide was regularly hired by Party Shuttle to provide guided tours of New York City. He also maintained his own tour company, and booked and provided tours through his own company. The Board held that Party Shuttle failed to establish that that the Tour Guide was an independent contractor. In making its decision, the Board applied a common law test that considers a multitude of factors and places the burden on the employer to establish independent contractor status. In this case, the Board found that Party Shuttle failed to establish that the tour guide as an independent contractor.

After determining that the Tour Guide was an employee, the Board turned to the next issue, the Tour Guide's termination.

The Tour Guide was hired in October 2011, and quickly became displeased with the working conditions at Party Shuttle. After one month on the job (that was fast) the Tour Guide began suggesting to other employees that they form a union. Some of these employees complained to the Party Shuttle that the Tour Guide was harassing them regarding the union issue and that he was overly aggressive and unprofessional with both coworkers and customers. After the holidays, Party Shuttle had few tours available and did not schedule the Tour Guide. In early February of 2012, the Tour Guide sent an email to his FORMER coworkers, at a completely separate tour company, complaining about the working conditions at Party Shuttle. The email contained a number of inaccurate statements about Party Shuttle. The Tour Guide later posted similar comments to Facebook. The Tour guide was given no further assignments by Party Shuttle and he then amended an earlier complaint against Party Shuttle that he had filed with the Board alleging that he was unlawfully terminated.

The Board concluded that Party Shuttle's failure to provide the Tour Guide with assignments was based on his discussions with other employees regarding union organizing. The Board was not concerned about the timing of the original complaint or Party Shuttle's argument that the Tour Guide acted inappropriately during interactions with coworkers and customers. In addition, Party Shuttle argued that the Tour Guide's statements to third parties about Party Shuttle were inaccurate and abusive. Nonetheless, the Board concluded that the Tour Guide's comments were protected by the Act, even if those comments were directed at employees of another company!

It seems that, regardless of how an employee discusses an issue or with whom, if the employee is discussing union organizing or terms and conditions of employment, those discussions will be protected. It does not seem to matter how other employees feel about the discussion, whether the discussion takes place with non-employees, or whether those discussions violate employer policies. As a result, employers must proceed with caution when attempting to address an employee discussions of the terms and conditions of employment.

Interpretation Letter Permits Union Organizers to Be Employee Representatives during OSHA Inspections at Non-Union Worksites

Jodi Frankel — Wed, 22 May 2013 07:29:05 -0500

This post was contributed by Andrew L. Levy, Esq., a Member in McNees Wallace & Nurick LLC's Labor and Employment Practice Group.

The Occupational Safety and Health Administration (“OSHA”) recently released a Letter of Interpretation authorizing employees at non-union workplaces to designate union organizers to act as their employee representative during an OSHA inspection. The following is an excerpt from the Letter of Interpretation, the full version of which is available here:

Question: May workers at a worksite without a collective bargaining agreement designate a person affiliated with a union or community organization to act on their behalf as a walk around representative?

Answer: Yes . . . [a] person affiliated with a union without a collective bargaining agreement or with a community organization can act on behalf of employees as a walk around representative so long as the individual has been authorized by the employees to serve as their representative.

Under the Occupational Safety and Health Act and OSHA regulations, an employee representative is given an opportunity to participate in an on-site OSHA inspection. For purposes of the on-site inspection, the OSHA Field Inspection Reference Manual has defined employee representatives to include:

a representative of the certified or recognized bargaining agent, or, if none,
a member of a safety and health committee who has been chosen by the employees (employee committee members or employees at large) as their OSHA representative, or
an individual employee who has been selected as the walk around representative by the employees of the establishment.

OSHA's recent Letter of Interpretation, however, represents a shift from the traditional definition of employee representative and now will allow non-employees (including union organizers) who do not currently represent the employees for purposes of collective bargaining to serve as the employee representative during the inspection. Obviously, if put into practice, OSHA's position could not only make the OSHA inspection process more difficult and burdensome for the employer, but could also enable union organizers to get a significant "foot in the door" during an organizing campaign.

OSHA’s new interpretation allowing a third-party-outsider representative raises a host of legal issues concerning OSHA's authority to conduct workplace inspections. For example:

How will it be determined whether the employees really wish for a certain union to serve as a representative for purposes of an inspection?

What role does the union organizer play and what authority does he or she have while onsite?

Where does OSHA derive its authority to compel an employer to allow third parties to enter its facilities?

Whether OSHA area offices and compliance officers will adopt OSHA’s interpretation and how they will exercise the discretion provided to them in the Letter of Interpretation remains to be seen. In the meantime, non-union employers should be vigilant at the outset of OSHA inspections to obtain clarity with respect to whether an employee representative will participate in the inspection and, if so, who that individual will be. In the event that OSHA attempts to permit a third party who is not employed by the employer to serve as the employee representative during an inspection, non-union employers are well advised to immediately consult with counsel. Depending upon the circumstances, the employer might consider withholding consent to the inspection or, at the least, to involvement of the third party. It appears questionable whether OSHA could obtain a court-ordered search warrant requiring that an employer permit entry into its facilities by such an affiliated third party.

Litigation challenging OSHA’s new interpretation could be forthcoming. Through this blog, we will keep you updated on any advancements in this area.

Facebook Discussion About "Street People" Protected

Adam Santucci — Tue, 14 May 2013 11:50:27 -0500

In a recent decision involving employee social media activity, the National Labor Relations Board held that a high-end clothing boutique in San Francisco violated the National Labor Relations Act when it terminated employees who complained on Facebook about working late at night in an unsafe neighborhood. The Board also found that a policy in the employer's handbook prohibiting disclosure of wage and compensation information was unlawful.

