Pennsylvania Employment Lawyer & Attorney : Russell Krafft & Gruber Law Firm : Lancaster, York, Harrisburg

Having identified several of the most common Wage & Hour mistakes in the last post, I wanted to expound upon 5 of them that I see over and over again:

1.    Misclassifying nonexempt employees as exempt and the resulting failure to pay overtime.

The so called "White Collar Exemptions" were revamped in 2004 DOL regulations, but still remain a source of interpretive confusion or corporate intransigence. The exemptions to minimum wage and overtime requirements apply to executive, administrative, and professional employees (including teachers and academic administrative personnel in elementary and secondary schools), outside sales employees, and employees in certain computer-related occupations. In my experience, the three most frequent errors occur for the following jobs: Working Supervisors; Administrative Assistants; IT Help Desk Employees.

Corporate intransigence remains for job titles that have traditionally been treated by a company as exempt positions and paid a salary, but which don't really qualify for any exemption.  For example, there are many clerical positions for which an employer tries to recognize the significant contribution and responsibility by treating them as exempt, but these positions don't meet the "administrative" exemption. An employer's hesitancy to address the employee relations issue associated with an incorrect exemption is like a ticking time bomb.

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The Central Penn Business Journal's Morning Roundup featured an Associated Press article entitled "Small Business Owners shouldn't use interns as substitute employees". This is the same issue that I commented on in my last posting, but it reminded me that I missed a chance to describe the ramifications of getting it wrong.

There are significant consequences for violating the Fair Labor Standards Act (FLSA) by incorrectly paying minimum wage or overtime. Fixing a violation may involve more than just paying the compensation that was owed.

For FLSA violations, an employee may recover both back pay and liquidated damages (which is a penalty equal to the amount of the back pay). The double damages recoverable by an employee give the FLSA some real teeth.

The FLSA may be enforced by either the Department of Labor or by a private lawsuit by an employee. Listed below are methods which the FLSA provides for recovering unpaid minimum and/or overtime wages:

(1) The Wage and Hour Division may supervise payment of back pay.

(2) The Secretary of Labor may bring suit for back wages and an equal amount as liquidated damages.

(3) An employee may file a private suit for back pay and an equal amount as liquidated damages, plus attorney's fees and court costs.

(4) The Secretary of Labor may obtain an injunction to restrain any person from violating the FLSA, including the unlawful withholding of proper minimum wage and overtime pay.

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The Human Resource Blog has a great post on the benefits of hiring a summer intern. At the risk of throwing the legal wet blanket on internship programs, employers need to be cautious when it comes to unpaid interns. The FLSA provides minimum wage and overtime protection to those employed within the meaning of the Act. FLSA section 3(g) states that to “employ” means to “suffer or permit to work.” The Supreme Court in Walling v. Portland Terminal Co., 330 U.S. 148, 152 (1947), identified six factors to evaluate whether a trainee, intern, extern, apprentice, graduate assistant, or similar individual is to be considered an employee. If all of the following six factors are met, then an employment relationship does not exist and compensation is not due:

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Beginning September 30, 2007, Employers who are required to submit EEO-1 Reports to the Equal Employment Opportunity Commission (“EEOC”) must do so on a new form. The EEO-1 Report collects annual data on the race, sex, and ethnicity of the workforce of private employers with 100 or more employees and certain federal contractors.

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Merrill Lynch tried to prevent abuses in sick time by clamping down on the reasons for sickness related absences and disciplining employees for excessive absenteeism. Many employers have decided to get away from policing the circumstances of an employee's absence by just creating a bank of paid time off that can be used for any reason. Once PTO is exhausted, time is unpaid and subject to the attendance discipline policy. This certainly sounds like a great idea, but here are some practical and legal considerations in converting from a traditional sick pay program to a PTO plan:

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Merrill Lynch is reportedly cracking down on time off abuses through new attendance guidelines that provide for a verbal warning and possible loss of pay after use of four sick days and termination after use of nine sick days without valid excuse. The new corporate policy is purportedly designed to reign in workers who misuse sick days by playing hooky on nice summer days, extending weekends, etc. The new policy replaces a program that providing up to 40 sick days per year.

Sick day programs are one of the most fretted over of all employment policies because they involve so many management and legal issues. Sick time is disruptive to the workplace because it is almost always unscheduled. Misuse of sick time has a dramatic impact on employee morale because of work inequity perceptions. Employers must manage abuses within the legal parameters imposed by the wage & hour laws, disability discrimination protections, Family and Medical Leave Act compliance, and wage payment regulations.

