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

The Whistleblower Law prohibits discharge or discrimination by a "public body" against an employee who makes a good faith report to the employer or appropriate authority concerning an instance of wrongdoing or waste. Claims must be filed within 180 days of the violation of the law. Employers may defend the whistleblower claim by proving that the employment action was for a separate and legitimate reason, and not merely pretextual. The aggrieved employee must show some nexus between the complaint and the violation of the law. Golaschevsky v. Commonwealth Dept of Environmental Protection.

There are electronic resources to assist employers in complying with the I-9 verification requirements including workers' names and Social Security numbers (SSN) and validating work eligibility.  However, there is no safe harbor for using such resources. Before using theses resources, read my post entitled "Four Reasons to take a "Wait and See " approach to E-verify".

Social Security Number Verification Service (SSNVS)

• To verify up to five names. Call SSA toll-free, (800) 772-6270, or call the general SSA number at (800) 772-1213. Both numbers are open for service weekdays from 7 a.m. to 7 p.m., Eastern Standard Time.

• To verify up to 10 names. Use the agency’s web site, which provides an instant response. Or receive the results of up to 250,000 names and SSNs overnight (which requires registration by employers.) SSA website information.

Department of Homeland Security E-Verify.  Employers may verify the eligibility of individuals to work in the U.S. by matching their names, SSNs and immigration status.  E-Verify Website

Electronic I-9 Signatures.  Employers are permitted to store Forms I-9 electronically. Maintaining electronic signatures helps some employers reduce storage and recordkeeping burden and costs.  Regulations  allowing for electronic storage.

Until July 13, 2007, Pennsylvania was the only state that did not publish its state statutes on line.  Fortunately, the General Assembly put some of the Consolidated Statutes on line in a seachable in both text and PDF format.  Before you get too excited, Pennsylvania's labor laws (Title 43) are not yet on line.The Pennsylvania Regulations have been on line for some time.  Some news coverage was given to the on line publication.  The PAPower Port has not yet been modified to reflect the change.

The Governor's Office announced a reduction in the U.C. tax rate. Beginning Jan. 1, 2008, the average U.C. tax rate for businesses is projected to be 4.7 percent, down from 5 percent in this year and 5.4 percent in 2006.  The average employer cost for unemployment compensation per employee is projected to drop by $28. Benefit payments will continue without reduction for the second year in a row, and the tax rate on employee wages will drop from .09 percent to .06 percent.

Pennsylvania Unemployment tax rates apply to the first  $8,000 of wages. Rates depend on several factors. The "New Employer" rate applies to employers for up to the first 2 or three calendar years. The rate amount differs for nonconstruction and construction employers and ranges from  3.7520% to 10.3984%. The "Standard Rate" applies to employers with a sporadic contribution history so that they cannot get an Experienced Based Rate. The rate level depends on whether the employer has a positive or negative reserve account balance and ranges from 6.1888% to 10.2624%.

The Experienced Based Rate applies to all other employers. An employer's experience based contribution rate is comprised of six components. The Computation Rate components are:

• Reserve Ratio Factor
• Benefit Ratio Factor
• State Adjustment Factor
• Surcharge Adjustment
• Additional Contributions Factor
• Interest Tax Factor

Under Pennsylvania law (43 P.S. §§ 1481-1485), an employer may not discipline or discharge an employee who fails to report to work due to the closure of the roads in the county of the employer's place of business or the county of the employee's residency, if the road closure is the result of a state of emergency declared by the Governor.  The most obvious and likely scenario is a snow storm or other inclement weather.

Employers are not required to pay an employee who is a no show based on road closures. An employee who can prove the employers "knowing and intentional" violation of the law may recover lost pay, be reinstated or have discipline revoked, and may collect attorneys fees and costs.

The law does not apply to the following jobs: drivers of emergency vehicles, essential corrections personnel, police, emergency service personnel, hospital and nursing home staffs, pharmacists, essential health care professionals, public utility personnel, employees of radio or television stations engaged in the gathering and dissemination of news, road crews and oil and milk delivery personnel.

The Uniform Trade Secrets Act (12 Pa.C.S.A. §§ 5301-5308) protects businesses form misappropriation of trade secrets by allowing injunctive relief for actual or threatened disclosures or recovery of monetary damages. In the case of a willful and malicious misappropriation, punitive damages may be awarded.