The employees at issue in Bettie Page Clothing (pdf) raised concerns to the store manager and others about the store's hours, which required that the employees close the store after dark. The employees were concerned about being harassed by "street people" after closing up. When the employees' internal complaints were not successful in having the store hours changed, the employees criticized the store manager during multiple discussions on Facebook. Shortly after the posts, the employees were terminated.

The employees filed a complaint with the Board challenging their terminations. The Board affirmed the decision of an Administrative Law Judge (ALJ), holding that the employees' complaints and sarcastic remarks about the store manager on Facebook were a discussion about the terms and conditions of employment. The Board stated that the discussions about the manager's refusal to address their concerns over store hours were "classic" concerted protected activities, and therefore, the employees' terminations based on those discussions were unlawful. The Board ordered the employees reinstated.

In addition, the Board affirmed the decision of the ALJ finding that the policy in the employer's handbook that prohibited the disclosure of wage and compensation information violated Section 7 of the Act. The Board ordered the employer to rescind the policy.

As we have discussed in the past, the Board continues to take a hard line when it comes to employee discipline for social media activity. The Board has made clear its position that discussions on Facebook are the equivalent to discussions around the water cooler, but I am not sure I agree. For example, discussions around the water cooler typically do not create electronic records and have a worldwide audience. Only time will tell whether the Board's decisions in this area will be affirmed by the courts.

Please also keep in mind that it appears that the Board has been reviewing employer policies with increased scrutiny. If you haven't done so already, it is a good time to proactively review your policies to ensure compliance with the Act.

Liquor Law Update

Adam Santucci — Mon, 13 May 2013 13:08:41 -0500

McNees Wallace & Nurick LLC's Alcoholic Beverage and Liquor License Practice Group recently published a Liquor Law Update, which can be accessed by clicking here. The Update contains an article on employee tip pools that readers may find interesting.

Whether you need to acquire a liquor license, sell a liquor license, keep a liquor license, move a liquor license, expand the use of a liquor license, restrict a liquor license, or just need some advice about what you can do with a liquor license, McNees attorneys in the Alcoholic Beverage and Liquor License Practice Group are ready and able to assist you. We are familiar with the workings of both the Pennsylvania Liquor Control Board (PLCB) and the Ohio Department of Commerce, Division of Liquor Control (DOLC), and routinely interface with personnel at PLCB and DOLC.

NLRB'S Notice Posting Rule Invalidated by DC Court of Appeals

Jodi Frankel — Wed, 08 May 2013 11:44:24 -0500

This post was contributed by Bruce D. Bagley, Esq., a Member in McNees Wallace & Nurick LLC's Labor and Employment Practice Group.

On May 7, 2013, a three-member panel of the U.S. Court of Appeals for the DC Circuit vacated the NLRB's Notice Posting Rule, originally issued by the Board in August 2011. The Rule required that virtually all private-sector employers post a Notice to Employees, informing employees of various rights under the National Labor Relations Act (Act), such as the rights to engage in union organizing, form or join a union, and strike. The Notice also described various actions by employers or unions that would be illegal under the Act.

The Rule was immediately subject to legal challenge. Notably, the National Association of Manufacturers (NAM) challenged the validity of the Rule in the U.S. District Court for the District of Columbia. In March 2012, the District Court struck down several provisions concerning how the Rule would be enforced by the Board but ultimately held that the Board did have legal authority to promulgate the Rule. Thereafter, NAM appealed the District Court's decision to the D.C. Court of Appeals. Meanwhile, another federal District Court, in South Carolina, had vacated the Rule in its entirety in April 2012. The NLRB appealed that decision to the Fourth Circuit Court of Appeals, where it remains pending at this time.

The DC Circuit's May 7 opinion in National Association of Manufacturers, et al. v. NLRB vacating the Rule was premised on what the Court deemed to be unlawful provisions for enforcement of the Rule against employers. Specifically, the Board had designated three enforcement mechanisms: (1) an employer who failed to post the Notice would be committing an unfair labor practice, (2) an employer's failure to post the Notice would be evidence of anti-union animus in cases involving employer motivation, such as discharges or refusals to hire, and (3) failure to post would toll the Act's six months limitations period for filing an unfair labor practice charge.

Judge Randolf, writing for the Court, concentrated most of his opinion on employer "free speech" rights, stating that Section 8(c) of the Act protects not just an employer's right to state its opinion on whether its employees should unionize, but also protects "the right of employers (and unions) not to speak." The Court held that enforcement of the NLRB's Rule would impermissibly force employers to speak to its employees about topics they might prefer not to address, e.g., employees' rights to unionize, picket, strike, etc. All three of the Rule's enforcement provisions were struck down by the Court, with Judge Randolf concluding that the Rule (whether or not it was lawfully promulgated) could not stand if there was no lawful way to enforce it. Judges Brown and Henderson, writing a separate but concurring opinion, went even further than Judge Randolf and found no statutory authority for the Board to promulgate the Rule, even aside from the Rule's unlawful enforcement mechanisms.

In light of the Court’s decision, the Rule remains invalid, and employers throughout the country are, for the time being, relieved of any obligation to post the Notice. Like any disappointed litigant, the Board must now decide whether to appeal the DC Circuit Court's Opinion. Already pending at the U.S. Supreme Court is the Board's request to appeal from the DC Circuit’s decision in Noel Canning v. NLRB. In Noel Canning, the DC Court of Appeals found that President Obama acted unconstitutionally by making three so-called “recess” appointments to the Board in 2012. Because of these unconstitutional appointments, the Court held that all of the Board’s decisions since January 2012 were null and void.