Almost every employer offers some form of sick time benefit.   Statistics show that the average business offers 8.1 sick days per year, but employees use only 5.2. However, the growing trend is away from traditional sick days to creating a paid time off bank (PTO). PTO programs combine into one pot all categories of time off, like vacation, sick days, personal days, and floating holidays. Some of the advantages and disadvantages of PTO are as follows:

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Helicopter parents may hover over their children, but what's their management style in the workplace when it comes to other people's kids and their peers? Phyllis Weiss Haserot on her Blog "Practice Development Counsel" posted a set of questions concerning how Helicopter Parents operate as managers in the workplace some of which are as follows:

• Do the helicopter parents (those that hover too much and interfere) exhibit similar behavior with their juniors as they do with their children? Do they bring their parenting style to the workplace to over-protect and push their people ahead?

• Or do they take an opposite approach and expect great results without giving the guidance and support they want for their children?
• Are Baby Boomer managers (only some of whom are "helicopter parents") hard on younger generation workers because they are demanding the results they would like to see from their children, but without the coddling they give their kids?
• Is it because many Boomers are so competitive and status conscious that they want everyone (children, junior people on their work teams, etc.) to make them look good?

If we assume that Helicopter Parents operate as Helicopter Managers too, what impact will that have on the workplace culture and risks of litigation?

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The Today Show featured a story on "Helicopter Parents : Helping Your Child Get a Job" which was an interesting foil to our recent posting.   Matt Lauer's guest was Dr. Michele Borba (whose blog appears on iVillage website). Dr. Borba referred to some helicopter parents as 'Blackhawks" and said  that these parents haven't struck the correct  balance between "mentoring and meddlesome". However, the show noted that many large companies like General Electric are embracing helicopter parents by inviting them into the recruiting process and targeting them with advertising. I think  employers will need to be flexible in their approach to parents in the recruiting phase. Human resource professionals face the challenge of drawing the boundary at the workplace once the recruit is hired.

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Imagine that your company has decided to make a job offer to a very promising Ivy League MBA candidate. You call the candidate to communicate your company's very generous offer and what's the response?

"My mom will call you back to negotiate my compensation package". Welcome to your first encounter with a "Helicopter Parent". For the moment, let's leave aside the issue of whether this level of parenting does more harm than good and focus on the issue as framed by Stephanie Armour in her recent USA TODAY article:

Employers are finding that parents are increasingly involved in their children's job choices, as "helicopter parenting" extends to the workplace.

As Generation Y enters the job force, parents of new hires are calling employers to negotiate salary and benefits, and some are even showing up at job fairs. It's a new dynamic that has some employers responding by training recruiters and managers how to handle "helicopter parents," who hover over their children's lives.

Here are some considerations that I think are worth evaluating in anticipation of Mom or Dad's call:

• Temper your Gut Reaction: The almost universal reaction of most Baby Boomers and Gen X'ers to this scenario is shock and aghast. How can this seemingly bright candidate allow parents to run his or her life? However, this is a value judgment that ignores the sociological and demographic facts. The real questions are: Do you want the candidate or not? Are you willing to negotiate under these terms?

•  Balance the Pushback: Hey why not? Professional athletes and Hollywood stars, have agents do their negotiations and no one considers that a poor reflection on their future job performance. Evaluate whether parental involvement at the recruiting stage is really indicative of an inability to perform in the job. Obviously, these three-way conversations will have to stop once the candidate becomes an employee because that truly relates to job performance.

• Consider the Sociology: Generation Y also called the Millennials has already been labeled with there own set of workplace attitudes which may not respond well to the traditional recruiting model. Gen Y'ers collaborative relationship with others including their parents may make others a natural part of their decision making process. But where does it stop? Certainly parents cannot become an ongoing collaborator in workplace performance and personnel issues. Undoubtedly taking a cue from the academic world ,which is ahead of the curve on this one, would be appropriate. Academia's approach has been to develop a hard line in keeping parents out of the classroom.

• Recognize the Demographics: Following the acclimation of Gen-X'ers into the workforce, demographics have become a worthy consideration for HR professionals in sculpting corporate culture. The challenge becomes integrating the next generation of Helicopter Parents and Boomerang Kids. As noted by Carolyn Tang in her article "The Great Divide":

Traditional suit-and-tie Baby Boomers are interacting with denim-clad colleagues from both Generations X and Y. Disparities in career expectations and attitudes between the old guard and the new are causing subtle, yet significant shifts in corporate culture and the working environment. And perhaps some tension as well.