Trade Secrets include information, including formula, drawing, pattern, compilation, including a customer list program, devise, method, technique or process that:

• Derives independent economic value from not being generally known to, and not being readily ascertainable by a lawful means by, other persons who can obtain economic value from its disclosure.
• Is the subject of efforts that are reasonable under the circumstance to maintain its secrecy.

Pennsylvania and Federal Minimum wage posters may be downloaded at the website locations listed below.  Posters must be placed in a conspicuous place in the work site where they can be seen by employees at all work site and business locations.  The DOL has a "Poster Advisor" that helps employer's identify which posters it may be required to post.  The Pennsylvania Department of Labor and Industry also has a webpage with "Mandatory Postings for Pennsylvania Employers".

Fair Labor Standards Act (FLSA) Minimum Wage Poster effective July 24, 2007

Pennsylvania Department of Labor and Industry Minimum Wage Poster effective July 1, 2007

In Case v. Hazelton Area Educational, the Pennsylvania Commonwealth Court held that "[i]ndividual claims by employees against the union that allege a breach of the duty of fair representation do not qualify as [complaints of] unfair labor practices in violation of the PERA [Public Employe Relations Act]." This ruling forces public employees to assert their individual claims against their union for violation of the duty of fair representation in court and not with the Pennsylvania Labor Relations Board (PLRB). The court expressly overruled Segilia v. Riverside School Service Personnel Association, 526 A.2d 832 (Pa.Cmwlth. 1987), to the extent that case allowed individual claims before the PLRB.

The U.S. Equal Employment Opportunity Commission (EEOC) today issued revised regulations on age discrimination in the workplace in accordance with a 2004 Supreme Court decision, General Dynamics Land Systems, Inc. v. Cline. The updated regulations, published in the July 10, 2007 Federal Register, are available on www.eeoc.gov.

The revised regulations clarify that the Age Discrimination in Employment Act (ADEA) does not prohibit employers from favoring an older employee over a younger one when both are protected by the Act. The EEOC initially proposed these changes in 2006 and, after receiving public comments on its proposal, unanimously voted to approve the revisions.

The sole owner of an LLC was individually liable to the IRS for unpaid payroll taxes under a recent federal appeals court ruling in S.P. McNamee, CA-2 Docket 05-6251-cv, May 23, 2007. The owner, a sole proprietor of an LLC, failed to remit payroll taxes to the IRS. The IRS ignored the LLC status and assessed the unpaid taxes personally against the LLC's sole owner by placing a lien against his property.

The appeals court held that a single owner LLC's can elect to be treated for tax purposes as corporation or as a sole proprietor. If the LLC elects sole proprietor tax treatment than its owner is liable for unpaid taxes. If corporate tax treatment were elected by the LLC, then the owner avoids personal liability.

Single member LLCs should factor the added potential liability of federal payroll taxes when selecting their business form.

Now that summer is here, many employers will be hiring teenagers to fill temporary jobs. There are state and federal limitations on the maximum hours of work, types of work, and work authorization documentation for "child labor". Different aged children are limited in the jobs they can perform and the hours they can work. The use of child labor is an situation that employers need to carefully monitor in their workforces because it is frequently audited and highly regulated by the Pennsylvania Department of Labor and Industry.

Employers who obtain credit information in compliance with the Fair Credit Reporting Act must be aware of the limitations on its use created by the Bankruptcy Act. Section 575 of the Bankruptcy Act protects employees and applicants from discrimination if an individual:

• is or has been a debtor under this title or a debtor or bankrupt under the Act;
• has been insolvent before the commencement of a case under the Act or during the case but before the grant or denial of a discharge; or
• has not paid a debt that is dischargeable in a case under this title or that was discharged under the Act.

Courts have limited the reach of this provision by requiring that the discrimination be "solely because" of the individual's bankruptcy participation.

On May 29, 2007, the United States Supreme Court ruled that employees may not bring suit for sex discrimination in an employer's pay practices under Title VII of the Civil Rights Act of 1964, unless they have filed a charge with the EEOC within 180 days (300 days in the case of Pennsylvania) after their pay was set. The clock begins to run even if the effects of the initial discriminatory act were not immediately apparent to the worker and even if they continue to the present day.