Suffice it to say, it has not been a pleasant Spring for the President's extremely pro-union appointees at the Board!

Employers Can Use Disclaimers to Protect Customers from Employee Personal Injury Lawsuits

Kelley Kaufman — Tue, 07 May 2013 08:32:04 -0500

This post was contributed by Joseph S. Sileo, Esq., a new addition to McNees Wallace & Nurick LLC's Labor and Employment Law Practice Group. McNees recently welcomed Joe, Jennifer LaPorta Baker and Jennifer J. Walsh in Scranton, Pennsylvania.

As employers know all too well, an employee who is injured in connection with work can receive workers' compensation benefits simply by establishing that the injury occurred in the course of employment and resulted in a loss of wages. Proof of employer negligence or fault is not required. In exchange for this benefit, workers' compensation is generally the "exclusive remedy" for employees who sustain work-related injuries. In other words, injured employees are not permitted to sue their employers for negligence in connection with their injuries. This exclusive remedy reflects the public policy bargain between employers and employees underlying Pennsylvania's workers' compensation system, by which workers give up the right to bring personal injury suits against their employers in court in exchange for the guaranty of workers' compensation benefits for work-related injuries.

Pennsylvania's Workers' Compensation Act does not, however, prevent injured employees from taking legal action against third parties, such as an employer's clients, customers or vendors. For example, an employee who is injured while working on the property of an employer's client may, in some circumstances, file a workers' compensation claim against his or her employer and file a lawsuit against the client for negligence.

A recent decision by Pennsylvania's Supreme Court confirms that employers can take steps to prevent such employee-initiated third party lawsuits relating to injuries covered by workers' compensation. In Bowman v. Sunoco, a security guard employee was injured during work when she fell on an icy sidewalk at a facility owned by her employer's client. In addition to filing a claim with her employer for workers' compensation benefits, the employee also sued the client for negligence. The Court held that a disclaimer signed by the employee when she was hired – stating that she waived her rights to sue the employer's clients for injuries covered by workers' compensation – was valid and precluded the employee's lawsuit against the employer's client.

For obvious reasons, employers have an interest in protecting their clients, customers and vendors from embarrassing, costly and time-consuming employee lawsuits. In light of the Bowman decision, employers should consider using disclaimers to prevent employee lawsuits against third parties relating to work injuries covered by workers' compensation. Such disclaimers may be particularly useful in the case of employees who routinely have direct interaction with an employer's customers and vendors, or who perform work at client facilities or other remote locations.

Feel free to contact any member of the McNees Wallace & Nurick Labor and Employment Practice Group for assistance with labor and employment law issues and/or if you have any questions regarding this article.

New Form I-9 Required Beginning May 7

Jodi Frankel — Mon, 29 Apr 2013 10:21:46 -0500

This post was contributed by Jennifer LaPorta Baker, Esq., an attorney in McNees Wallace & Nurick LLC's Labor and Employment Law Practice Group and based in the Scranton, Pennsylvania office.

U.S. Citizenship and Immigration Services (USCIS) recently released the revised Employment Eligibility Verification Form I-9, which employers are required to use to verify the identity and employment authorization of newly hired employees. Starting May 7, 2013, employers must use the new Form I-9 (with a revision date of 03/08/13) to comply with their employment eligibility verification responsibilities. The new Form I-9 was first published by U.S. Immigration and Customs Enforcement (ICE) on March 8, 2013, and had been authorized for use, along with the previous Form. Now, use of the new Form I-9 will be mandatory.

An electronic version of the new Form I-9 is available on the USCIS website. USCIS has also released an updated Handbook for Employers (M-274) available here (pdf). A Spanish version of the new form is also available on the USCIS website for use in Puerto Rico only. Spanish-speaking employers and employees in the 50 states, Washington, DC, and other U.S. territories may use the Spanish version for reference, but must complete the English version of the form.

Employers using an electronic version of the Form I-9 should receive an updated product from their software providers. Those employers must transition electronically to the new Form I-9, or otherwise take steps to implement a compliant system for completing the new Form I-9, by May 7.

Employers who fail to use the new Form I-9 on and after May 7 may be subject to penalties issued by ICE and/or the Department of Justice.

Employers should conduct internal audits of immigration policies and protocols as necessary to assess and maintain legal compliance and reduce the significant risks and liabilities associated with non-compliance. Failure to maintain compliance may result in hefty fines and stiff penalties. Common employer violations include failure to obtain the correct employee documentation as required by federal law, as well as improperly completed I-9s. Remember, there is no “good faith” defense for I-9 paperwork violations. The best defense is to conduct annual self-audits and correct defective I-9 Forms before an aggressive government agency is at your door.

Supreme Court Reverses Third Circuit Decision Precluding Early Use of Offer of Judgment to Defeat An FLSA Collective Action

Jodi Frankel — Fri, 19 Apr 2013 07:45:49 -0500

This post was contributed by Adam R. Long, Esq., a Member in McNees Wallace & Nurick LLC's Labor and Employment Practice Group.

In 2011, the Third Circuit held that a pre-certification offer of judgment made by a defendant-employer to an individual plaintiff would not require dismissal of the plaintiff's entire FLSA collective action, even if the offer of judgment would fully satisfy the plaintiff's own individual claims. (Third Circuit opinion available here.) Before this decision, employers increasingly had used offers of judgment made pursuant to Rule 68 of the Federal Rules of Civil Procedure to "pick off" individual plaintiffs and defeat FLSA collective actions early in the litigation before they could be certified. The Third Circuit held that even though an offer of complete relief could moot the plaintiff's individual claims (regardless of whether the offer was accepted), it would not defeat the broader FLSA collective action.