So what's the recommendation on HR's approach to helicopter parenting?

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There are psychological tests and assessment tools that are predictive of violent behavior, but there are significant legal restrictions on their use. Assessments that are not "medical tests" may be used on a pre-employment basis, but should not be used as the principal reason for a hiring or promotion decision.

There is no profile of a potential workplace violence perpetrator; however, there are traits when coupled with at risk situations that increase the likelihood of violent behavior. Sheryl and Mark Grimm of the Workplace Violence Headquarters have developed a Formula for Workplace Violence that includes a list of traits as follows:

• Previous history of violence, toward the vulnerable, e.g., women, children, animals
• Loner, withdrawn; feels nobody listens to him; views change with fear
• Emotional problems, e.g., substance abuse, depression, low self-esteem
• Career Frustration, either significant tenure on the same job of migratory job history
• Antagonistic relationships with others
• Some type of obsession, e.g., weapons, other acts of violence, romantic/sexual, zealot (political, religious, racial), the job itself, neatness and order .

There is a major legal distinction made between an employer's treatment of an applicant with a potentially violent personality and the treatment of employee conduct that exhibits violent behavior. The EEOC has stated that its position on the distinction between perception and conduction in its  Enforcement Guidance for Individuals with Psychiatric Disabilities :

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As a follow up to the previous posting, Dr. Ira Wolfe offers his thoughts on Psychopathy in the Workplace based in part on his experience with personality assessments conducted through his business Success Performance Solutions. Thank you Ira for your contribution.

 

When Psychopaths Go to Work

 

We may never know the final diagnosis that drove Cho Seung-Hui to his mass murder spree at Virginia Tech but one thing is for sure: our desire to know "What on earth is wrong with that guy?" will continue. 

Fortunately most of us will never have to face what the students and faculty did on April 16, 2007. What many of us have and will experience are our interactions with an equally destructive and dangerous group that lurks behind many resumes and executive desks. Specifically I'm writing about psychopaths who are walking and working among us every day.

Many of you will likely have the same reaction as I did when I picked up a copy of a new book, "Snakes in Suits: When Psychopaths Go to Work": you're thinking serial killers and stalkers or picturing Hannibal Lecter, Freddy Krueger, and Dr. No. Reality however paints a far different picture. Psychopathic behavior is not illegal. It is not in fact even classified as a mental illness. Psychopathy is a personality disorder and hiring managers today often confuse its symptoms with success attributes.

Psychopaths live and work freely among us. In fact in today's dog-eat-dog world where greed is good and the survivor of the fittest earns the most riches, psychopathic behavior is innocently recognized as talent. For example, how many rising stars have you known who are driven, ambitious, resilient, charming, articulate, intelligent, and charismatic? Their mere presence disarms the most skeptical while their supporters fawn and idolize them. Now remove a moral conscience and the incapability of empathy, guilt or loyalty to anyone but themselves and viola - you have a psychopath. What interviewers see is not always what they get.

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The Pennsylvania Employment Law Blog has added a new section which highlights and/or discusses legal situations which commonly confront human resource professionals. Click on the link titled "Did You Know? PA Employment Law Highlights" on the upper right side of the page. The short informational postings address Pennsylvania law's impact on specific HR activities to promote compliance, proactive risk management, and issue identification.   The postings will be made on a regular basis and archived in this special section of the blog for our reader's reference and review. 

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By Dr. Ira Wolfe and Michael Moore

In the aftermath of Cho Seung-Hui’s mass killing of 32 people at Virginia Tech, the question that dominates discussions from the water cooler to the halls of Congress after every incident of workplace or classroom violence is: How could this have been happened and what can we do to prevent it from happening again?

The prevention analysis is already following the familiar two-step paradigm of trying to assess an individual's propensity for violence and then excluding the potential perpetrator from school or work based on the risk. However, both steps of assessment and exclusion pose a risk for employers.

The assessment aspect has likely captured the most attention, especially with employers.  Psychological testing for job fit got its start nearly ninety years ago. The Surgeon General's staff administered intelligence and personality tests during World War 1 to the almost two million recruits of the American Expeditionary Force. The soldiers were given the Wordsworth Personal Data Sheet, a 125-question inventory, that was supposed to detect personalities that would crumble under fire. Although this test led to mixed results, it spawned a revolution in psychological research and the creation of predictive personality models and assessments. 

The majority of these early assessments, including the Minnesota Multiphasic Personality Index (MMPI), were clinical in nature, constructed and validated to diagnose psychiatric disorders.  The MMPI is considered one of the most researched psychological tests and, as a result, remains consistently ranked as one of the most reliable psychological instruments used by psychologists today.