In Ledbetter v. Goodyear Tire & Rubber Co., the majority rejected the view of the EEOC, that each paycheck reflects the initial discrimination is itself a discriminatory act that resets the clock on the 180-day or 300-day period, under a rule known as “paycheck accrual.”

The impact of the decision on women may be somewhat limited by the availability of another federal law against sex discrimination in the workplace, the Equal Pay Act (EPA), which does not contain the 180-day/300-day requirement. The EPA has additional procedural hurdles and a low damage cap that excludes punitive damages. It does not cover discrimination on the basis of race or Title VII’s other protected categories. However, the decision may signal the Court's willingness to limit the concept of a "continuing violation" which allows employees to circumvent the limitations periods for filing charges with the EEOC by showing that the effects of a discriminatory act continue to the present time.

Pennsylvania law allows for a 5% annual discount on workers' compensation insurance premiums to employers that  establish a certified safety committee.

To qualify for the insurance discount, an employer must establish a safety committee that meets certain requirements, fill out a committee certification application, and have it approved by the Department of Labor and Industry.

The requirements for a committee are as follows:

• Committees must have a minimum of 2 employer and 2 employee representatives, meet monthly and be in operation for at least 6 full months.
• All committee members must be trained by qualified trainers in safety committee operation, hazard inspection and accident investigation.
• Committee meeting agendas, attendance lists and meeting minutes must be kept.

The Department of Labor and Industry Website has the following helpful links:

Process Overview:

Certification Process Overview

Application for Initial Certification:

Online Filing using HandS 

PDF Application (LIBC-372) 

Application for Renewal Certification:

Apply for Renewal Certification

Help in Getting Certified:

Health & Safety Division Contact Information

Safety Committee Technical Assistance Manual

Required Committee Member Training

Certified Employer Network

All Pennsylvania employers are required to report all newly hired employees to the Pennsylvania New Hire Reporting Program within 20 days of the date or hire. Pennsylvania will match New Hire Reports against its child support records to locate non-custodial parents, establish child support orders, or enforce existing orders. Pennsylvania will also transmit the data to the National Directory of New Hires to match against child support orders from other states.

Employers may report their new hires by any of the following methods:

• W-4 Form - Date of hire, contact name and contact phone number must be listed separate, signature date is not a valid date of hire. Please make sure you complete all employee and employer information including lines 10 & 12.
• New Hire Form
• Internet through a Web page
• Diskette or Magnetic Tape
• E-mail or FTP

An employee must be reported as a "new hire" under the following conditions:

1. a new employee
2. a former employee who is:

• rehired following termination,
• rehired following separation,
• returning to work following a lay off, or
• returning to work following a requested leave of absence without pay greater than 30 days

If the employee does not fall into any of the above categories, the employee does not need to be reported as a new hire. A temporary agency does not need to report an employee for each work assignment.

State Website addressing FAQs: http://www.panewhires.com/faq.asp

The PA Workers' Compensation Act gives employers the right to establish a list of designated health care providers. When the list is properly posted, injured workers must seek treatment for the work injury or illness with one of the designated providers for 90 days from the date of the first visit. There are some specific guidelines provided in the rules and regulations[Subchapter D, Sections 127.751 through 127.755 of the rules and regulations found on page 237 of the Workers' Compensation Act] for these lists:

• The employer must provide a clearly written notice to employee of the employee's rights and duties.
• The notice must be signed by the employee at the time of hire, whenever changes are made in the list and at the time of injury.
• The list must contain at least six providers; three of the six providers must be physicians.
• Providers as defined in the Act are more than just physicians (includes chiropractors) .
• Each provider's name, address, telephone number and specialty must be included on the list.
• If a particular specialty is not on the list and the specialty care is reasonable and necessary for treatment of the work injury, the employee will be allowed to treat with a health care provider of his or her choosing.
• The employer may not direct the employee to any specific provider on the list.
• The employee may switch from one designated provider to another designated provider.
• Listed providers must be geographically accessible.
• Listed providers must contain specialties appropriate for the anticipated work-related medical problems of the employee.
• If employer's list of designated providers fails to comport with the Act and the regulations, the employee has the right to treat with a provider of his or her choice.