In June 2012, the Supreme Court agreed to review the Third Circuit's decision on this issue. In Genesis Healthcare Corp. v. Symczyk, a 5-4 decision announced earlier this week, the Supreme Court reversed the Third Circuit's decision and held that if the individual plaintiff's own claims were made moot by an offer of judgment prior to certification of the FLSA collective action, the broader FLSA collective action must be dismissed. (Supreme Court opinion available here.) Justice Thomas, writing for the majority, noted that both the District Court and Third Circuit found that the defendant-employer's unaccepted offer of full remedy made pursuant to Rule 68 had mooted the sole plaintiff's individual FLSA claims. Justice Thomas explained that because Symczyk, the plaintiff, had not challenged this finding in a timely manner, the question of whether an unaccepted offer of complete relief mooted Symczyk's individual claims was not properly before the Court. The Court simply accepted the Third Circuit's position on this issue and assumed that the Rule 68 offer mooted Symczyk's own claims. Based on this unchallenged assumption, the Court held that the FLSA collective action must be dismissed because the only plaintiff's individual claims were moot.

In her dissent, Justice Kagan maintained that the majority decision had no effect beyond the specific case at issue, because she believed that the Third Circuit's underlying decision on the mootness of Symczyk's individual claims was clearly erroneous. In the view of Justice Kagan, the assumption on which the majority decision was built (i.e., an unaccepted offer of complete relief mooted the plaintiff's individual claims) was faulty, making the Court's holding meaningless.

Unfortunately, the Supreme Court's decision in Genesis did not provide litigants with a definitive answer on the viability of the Rule 68 "pick off the plaintiff" strategy in FLSA collective actions. While the majority expressly held that the strategy can defeat a pre-certification collective action if the individual plaintiff's claims truly were made moot, it did not address the underlying question of whether an unaccepted offer of complete relief actually would moot the individual plaintiff's own claims. Justice Kagan and the three other dissenting Justices believe that such an offer would not moot the individual claims. While the Genesis decision breathes new life into the Rule 68 offer strategy for defendant-employers, the individual claims/mootness issue seemingly will continue the uncertainty for courts and litigants in FLSA collective actions.

PA Child Labor Act Modernizes and Clarifies Work Hour Restrictions for Minors in Time for Summer Hiring Season

Jodi Frankel — Thu, 21 Mar 2013 11:37:52 -0500

With spring upon us and warmer temperatures hopefully just over the horizon, many employers are beginning to recruit high school students for after-school and summer employment. When doing so, employers must be aware of specific rules under both federal and state laws regarding the employment of minors (i.e., individuals under 18 years of age).

Earlier this year, the Pennsylvania Child Labor Act (“PCLA” or “Act”) went into effect. The Act is designed to clarify the state law and make it consistent with child labor standards imposed under the federal Fair Labor Standards Act (“FLSA”). For all intents and purpose, compliance with the PCLA will satisfy the employer’s obligations under the FLSA.

The Act sets forth minimum age requirements, permissible working hours and time restrictions, and permitting requirements. The most notable requirements of the PCLA are outlined below:

Minimum Age

With limited exceptions, children under the age of 14 may not be employed in any occupation.

Hours of Work and Work Time Restrictions

Minors who work more than five continuous hours are required to be given a 30-minute uninterrupted rest period.
Minors are prohibited from working more than six consecutive days.
Minors Ages 14 & 15:
- During School Term – maximum 3 hours / school day, 8 hours / non-school day; maximum 18 hours / school week (M-F) with 8 additional hours on Sat / Sun; no interference with school attendance.
- During School Vacations – maximum 8 hours / day; 40 hours / week.
- Work Time – employment between 7 a.m. and 7 p.m. during school term; during school vacations, minors may work until 9 p.m.
Minors Ages 16 & 17:
- During School Term – maximum 8 hours / day; maximum 28 hours / school week (M-F), with 8 additional hours on Sat / Sun; no interference with school attendance.
- During School Vacations – maximum 10 hours / day; 48 hours / week; minor may refuse any request to work more than 44 hours / week.
- Work Time – employment between 6 a.m. and midnight during school term; during school vacations, minors may work until 1 a.m.

Place and Type of Employment

Minors are prohibited from working in establishments where alcoholic beverages are produced, sold, or dispensed. Except:
- Minors under 16 may be employed at a recreational establishment (e.g., golf course, amusement park) where alcohol is served, provided the minor is not handling or serving alcohol.
- Minors over 16 may work in the part of the establishment where alcohol is not served or in a hotel, club, or restaurant provided the minor is not handling or serving alcohol.
Minor employees are prohibited from working in occupations designated as “hazardous” by state or federal law – e.g., machinery, electrical work, explosives, demolition.
Minors are prohibited from engaging in “youth peddling” – e.g., selling or promoting of goods or services to customers at locations other than the employer’s establishment.
The PCLA establishes specific guidelines for children working in the entertainment industry or in other performance-related employment.

Work Permits and Work Authorizations

In order to work, a minor must have a valid work permit issued by the school district in which the minor resides. The type of work permit required varies based on the age of the minor.
If the minor is under the age of 16, the employer must obtain a written statement from the minor’s parent or legal guardian acknowledging understanding of the duties and hours of employment and granting permission to work. This form prepared by the Pennsylvania Department of Labor and Industry (“L&I”) is one way to satisfy this obligation.