With that endorsement you would expect every employer, college president and school superintendent to be ordering up MMPI evaluations as fast as shoppers flock to malls during post-holiday sales.  If only it were that easy.  Despite the requirement that employers provide a safe environment for their workers, government regulations place an even higher priority on protecting the rights of the individual.

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Design of an effective wellness program requires collaboration between insurance brokers, benefit providers and legal advisors in light of limitations placed on certain aspects of their design by HIPAA's Nondiscrimination Requirements.    Under the final regulations that take effect for plan years beginning after July 1, 2007, HIPAA impacts the design of wellness programs that take into account "health factors" when providing incentives under the program. Programs such as the following that do not take into account a participant's health factors when a reward is given or withheld for participation by an employee or beneficiary:

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As Steve Buterbaugh noted in the previous post, successful Wellness Programs need specific goals and top level support. These two factors play out in the design and implementation of the programs.

Wellness Programs have been successfully implemented by many central Pennsylvania companies.  One successful program was highlighted by David Wenner in a recent article about D&E Communications.  D&E's Wellness Program likely succeeded because it had a specific goal (90% employee participation in a health assessment) and it had a commitment from the top of the organization(CEO personal appeals).  These aspects are outlined in Mr. Wenner's article as follows:

D&E had been looking for a way to hold down health insurance premiums, which had risen 12 percent in 2005 and 20 percent in 2004, said Judy Naylor, vice president of human resources.

Highmark Blue Shield recommended its wellness program, Lifestyle Returns. The insurer offered D&E a 2 percent premium reduction this year if 90 percent of employees participated in the first two steps of Lifestyle Returns, Naylor said. Employees had to pledge to become more health conscious and complete an online health risk assessment.

D&E qualified for the premium reduction, which amounted to about $100,000. It divided the money among participating employees, giving each a $200 reward.

…

 Participation reached 65 percent after about six months, then stalled.  CEO James Morozzi begin visiting each work site and making personal appeals. In the end, 96 percent of employees completed the health risk assessment, which asks about their health-related habits.

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Design of an effective wellness program requires collaboration between insurance brokers, benefit providers and legal advisers. There are particular considerations relating to HIPAA's Nondiscrimination Requirements which I will discuss in my next post. Before we get to that, I am pleased to share the following contribution from Steven P. Buterbaugh, CPCU, AAI of E.K. McConkey & Co. Insurance. Thank you to Steven for being our first guest blogger. 

Wellness Programs Have Positive Impact on Group Health Insurance and Overall Company Productivity

Businesses are under constant and increasing pressure to find ways to manage and reduce health benefit expenses while maintaining or improving employee morale and productivity.

Benefit redesign and changing employee contributions are often the first options to consider, but these can strain the important relationship between employer and employees. Significant long term savings will only occur when member health is actually improved, and this is where a wellness initiative can make an impact.

There is a wide disparity between the average claims and cost/person for someone who has a chronic illness and the average claims and cost/person for someone with non-chronic illness.  (See Chart) 

As we often are reminded through the media, there has been an increasing prevalence of chronic illness in our society including Obesity, Diabetes, and Heart Disease. Following are some compelling statistics:

• Obesity- The CDC’s Health-E Stats for 1999-2002 show that 64% of adults in America age 20 and over are overweight or obese^.
• Diabetes- the National Diabetes Information Clearinghouse states that:
  • Each year, approximately 798,000 people are diagnosed with diabetes
  • Diabetes is a leading cause of death and disability and costs $92 billion per year in direct medical costs.
• Heart Disease- in 2002, there were 23 million adults diagnosed with heart disease according to the Centers for Disease Control Summary Statistics for U.S. adults. The CDC also reports heart disease as the number one cause of death in the United States.

While these “big three” chronic health conditions are to some extent preventable and/or treatable, current health protocols can only do so much to address these problems.

Long term, the most effective way to control claims costs and keep insurance premiums down is to prevent claims from being incurred through health improvement.

The positive effects of a wellness initiative are cumulative. The longer the company participates, the greater the impact you should see. Taking action now could help stave off the development of future chronic conditions that will inevitably affect your bottom line and productivity in the future.