This post is largely for historical purposes as the status quo has been restored on the matter of non-lawyer representation at Unemployment Compensation hearings.  By action of both the State Legislature and now the Pennsylvania Supreme Court, non-lawyers may represent employers at U.C. hearings reversing the anomaly created by the earlier lower court's decision in Harkness v. UCBR.  The Supreme Court's decision may have some impact on other quasi-judical forums (like zoning appeals) where non-lawyer participants may arguably engage in the practice of law.

Pennsylvania employers are required to post certain notices in their worksites so employees have access to and information about applicable labor laws. These posters can be downloaded for free from the Department of Labor and Industry website.  The website identifies each poster with links to the content of the poster, which employers are required to post it and contact information should you require additional information.

All notices must be posted in a conspicuous place so that they can be seen and read by employees. Failure to post notices can result in penalties and possible fines. In addition to the notices listed below, all government agencies and private employers with government contracts over $25,000 are required to publish and post an anti-drug policy statement in accordance with the Drug-Free Workplace Act of 19

Pennsylvania is a strong at will employment  state, but what does that really mean? Employment at will is only a contract term. It creates a rebuttable presumption that all employment contracts can be terminated by the employer or the employee at any time, for any reason. However, the "reason" cannot violate discrimination laws, government regulations, or public policy. The Pennsylvania Supreme Court has been very conservative in recognizing public policy exceptions to the at will employment presumption limiting them to the following circumstances:

• Supervisor fired for refusing to dissuade employee from seeking W/C benefits
• Employee fired for filing a worker's compensation claim
• Employee fired for filing unemployment claim
• Employee fired for refusing to take polygraph test.

Don't think that you don't need a "reason" to terminate an employee in Pennsylvania.  And make sure its not an illegal one.

 

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Although the Personnel Files Act limits inspection rights to "any person currently employed", it does not prohibit an individual from obtaining access when the individual makes a request contemporaneously with termination or within a reasonable time immediately following termination. Beitman v. Dept of Labor and Industry, 675 A.2d 1300 (Pa. Cmwlth 1996).  Remember that disciplinary records that may form a basis for defense of a legal claim should be included in the personnel file unless prepared in anticipation of litigation.  If documents are not in the personnel file when inspected by a former employee, an argument can be made that they were fabricated after the fact.

Many employers rely on the decision in Statler  v. U.C.B.R, 728 A.2d 1029 (Pa. Cmwlth 1999) as a blanket justification for mandating that all employees submit to direct deposit.  In Statler, a union employee refused to sign a direct deposit authorization form as mandated by the collective bargaining agreement and the employee was fired. He was ruled ineligible for unemployment benefits because he engaged in willful misconduct because his refusal was unreasonable.

Those who rely on this case may be right; however, there is an important assumption underlying this reliance which can be described as follows:

• The Pennsylvania Wage Payment and Collection Law requires the payments of wages be made in cash or check;
• The Pennsylvania Electronic Fund Transfer law allows payment of wages by electronic transfer whenever a party requests the method of payment in writing;
• The request must be in a written agreement that includes the terms under which a wage earner may withdraw the request and terminate the agreement;
• Unionized employees make their collective request through the terms of the collective bargaining agreement negotiated by their authorized bargaining agent (the "Union").

Can nonunion employees be compelled to authorize or "request" direct deposit as a condition of employment or continued employment?

Volunteer firemen, fire police, or any volunteer member of an ambulance service or rescue squad may not be disciplined or terminated for responding to a call prior to the time he is due to report to work that results in loss of work time. The employee need not be paid for the missed time. The employee must provide a statement from the chief executive officer of the fire or ambulance company stating that he or she responded to a call and the time of the call. 43 P.S. §§1201-1205; Guiffra v. International Paper Co., 931 F.Supp 372 (E.D. Pa. 1996).

Federal law does not require lunch or coffee breaks. However, when employers do offer short breaks or "rest periods" (usually lasting about 5 to 20 minutes), federal law considers the breaks work-time that must be paid. Unauthorized extensions of authorized work breaks need not be counted as hours worked when the employer has expressly and unambiguously communicated to the employee that the authorized break may only last for a specific length of time, that any extension of the break is contrary to the employer's rules, and any extension of the break will be punished. Bona fide meal periods (typically lasting at least 30 minutes), serve a different purpose than coffee or snack breaks and, thus, are not work time and are not compensable.