Employer’s Notice, Posting, and Recordkeeping Obligations

Within 5 days of the minor’s start date, the employer must provide written notice of employment to the school district issuing the permit. The PCLA sets forth the specific content that must be included in this notice. Written notice must also be provided within 5 days of the minor’s termination of employment.
Employers employing minors are required to post, in a conspicuous place, the new “Abstract of the Child Labor Act Hours Provisions” prepared by L&I and updated to reflect these changes.
Employer must maintain at the place of employment a list of all minors employed, the schedule for each minor (including the daily and weekly hours worked and rest breaks taken), copies of the minor’s work permit, and any required parental authorizations. (NOTE: These recordkeeping requirements are in addition to those imposed by the Pennsylvania Minimum Wage Act.)

The PCLA imposes criminal penalties on employers for intentional violations of the Act and failure to produce the required records. In addition to criminal penalties, the PCLA also creates administrative penalties that may be imposed where criminal penalties are not pursued.

DOL Audits of Employer-Sponsored Group Health Plans Now Include Healthcare Reform Compliance

Kelley Kaufman — Mon, 18 Mar 2013 09:30:36 -0500

This post was contributed by Stephen R. Kern, Esq., a Member in the Employee Benefits Practice Group.

The U.S. Department of Labor (the "DOL") has recently enhanced its enforcement activities with respect to group health plans by significantly increasing the number of audits it is conducting. In addition, the DOL's audit letters contain significant document requests that are directed specifically at compliance with the Patient Protection and Affordable Care Act ("PPACA" or "healthcare reform") compliance obligations. For example, the DOL's audit letters now include the following:

Age 26 mandate – Plans must provide a sample of the written notice describing the enrollment rights for dependent children up to the age of 26 that has been used by the plan since September 23, 2010.
Prohibition on rescissions of coverage – If the plan has rescinded coverage, it must supply a list of all affected individuals and a copy of the written notice provided 30 days in advance of each rescission. The DOL will analyze whether the reason for the rescission complies with the healthcare reform standard of fraud or intentional misrepresentation of a material fact.
Monetary limits on essential health benefits – Plans that have imposed dollar limits since September 23, 2010 must provide documentation showing the limits that are applicable for each year. A plan must also provide a sample of the notice that it sent to participants stating that the plan's lifetime limits had been eliminated.
Grandfathered plan status – Employers that are retaining grandfathered plan status must provide documentation to substantiate that status, as well as a copy of the notice that is part of the plan's documents and has been provided to participants and beneficiaries.
Choice of Provider Notice – Nongrandfathered plans must provide a copy of the notice informing participants of the right to designate their choice of certain providers as well as a list of participants who received the notice.
Claims and external review – Nongrandfathered plans must provide samples of the claims and appeals forms that have been used since September 23, 2010 plus the contracts with any independent review organizations or third party administrators that are providing the required external reviews.

In light of this recent DOL audit activity, employers should carefully document their files regarding these healthcare reform compliance issues. To assist employers in this regard, the DOL recently published a very useful checklist entitled "Self-Compliance Tool for Part 7 of ERISA: Affordable Care Act Provisions" on its website. The DOL compliance tool allows employers to engage in a step-by-step analysis of their level of compliance with the healthcare reform requirements that are currently effective. In addition to the compliance issues referenced above, the compliance tool also deals with summary of benefits and coverage, emergency care, and preventive services.

The increased scope of the DOL's group health plan audits echoes the recent expansion of other DOL investigations and audits of employers (e.g., wage and hour audits, and other areas of labor and employment law compliance – see our recent blog article for more information). If you have any questions regarding DOL audits or PPACA, please do not hesitate to contact any member of our Labor & Employment and Employee Benefits Practice Groups.

Investigations/Audits of Employers by DOL Increase and Expand in Scope

Adam Santucci — Mon, 04 Mar 2013 17:55:44 -0500

The Department of Labor (DOL) routinely investigates and audits employers to ensure compliance with a variety of important labor and employment laws. Historically, wage and hour (overtime) compliance under the Fair Labor Standards Act has been the most common subject of the DOL's enforcement efforts.

Fueled by additional resources, funding and staffing, the DOL is increasing its enforcement efforts both in terms of frequency and scope. This concerning trend means that employers can expect an increase in the number of investigations and that such investigations, once initiated, will cover a broader range of compliance issues and dig deeper into those issues under review. In this regard, our clients are reporting that, in addition to typical wage and hour issues, expanded DOL inquiries as a matter of course now include review of other laws, such as the Family and Medical Leave Act, and even the Patient Protection and Affordable Care Act. It is also common for DOL investigations to "spread," resulting in the inquiry ultimately moving into areas other than the initial issue under review.

DOL audits can be inconvenient, disruptive and costly. If a violation is found, the DOL will attempt to compel remedial/corrective action, which may require an employer to revise its policies and pay damages. In the case of a wage and hour violation, for example, an employer may be liable for any unpaid overtime over the course of the past two to three years for each affected employee. Given the potential consequences, it is typically best to seek the advice of counsel at the onset of an audit.

To reduce the negative impact and potential liabilities associated with a forced government audit, particularly in the face of the DOL's more aggressive and expanded enforcement approach, employers are advised to review relevant employment practices and polices, and to periodically conduct internal compliance self-audits, before any outside investigation occurs. Our Labor & Employment Practice Group can assist you with reviewing employment polices/practices, conducting internal self-audits, and responding to any DOL compliance inquiry. Please do not hesitate to contact any member of our Group for assistance with these issues and any questions you may have.