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The Genetic Information Nondiscrimination Act of 2007 (GINA) was passed in the U.S. House of Representatives on Wednesday, by a vote of 420-3. The act will protect individuals against discrimination based on their genetic information when it comes to health insurance and employment.  Title II addresses employment and provides that it shall be an unlawful employment practice for an employer--

1. to fail or refuse to hire, or to discharge, any employee, or otherwise to discriminate against any employee with respect to the compensation, terms, conditions, or privileges of employment of the employee, because of genetic information with respect to the employee; or
2. to limit, segregate, or classify the employees of the employer in any way that would deprive or tend to deprive any employee of employment opportunities or otherwise adversely affect the status of the employee as an employee, because of genetic information with respect to the employee.
3. to request, require, or purchase genetic information with respect to an employee or a family member of the employee.

Powers, remedies and procedures are patterned after the Civil Rights Act of 1964 (42 U.S.C. 2000e-4 et seq.) and section 1977A of the Revised Statutes of the United States (42 U.S.C. 1981a), existing anti-discrimination federal legislation. 

The Act is available online at The Library of Congress site.  The National Human Genome Research Institute has also posted information on their website. 

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In many significant ways, Pennsylvania Income Tax and Withholding laws differ from federal tax regulations. The most notable difference involves Pennsylvania's taxation of elective employee contributions to 401k and other retirement plans. Having completed the mind numbing task of researching this area, I decided that it might be helpful to others to have a resource for some of their Pennsylvania tax questions.  Or, you may consider using this post as an excellent cure for insomnia. 

In any case, the following is a general summary of Pennsylvania's tax treatment of various employee benefits and includes links to additional information. The summary is not intended as a substitute for professional tax advise as individual tax situations vary widely.

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Many employers utilize some form of pre-employment testing to assist them in hiring decisions. A 2000 study by the American Management Association reported that 69% of firms used some form of job skills testing and 33% used psychological testing. 

There are general legal restrictions on the use of pre-employment testing in addition to the general prohibitions on discrimination found in Title VII and the Pennsylvania Human Relations Act. The Uniform Guidelines on Employee Section Procedures prohibit the use of a test or selection process that has an adverse impact on individuals in a protected class unless the test has criterion-related, content and construction validation studies. The validation studies must consist of empirical data demonstrating that the test is (1) predictive of performance of important elements of job performance; (2) contains content which tests important aspects of performance on the job; and (3) consists of procedures that assess identifiable characteristics that have been determined to be important to job performance.

Both the ADA and the Pennsylvania Human Relations Act prohibit the use of "medical tests" prior to an employer extending a conditional offer of employment. A medical test is generally one that seeks information about an individual's physical or mental health or impairments. Courts examining whether a test is "medical" have looked at the following factors: (1) administration or interpretation of the test by a medical professional; (2) intent of design of the test to reveal a medical or mental impairment; (3) conducting the test in a medical setting; (4) measurement of the individual's psychological responses to performing a task; (5) necessity of medical equipment to perform the test; and (6) invasive nature of the procedure.

Following is a summary of some of the more popular pre-employment tests employed by businesses to assess applicants:

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Newspaper headlines are replete with cases of embezzlement by employees and violence in the workplace. Government statistics note alarming trends for increases in criminal activity at the workplace. To stem this tide, employers have turned to Credit Reports and Criminal Record Checks as two sources of information they may legally obtain about prospective and existing employees.  However, there are statutes that govern the use of the data employers obtain.

 

• Credit reports - The Fair Credit Reporting Act, 15 U.S.C. § 1681, (FCRA) requires employee consent and disclosure.  Employees or applicants must be notified of the existence of a report, consent to the disclosure of the report and be provided with a copy of the report if it results in an adverse personnel action.  The employer must certify that it is requesting the credit report for employment purposes, that it has made the required written disclosure to the individual, and that it has obtained the individual's written authorization permitting the procurement of the report.  The employer must also certify that it will provide the required disclosures if any information in the report results in adverse action against the individual. 

Be aware in using credit reports to evaluate candidates that the Federal Bankruptcy Act prohibits an employer from discrimination in hiring or retaining an employee solely because the employee or someone associated with him/her has filed for bankruptcy or has not paid a debt dischargeable in bankruptcy, see Thomas v. Dennis Real Estate, 1989 WL 114165 (E.D. Pa. 1989). Many employers question the benefit of credit checks since they are prohibited from using bad credit as a reason for not hiring someone when the individual his filed for bankruptcy. The result is only those individuals with late payment histories and charge offs can be weeded out, while those with bankruptcies can not be treated discriminatorily.

 

• Criminal Record Check - A Pennsylvania employer's use of criminal history record information must be in compliance with the Criminal History Record Information Act.   Felony and misdemeanor convictions may be considered only to the extent to which they relate to the applicant's suitability for employment in the position for which he/she has applied, 18 Pa.C.S.A. § 9125(b).