Training time is counted as hours worked and therefore compensable even if it occurs after normal business hours.  It is compensable at the employee's normal rate and counts toward overtime if the employee exceeds 40 hours in that week.  If an employer has an established training rate, it could pay the training time at a different rate; however, most employers don't  pay at a different rate. There is an exception to the requirement that the training time be paid, if all the following can be met:

• Attendance is outside the employee's normal work hours;
• The employee's attendance is completely voluntary (meaning attendance is not expressly or impliedly a condition of employment or advancement)
• The training is NOT directly related to the employee's job duties
• The employee does not perform any productive work during his or her attendance.

There is also an exception for voluntary attendance at a lecture or course that is job related if the course or lecture is offered by a third party like a school or vocational institute not affiliated with the employer. For more information see the Department of Labors Bulletin on this subject.

Both Pennsylvania and Federal Laws apply to the garnishment of employee wages. Under Pennsylvania Law, wages and earnings of employees may not be garnished or attached except for repayment of student loans, child & spousal support and to collect unpaid taxes. 42 Pa.C.S.A §8127. Under the federal Consumer Credit Protection Act (CCPA), employees are protected from discharge by their employers because their wages have been garnished for any one debt, and limits are imposed on the amount of an employee's earnings that may be garnished in any one week. The Department of Labor has published guidance on the limitations imposed on wage garnishment.   Fact Sheet # 30 also describes the amount that may be withhold for specific types of garnishments.

A restrictive covenant or noncompetition clause contained in an employment agreement is not assignable to purchasing a business entity, in the absence of a specific assignability provision, where the covenant is included in a sale of assets. Hess v. Gebhard & Co., 570 Pa. 148, 808 A.2d 912 (2002). Business should carefully review the provisions of employment contracts and noncompete agreements to determine if the agreements are assignable to successor companies. 

Officers of a corporation can be personally liable for unpaid wages and fringe benefits under the Pennsylvania Wage Payment and Collection Law, if they have an active role in the decision-making of the company. International Ass'n of Theatrical Stage Employees Local Union No. 3 v. Mid-Atlantic Promotion, Inc., 856 A.2d 102 (Pa. Super. 2004). 43 P.S. 260.9a.

An employee or a designated representative has a right to inspect the employee's personnel file including all records that are used to determine the employee's own qualifications for employment, promotion, additional compensation, termination or discipline. 43 P.S. §§1321-1323.   The employer may impose the following restrictions on the inspection:

• Employee may be required to provide written notice of either the purpose of inspection or parts of record to be inspected
• Inspection may be limited to times during employer's normal work hours
• Inspection may be mandated during employee's "free time"
• Employer may limit the employee's ability to remove the file or copy any part of it
• Employee may take notes
• Company official may be present during inspection
• Except for reasonable cause, employer may limit inspection to once every calendar year by an employee and once by a designated representative

An employee who revokes or withdraws a resignation before its effective date is eligible for unemployment compensation benefits if the employer separates him or her from employment, unless the employer has taken steps to replace the employee. Spadaro v. UC Board of Review, 850 A.2d 855 (Pa. Cmwlth 2004). Steps to replace the employee may include reassigning other employees, advertising the opening, interviewing replacements, or offering the position to someone else.

A noncompetition agreement may not be enforceable against an employee who is terminated for poor performance. Under a court ruling, an employer who fires and employee for failing to perform deems the employee "worthless" and the noncompete is no longer necessary to protect the employer's business interests. Insulation Corporation of America v. Brobston, 446 Pa.Super 520, 667 A.2d 729 (1995).

It is a criminal offense for a Pennsylvania employer to require any employee or applicant for employment to pay the cost of a medical examination, required by the employer as a condition of employment, if the applicant or employee works for the employer for one week or more. There is an exemption for medical examinations required by law. 43 P.S. § 1001- 1003.   There is no case law interpreting this section to give guidance on whether Pennsylvania would follow the federal rules that do not consider a drug test to be a "medical examination". 

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.