Pennsylvania Regulatory Review Panel Disapproves of L&I's New UC Active Work Search Requirements

Jodi Frankel — Thu, 21 Feb 2013 15:14:50 -0500

In the past year there has been a flurry of activity in the courts and the General Assembly surrounding the availability of unemployment compensation benefit to employees within the state. To start off 2012, amendments to the Pennsylvania Unemployment Compensation Law (“Act 6” or “amendments”) took effect and imposed a requirement that claimants “mak[e] an active search for suitable employment” in order to be eligible for UC benefits. Prior to Act 6, Pennsylvania was the only state that did not require a UC claimant to search for work in order to qualify for benefits.

Act 6 directed the state’s Department of Labor and Industry (“L&I”) to establish the specific search efforts necessary for a claimant to satisfy the active search requirement. At a minimum, though, the amendments required claimants to (i) register for employment search services with the Pennsylvania CareerLink system, (ii) post a resume to the site, and (iii) apply for similar employment within a certain commuting distance.

Pursuant to the directive, L&I proposed specific additional steps claimants must take to make an active search for work. L&I's proposal established a two-tiered search scheme, tying the level of search efforts to the number of weeks for which a claim for UC was filed. Notably, L&I's regulations required claimants to apply for a specified number of positions each week, undertake certain work search activities other than applying directly for a position, and keep a record of such activities. The required efforts increased after a claimant filed for benefits for eight consecutive weeks. Legislative staff estimated L&I's proposed work search regulations would yield an estimated $24 million in annual savings to the state UC system.

Last week, officials with the Pennsylvania Independent Regulatory Review Commission (“IRRC”) voted to disapprove the work search rules. The IRRC, an independent state agency tasked with reviewing regulations before implementation, concluded that the L&I work search proposals were “not in the public interest.” In its comments on the regulations, the IRRC stated its opinion that the two-tiered system was inconsistent with the General Assembly’s intent in establishing the active search requirements, was unreasonable and overly burdensome on claimants, and exceeded L&I’s statutory authority.

Although IRRC disapproval does not permanently bar a regulation, it does delay its implementation. At this point L&I has three options: (i) withdraw the regulation; (ii) modify the regulation in light of the IRRC’s comments and resubmit for consideration by the IRRC and legislative standing committees; or (iii) resubmit the regulation without modification for consideration. L&I has yet to publicly address the vote of disapproval. While this development does not require employers to take any immediate action, we will keep you updated on any updates as they come to light.

Employee's History of Absenteeism Sufficient to Deny UC Benefits Even if Final Incident Justified

Jodi Frankel — Tue, 19 Feb 2013 14:38:21 -0500

Historically, in determining whether an employee discharged for absenteeism and tardiness was eligible for unemployment compensation benefits, the court’s analysis had focused on the final incident that led to termination. Specifically, even where the employer could point to a pattern of excessive absenteeism as the cause for discharge, the employee was not disqualified from receiving benefits if the last absence was justified. Late last year, however, the Commonwealth Court of Pennsylvania issued a decision that undermines this "last in time" approach.

In Grand Sport Auto Body v. UCBR (pdf), the Court considered whether Andrew Terrell was eligible for benefits after being discharged for excessive absences. Mr. Terrell had a pattern of unexcused tardiness and absences, including 19 incidents in a period of less than six months, and was previously warned about his attendance issues. His employer even pushed back his start time to improve his attendance, but he continued to be tardy. Towards the end of his employment, Mr. Terrell requested and was approved for leave from March 14 through March 21, 2011 to get married in Mexico. On March 21, 2011, Mr. Terrell’s flight home from Mexico was overbooked, leaving him unable to return to work on March 22, 2011, as scheduled. When Mr. Terrell did return to work the following day, he was suspended and later discharged because of his “history of attendance and tardy arrivals.”

Following his termination, Mr. Terrell applied for unemployment compensation benefits. Relying on court precedent, the referee found Mr. Terrell to be eligible for benefits. Specifically, the referee concluded that because the last absence was justified due to a change in flight schedule it did not constitute willful misconduct sufficient to deny benefits. The Unemployment Compensation Board of Review (“Board”) agreed.

On appeal, the Commonwealth Court of Pennsylvania concluded that the Board erred in basing its determination on Mr. Terrell's last absence on March 22. Rather, the Court noted, consideration should have been given to his pattern of excessive and unexcused incidents of tardiness and absenteeism. The Court reasoned that an employer has the right to expect an employee to attend work when scheduled and to be on time. Habitual tardiness and excessive absenteeism, absent a showing of good cause on the part of the employee, is inimical to this interest and, as such, may rise to the level of willful misconduct.

In the present case, only three of Mr. Terrell’s absences and late arrivals appeared to be health-related, and he was unable to offer good cause to justify the remainder. Similarly, when given the opportunity at the hearing to explain his attendance history, Mr. Terrell “demonstrated a decidedly cavalier attitude toward [his employer’s] reasonable expectation that he appear at work on time.” Ultimately, the Court held that Mr. Terrell’s history of absences and tardiness and his failure to offer good cause to justify those absences were sufficient to establish willful misconduct and deny benefits. That his final absence—the one that got him fired—was justified did not change the analysis.

In light of the Grand Sport decision, employers should be sure to document each occurrence of absenteeism or late arrival, including the employee’s stated reason for such occurrence. And then when an employee’s attendance problems become excessive, the employer should make sure it can support that the termination decision is based on the history of absenteeism and tardiness, not just the final incident. With this documentation, the employer will be able to not only justify the discharge, but also establish willful misconduct rendering the employee ineligible for benefits.