If the employer's decision not to hire the applicant is based in whole or in part on criminal history record information, the employer must notify the applicant in writing, 18 Pa.C.S.A. § 9125(c). 

By implication the Act appears to prohibit consideration of arrests, or convictions of summary offenses.   Therefore, consider only felony and misdemeanor convictions, not summary convictions or charges without a conviction.

 

These are examples of issues of which you should be aware when doing any employment screening.  You should consult with an employment law attorney before you begin a screening program.  There are numerous issues that must be considered. 

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There is a growing trend among employers to use various pre-employment testing and background checks. Screening can range from credit reports and criminal checks to education and reference verification or motor vehicle records checks. I frequently answer questions for employers who are concerned about the legal issues related to obtaining this information. In my next few posts I will address some frequently asked questions.

What is an Employer's obligation to obtain background information on prospective and existing employees?

• Employers are under a common law duty to exercise reasonable care in selecting, supervising and controlling employees.
• The duty includes reasonable investigation into the prospective employee's work experience, background, character and qualifications.
• Look at the relationship between your customers and employees - is the potential for harm foreseeable? What kind of work and contact with the public do your employees have?
• Look at relationships between employees - has any conduct or history made the potential for harm foreseeable?

How can I minimize the risk of being sued when using background information?

• Apply the same procedure to all employees and/or applicants to avoid claims of discrimination in evaluation.
• Observe the requirements imposed by the statutes governing the data you obtain.

In my next post we will review some of the statutes that apply to some of the more commonly used reports. 

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Employers can take steps to minimize and/or manage their potential for "joint employer" status with a temporary agency. To avoid the creation of a joint employment relationship, the following is a list of some of the contractual and policy steps that should be undertaken:

• Right to Direct and Control Work of Temps - The right to direct and control the activities or the temporary employees should rest exclusively with the temporary agency.
• On Site Supervision - The temporary agency should have an on site supervisor to direct the work of the temps; otherwise, the default supervision will be the company's supervisors
• Disclaim Company Control - Company should not have the right to direct or control the activities or temps
• Disclaim Joint Employment Relationship  - Although it is largely window dressing, any agreement should state expressly that it does not create a join employment relationship
• Mandate Legal Compliance by the Temporary Agency - The legal compliance provisions set forth in the next section should be addressed
• Require Proper Payroll Reporting and Recordkeeping - Require that the agency be responsible for all payroll taxes, withholding and tracking of hours for FLSA compliance. Make certain that unemployment taxes and social security withholding are accomplished
• Require Evidence of Insurance - Obtain proof that the agency has appropriate insurance coverage for workers compensation, employment practice and liability insurance
• Obtain Indemnification from the Temporary Agency  - Obtain contractual indemnification which provides that the agency will pay damages and defense costs should the company be charged with employment law violations, unpaid taxes, unemployment or workers' compensation awards
• Limit Assignment of Temporary Workers - Limit the duration of assignment of a worker to your work site to no more than six months. Longevity of the placement is an indication of employment relationship; particularly, if temporary workers perform operations integral to the business. Companies risk creating "permatemps" who may seek benefits.
• Avoid Changing Employee Status - Except in the context of PEO's, don't outsource a group of employees to a temporary agency so that one day they are performing work as an employee and the next day as a temp.

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Staffing is a critical and time consuming function for human resource professionals. To expedite the process, many employers turn to staffing agencies to assist in or even take over the staffing function. Relationships with staffing agencies can take a variety of forms including temporary placements, temp to hire arrangements, and employee leasing with a professional employer organization (PEO).

 Many employers are surprised to learn that their company may have legal responsibility and even liability for temporary and leased employees. Liability arises when a company has the right to control the manner of the performance of the worker's activities.   When such a right to control is present, a company may be a joint employer with the temporary agency or PEO. Most common temporary agency relationships create joint employment because the temporary worker performs services at the company's business location under the direction and supervision of the company.

 The prime example of the joint employment principal in Pennsylvania is found in the case of JFC Temps, Inc. v. WCAB (Lindsay and G&B Packing), 680 A. 2d 862 (Pa. 1996). In JFC Temps, a worker was hired by a temporary agency, and was assigned to work for a trucking company. The worker performed his services at the trucking company, and the trucking company manager informed him of his work hours, the equipment he would be using, and the locations to which he was to drive. No representative of the temporary agency was ever at the trucking facility. The worker was injured in the course of the performance of the services for the trucking company. The injured worker sought workers' compensation benefits from the temporary agency.