Employers Required to Display New FMLA Poster by March 8, 2013

Jodi Frankel — Fri, 15 Feb 2013 16:06:25 -0500

In 2009, the Family and Medical Leave Act (“FMLA” or “Act”) was amended to expand military leave entitlements available under the Act. Last week, the Department of Labor (“DOL”) issued new regulations implementing and clarifying these amendments. In addition, the regulations increase the scope of qualifying exigency leave to include parental care and extend military caregiver leave to include care for veterans with a serious injury or illness.

From a practical perspective, these regulations do not create any significant changes to the availability or administration of FMLA benefits. However, in conjunction with these new regulations, the DOL has made revisions to its mandatory poster—Employee Rights and Responsibilities under the FMLA. Employers must begin using the updated poster no later than March 8, 2013. The Department of Labor has noted, though, that employers may start using the poster immediately.

All employers covered by the Act—generally public and private employers with 50 or more employees—are required to display the FMLA poster in a conspicuous place accessible to employees and applicants. The poster must be displayed at all worksites, even if there are no FMLA-eligible employees. The updated poster is available for free here.

NLRB Decisions to Fall Like Dominos?

Adam Santucci — Mon, 11 Feb 2013 20:21:00 -0500

As you may have heard, the District of Columbia Circuit Court of Appeals recently sent shockwaves through the labor relations world by holding that President Obama's "recess" appointments to the National Labor Relations Board were invalid. The court concluded that, as a result, the Board was acting without a quorum and did not have the power to render binding decisions. The question has now become, how many Board actions will go down?

The decision, Noel Canning v. Nat'l Labor Relations Bd. (pdf), addressed the President's ability to make "recess" appointments, that is, appointments to executive branch positions without the confirmation of the Senate. The court concluded that the "recess" appointment power is available, not surprisingly, only when the Senate is actually in recess. The three Board appointments at issue were declared invalid because the Senate was not in recess at the time the appointments were made. The court concluded that, since the appointments were invalid, the Board has been operating without a quorum since January 4, 2012. As such, in accordance with the Supreme Court of the United States' holding in New Process Steel v. Nat'l Labor Relations Bd. (pdf), the Board's decision was null and void.

The wave of challenges to the Board's actions rendered since January 4, 2012, (and some even prior to that date) has begun to crest. Interestingly the Noel Canning court, anticipating the likely impact of its decision, noted that it was not concerned about the repercussions of its holding on the Board. The Board, on the other hand, seems to have taken the position (in a January 25, 2013 press release) that the impact of Noel Canning is limited to only that case and therefore, its other decisions remain valid.

Despite the Board's position, one key decision that could be washed away is the Board's holding in D.R. Horton, Inc. (pdf). In that groundbreaking case, the Board held that mandatory arbitration clauses in employment agreements that prohibit class-based claims violate the National Labor Relations Act. Although rendered before the January 4, 2012 appointments at issue in Noel Canning, the D.R. Horton decision was rendered by a Board that also included at least one recess appointment. This decision was already on appeal, but the attorneys for D.R. Horton have the appeals court to consider the impact of Noel Canning.

Also, HealthBridge Management LLC asked the Supreme Court to make a splash by requesting that the Court issue an emergency stay of an injunction issued by the Board due to the uncertainty surrounding the Board appointments. Last week, however, the Court denied the petition. The impact of the decision may also be felt in other areas outside of labor law. For example, there has been a challenge to the "recess" appointment of the director of the relatively new federal Consumer Financial Protection Bureau that could undermine the actions of that agency.

For now, it appears that chaos reigns. Prudent employers, both union and non-union alike, are wise to proceed with caution in assessing the damage. President Obama has almost four years left in office, and it may be safe to assume that the Board, when properly constituted, will return to its pre-Noel Canning agenda.

Unemployment Compensation Case Update: Employees Who Accept Voluntary Early Retirement Incentive Offers Are Eligible for Benefits

Kelley Kaufman — Fri, 08 Feb 2013 08:03:44 -0500

For years, Pennsylvania courts have consistently denied unemployment compensation benefits to employees who accept early retirement incentive packages. Recently, however, the Pennsylvania Supreme Court overruled this well-established precedent. In Diehl v. Unemployment Compensation Board of Review, the Supreme Court found that employees who accept early retirement packages offered pursuant to employer-initiated workforce reductions are eligible for benefits.

In Diehl, the employer initiated a reduction in force due to deteriorating business conditions. To encourage high seniority employees to leave voluntarily, the employer offered employees over age 60 an early retirement package. Diehl accepted the early retirement package, believing that he also would be entitled to receive unemployment compensation benefits.

Under Pennsylvania’s Unemployment Compensation Law (“Law”), generally, a claimant who voluntarily quits his job will be ineligible for benefits unless he can prove that he had a "necessitous and compelling" reason to quit. In cases involving an employee’s acceptance of an early retirement package, the Pennsylvania Commonwealth Court typically has granted benefits only where the employee demonstrated a justifiable belief that his job was imminently threatened. Importantly, however, the Supreme Court did not apply this general “voluntary quit” rule in this case. Instead, the Court focused on a “voluntary layoff option” proviso under the Law (“VLO Proviso”).

The VLO Proviso provides in part that an employee who voluntarily resigns his employment will not be denied benefits when he exercises “the option of accepting a layoff ... pursuant to an established employer plan, program or policy.” 43 P.S. § 802(b). For years, the Pennsylvania Commonwealth Court has consistently refused to apply the VLO Proviso to employees who voluntarily accepted severance or retirement incentives offered by their employers.