Under these circumstances, the Pennsylvania Supreme Court held that the trucking company (not the temporary agency) was the injured worker's employer for worker's compensation purposes because the trucking company possessed the right to control the manner of the performance of the claimant's work. In fact, the Court noted, the temporary agency had no substantial contact with the claimant other than processing his paycheck, and, as such, could not be said to have controlled the manner of performance of the work. The Court so held despite the fact that the temporary agency had the authority to terminate the injured worker's employment.

The obvious problem for the trucking company was that the workers' compensation claim was likely uninsured since it did not consider the temporary worker to be one of its employees. This type of unexpected liability translates into other areas of the employment relationship like pension and medical benefits, payroll taxes, and discrimination laws. 

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Who's an Employer?  In the past week, I've had occasion to talk to several HR professionals about how the number of employees can define whether various employment laws apply, and that just a few employees either way can make a big difference, particularly for small employers.  Pay attention to the following shortlist, particularly if you have turnover and frequent changes in the number in your workforce.  Remember that how part time employees are counted also changes from statute to statute.  There may also be exemptions from coverage for certain industries like agriculture.    

 

      Total Number of Employees:                          Subject to the following employment laws:

• All employers regardless of size . . . . . . OSHA, Equal Pay Act (EPA), Immigration Reform and Control Act (IRCA)
• You have 4 or more employees . . . . . .  Pennsylvania Human Relations Act, Lancaster County Human Relations Ordinance
• You have 15 or more employees . . . . . . Title VII,   Americans with Disabilities Act (ADA)
• You have 20 or more employees . . . . . .  Age Discrimination in Employment Act, COBRA  
• You have 50 or more employees . . . . . . Family and Medical Leave Act (FMLA)
• You have 100 or more employees . . . . . . Worker Adjustment and Retraining Notification Act

The above is a partial list of statutes and law that apply to employers in Pennsylvania. For more information federal discrimination laws, consult the EEOC website.

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The U.S. House of Representatives voted 241 to 185 to pass H.R. 800 which is a bill that would change the process for unions to organize a workforce.  The bill would require the NLRB to certify a union when a majority of workers sign authorization cards that designate the union as their bargaining representative.  The card check process would eliminate the secret ballot election traditionally used to determine union representation. 

Under the current law, union organization of a workforce occurs after a showing of interest to the NLRB by the presentation of authorization cards together with a recognition petition identifying what the union believes to be an appropriate unit for organizing.  The employer may contest the appropriateness of the unit by demanding a hearing before an NLRB representative.  After the unit is certified as appropriate by the NLRB, a secret ballot election is held (generally within about 30-45 days after the petition was filed).  If the union receives a majority of the ballots cast by employees in the unit, it wins the right to represent the employees in an appropriate bargaining unit.

Eliminating the secret ballot has a tremendous impact on an employer's ability to combat organizing attempts.  The following is a partial list of problems created by the card check process:

 

 

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The change to Daylight Saving Time a few weeks early this year has caused some internet buzz including discussions of the myriad of computer related problems that might result.  Fortunately, I still have the  stock pile of bottled water and cases of canned food that I purchased for the impending doom prophesized by the Y2K pundits. I came across an InformationWeek article that I thought put the issue into perspective. 

 

The change will certainly require some attention from your IT Department and may impact some things you will need to deal with personally.  I have taken the precaution of noting times in the text of my appointments on my Outlook calendar, just to be sure that I am where I need to be at the correct time in March.  I have also reviewed the Microsoft Daylight Saving checklist to be sure that I don't have any surprises on my personal computer.    

 

Some employee communications might make the HR department look good.  You might consider sending a reminder to your employees via your company intranet or in a mass email.  It is likely that the early time change may take some by surprise. 

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Harley Davidson workers have approved a new contract, ending the three week strike that included disputes over wages and healthcare premiums. According to WHTM, ABC News of Harrisburg, the new contract provides that "Workers will not pay health insurance premiums, but deductibles and co-pays will increase." This resolution stops short of the trend toward consumer driven healthcare plans. However, increasing out of pocket healthcare expenses for consumers is a step towards making them more aware of the increased cost of healthcare. Insurance analysts hope this will result in consumers taking a more vested interest in their healthcare costs.

 

Is this an effective approach or will it result in consumers foregoing needed healthcare? There is a fairly comprehensive analysis of consumer driven healthcare at ConsumerDrivenHealthCare.us: Guide to Options in Consumer Driven Health Care. In the coming years, employers will be faced with many difficult decisions as they attempt to slow the rapidly rising cost of healthcare coverage for employees.  A recent report by the Centers for Medicare and Medicaid Services predicts that health care is expected to account for $1 of every $5 spent in the United States in another decade.  Decision makers will need to become educated on the options available and the consequences of the plans they choose.