The Supreme Court reversed the Commonwealth Court’s long-standing precedent. Specifically, the Supreme Court considered whether the option to accept an early retirement plan offered as part of an employer-initiated workforce reduction was equivalent to the “option of accepting a layoff” under the VLO Proviso. The Court found the options to be equivalent, as both essentially were a termination of employment initiated by the employer. The Supreme Court concluded that the VLO Proviso applies to employees who accept employer-offered early retirement packages as part of a workforce reduction, and as such, voluntary acceptance does not automatically disqualify them from eligibility for benefits.

The Diehl decision is notable because it increases the likelihood that employees who elect a retirement or severance incentive package also will be granted unemployment compensation benefits. Although the Law does provide a severance pay offset against unemployment compensation benefits, which may be available for some employers, the availability of the offset will depend upon the type of payment and the amount paid to the employee. As a result, employers must carefully consider potential unemployment compensation costs when evaluating the merits of offering incentive programs to employees during a reduction in force.

DOL Issues Guidance on Definition of "Son or Daughter" under FMLA

Jodi Frankel — Fri, 01 Feb 2013 09:59:30 -0500

This post was contributed by Tony D. Dick, Esq., an Associate in McNees Wallace & Nurick LLC's Labor and Employment Practice Group in Columbus, Ohio.

The Department of Labor (DOL) recently issued additional guidance to employers regarding the definition of “son or daughter” under the Family Medical Leave Act (FMLA) as it relates to an adult child. Under the FMLA, an eligible employee may take leave to care for a son or daughter who is 18 years old or older if the following four conditions are met: (1) the adult child has a disability as defined by the Americans with Disabilities Act (ADA); (2) he or she is incapable of self-care as a result of the disability; (3) he or she has a serious health condition; and (4) the adult child is in need of care due to the serious health condition.

A lingering question has been whether the onset of the child’s disability had to occur prior to the child turning 18 in order for the adult child’s parent to be eligible for FMLA leave. DOL has now clarified that it is irrelevant whether the onset of the disabling condition occurred before or after the child turned 18. DOL’s interpretation falls in line with the majority of courts that have decided the issue.

In addition, in light of the broader definition of “disability” under the Americans with Disabilities Act Amendments Act of 2008 (ADAAA), DOL has offered further guidance on the impact of those changes on the FMLA. Among other things, the ADAAA broadened the definition of “major life activities” and expanded the definition of “disability” to include episodic conditions that periodically flair up and substantially limit a major life activity. Since the FMLA’s inception, DOL has utilized the definition of disability under the ADA in defining a “son or daughter” who has reached the age of 18. DOL has now explicitly taken the position that the expanded definition of disability under the ADAAA should apply to the definition of “son or daughter” under the FMLA. It remains to be seen whether courts will adopt DOL’s position.

Finally, DOL has issued guidance concerning FMLA leave used to care for an adult child who has become disabled during military service. Under the FMLA’s military caregiver provision, a parent of a covered service member who sustained a serious injury or illness is entitled to up to 26 weeks of FMLA leave in a single 12-month period. Acknowledging that the servicemember’s injury or illness could have an impact that lasts beyond the single 12-month period covered by the military caregiver leave entitlement, DOL clarified that the servicemember’s parent may take FMLA leave to care for a son or daughter in subsequent years because of the adult child’s serious health condition.

DOL’s recent guidance is just the latest example of it construing the FMLA generously in favor of employees. Employers should train managers and HR personnel who handle leave requests on these new changes to ensure compliance with the law.

PPACA Update: Employers' Deadline to Provide Notice of Health Care Exchanges Postponed

Kelley Kaufman — Mon, 28 Jan 2013 13:10:56 -0500

Late last week, the Departments of Labor, Treasury, and Health and Human Services issued a new Frequently Asked Question (“FAQ”) page addressing implementation questions under the Patient Protection and Affordable Care Act (“PPACA”). Of particular note in the latest FAQ is the Departments’ announcement is the delayed effective date for the written notice of Exchange requirements under PPACA. Originally, PPACA required employers to issue specific written notices regarding the existence of Exchanges to new and current employees effective March 1, 2013. This deadline has now been delayed until late summer or fall of 2013. Additional guidance, which may include model notice language, likely will be forthcoming.

Stay tuned – and look for future PPACA updates on this blog. Additionally, if you have any questions regarding PPACA requirements, please do not hesitate to contact any member of our Labor & Employment Practice Group.

IRS Proposed Regulations On PPACA'S Shared Responsibility Provisions Full of New Year Surprises (Some Good For Employers - Some Not)

Kelley Kaufman — Fri, 18 Jan 2013 11:30:39 -0500

Recently, Eric N. Athey, Esq. and Kelley E. Kaufman, Esq., attorneys in McNees Wallace & Nurick LLC's Labor and Employment Law Group, prepared a White Paper entitled: "IRS Proposed Regulations On PPACA'S Shared Responsibility Provisions Full of New Year Surprises (Some Good For Employers - Some Not)".

On December 28, 2012, the Internal Revenue Service (“IRS”) issued long-awaited proposed regulations regarding the “shared responsibility” penalty provisions of the Patient Protection and Affordable Care Act (“PPACA”). In addition to consolidating prior IRS guidance on the subject, the proposed regulations also contain some surprising interpretations of PPACA’s penalty provisions. Employers will likely be pleased by some of these interpretations and disappointed with others.

Click to view the entire white paper.