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Last week we discussed some of the new issues that arise regarding electronic records. I summarized the results of a pre-federal rule amendment case, Zubalake v. UBS Warburg. 

 

If you've decided to do your best to protect yourself from similar circumstances, consider developing and implementing a written record retention policy. Following are some things to keep in mind:

• Identify the types and sources of both electronic and hard copy documents;
• Evaluate the business need for the various types of electronic records and documents. Keep in mind that some records have mandatory retention periods.
• Determine the retention or destruction period for classes of records.
• Anticipate the arguments that may be made and inferences that could be drawn from the destruction of certain documents and weigh it against the expense of retaining and producing the documents.
• Establish a storage and retrieval system for retained records evaluating its cost and efficiency.
• Develop, communicate, and enforce a policy on record retention.
• Establish a system for placing a "litigation hold" on records when a claim is threatened, administrative claim commenced, or a law suit filed. This will protect your company against sanctions for destroyed documents.

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Most Human Resource professionals tend to be pack rats. When documentation is typically hard to come by, no one in his or her right mind would put it in the shredder. In fact, the inclination might be to keep it forever. Recent changes in court procedures may require re-evaluation of company record retention practices, particularly when it comes to "electronically stored information". It's time for all employers to get a handle on the sources of electronic information and develop a record retention policy for its preservation, production and destruction.

 

On December 1, 2006, the Federal Rules of Civil Procedure were amended to address court procedures for disclosing electronic information during the discovery phase of litigation. The new court rules begin to apply to a company when litigation is "reasonably anticipated". At that point, a company must put a "litigation hold" on its electronic and other records that may be discoverable in litigation. Companies that take this step will be protected against court sanctions, so long as they take reasonable steps to protect and preserve information.

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 HSAs have been touted as the latest and greatest vehicle for consumer directed health care savings, but upon closer examination, HSAs may not live up to their billing because people are laboring under false assumptions. First, health coverage with HSAs isn't necessarily "cheaper". Cost savings may be achieved through the use of a high deductible health plan but the savings are not always used to fund HSA contributions. Second, HSAs are not retirement savings devises. It is difficult to for most employees to accumulate money in an HSA because the account is depleted annually to cover current health care expenses. Third, HSAs are not designed to be medical cost containment mechanisms; although, they can result in postponing or foregoing medical treatment when they are marketed as retirement savings vehicles rather than tax advantaged medical expense payment mechanisms.

 

The U.S. Treasury Department's publication on HSAs contains a laundry list of advantages including affordability, savings, portability and "triple tax savings." While all are true in theory, some are difficult to obtain in reality. HSAs can be more affordable because the high deductible health plan to which it is attached has a lower premium. HSAs create a portable account in which an employee can save money and accumulate earnings in a tax advantaged manner. However, an employee's ability to achieve any savings in an HSA depends upon how much of the medical expenses are covered by the plan versus paid out of pocket by the employee.

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 In 2007, Pennsylvania's minimum wage is slated to increase in two steps. On January 1, 2007 the minimum wage will increase from its current level of $5.15 an hour to $6.25 an hour. Then on July 1, 2007, the rate will rise to $7.15 an hour.

 

Increases are delayed for small employers with 10 or fewer full time employees. Small employers must increase minimum wage to $5.65 an hour on January 1, 2007, $6.65 an hour on July 1, 2007 and $7.15 an hour on July 1, 2008.

 

A sixty day training wage rate, based on the Federal $5.15 an hour, is permitted for employees under 20 years of age. To utilize the training wage, employers must notify workers at the time of hire of both the training wage and the workers right to receive the Pennsylvania minimum wage after 60 calendar days of employment. The law also makes it clear that other workers may not be displaced to allow hiring of training wage workers.

 

The minimum wage credit for tipped employees will remain at $2.83 per hour. However, an employer will have to make up the difference if the employee’s tips and the $2.83 per hour do not meet the full Pennsylvania minimum wage. The tip credit applies only if an employee received more than $30.00 in tips during a month. If an employee does not receive more than $30.00 per month in tips, the employer must pay the regular minimum wage.

 

The competitive market for employees has most companies paying more than the state minimums; however, employers of all sizes should evaluate the impact of these increases on their budgets and compensation systems.

 

If you have more questions, the Department of Labor and Industry has published a FAQ related to the new wages.