Class Certified in Pennsylvania Payroll Debit Card Litigation

We previously discussed on this blog the potential risks associated with the use of payroll debit cards to pay wages to employees. The absence of federal and state regulations specifically addressing this relatively new payroll option makes the use of payroll debit cards a target for potential wage and hour claims and litigation.

These risks were emphasized recently when Judge Thomas F. Burke, Jr. of the Luzerne County Court of Common Pleas certified a class of 2,380 former or current employees of a McDonald’s franchisee in Luzerne County in the class action case captioned as Siciliano et al. v. Albert/Carol Mueller T-A McDonalds et al. In Siciliano, the plaintiffs allege that their employer illegally paid workers using fee-laden debit cards in violation of Pennsylvania law. The plaintiffs seek more than $1.2 million in damages.file0001730089237 (1)

In addition to the state law claims at issue in Siciliano, there are federal law requirements that may apply to payroll debit cards.  In October 2013, the federal Consumer Financial Protection Bureau (CFPB) issued Bulletin 2013-10 on the subject of payroll card accounts. In its Bulletin, the CFPB confirmed its position that federal law prohibits employers from mandating that employees receive wages only on a payroll card of the employer’s choosing.

The recommendations we made in 2013 for employers in Pennsylvania who wish to pay wages via payroll debit cards remain the same today.

  1. Provide the employee with the option of either being paid by direct deposit or a payroll debit card, because it currently is unclear whether an employer lawfully may require that an employee accept payment of wages only via a payroll debit card.
  1. Obtain signed authorization from the employee for payment via payroll debit card.
  1. Use a bank that levies minimal or no fees, and that allows the employee at least one fee-free withdrawal per pay cycle.

Five Ways the EEOC Proposed Wellness Regulations Would Change Workplace Health Initiatives



The Americans with Disabilities Act (ADA) generally prohibits employers from requiring current employees to submit to medical examinations or medical inquiries unless the exam or inquiry is “job-related and consistent with business necessity.”  Guidance issued by the Equal Employment Opportunity Commission (EEOC) in 2000 makes an exception to this rule for wellness programs that request employee medical information (e.g. biometric testing, health risk assessments, etc.) as a condition of participating in the program.  However, this exception only applies if participation in the wellness program is “voluntary” – meaning that participation may not be required and non-participants may not be penalized.

Over the past fifteen years, employers and their benefits consultants have developed a myriad of strategies for encouraging employee participation in wellness programs, many of which involve “discounts” on employee contributions for health coverage for wellness participants.  More aggressive employers have gone so far as to condition enrollment in their group health plan on an employee’s participation in a wellness program.  Allegations of such requirements were the basis for EEOC lawsuits filed in late 2014 against Honeywell International Inc. and several other employers.  It is in this context that the EEOC published their proposed regulations on April 20, 2015 to further define the “do’s and don’ts” for wellness programs under the ADA.  The proposed regulations, if finalized in their current form, would change the wellness landscape in five significant ways.

Financial Incentives

The Affordable Care Act caps aggregate financial incentives that are offered under wellness programs at 30% of the applicable group health plan premium (and 50% for tobacco-related incentives).  The EEOC proposed regulations, on the other hand, would cap total financial incentives for participation in any wellness program(s) that involves employee medical inquiries (e.g. health risk assessments) or examinations (e.g. biometric testing) to 30% of the cost of employee-only coverage.

Employee Notice Requirements

If a wellness program is offered as part of a group health plan, employees must be provided with a notice that: (i) describes the type of medical information that will be obtained through the program and the purposes for which it is used; (ii) describes applicable restrictions on the disclosure of the employee’s medical information; and (iii) is written in a manner that the employee is likely to understand.

Reasonable Design Requirement

Wellness programs which include medical inquiries or examinations must be “reasonably designed to promote health or prevent disease.”  The EEOC explains that medical information that is gathered through a wellness program must be put to a use that benefits program participants.  For example, if a particular health risk is identified through such information, the risk should be communicated to the participant.  Gathering such information without providing employees with follow-up information or advice would not meet this standard.

Equal Benefit Rule

Some employers have offered additional health plan options to wellness participants while non-participants are limited to participating in a single less generous plan.  The proposed regulations would prohibit employers from denying coverage under any group health plan or otherwise limiting the extent of benefits available to employees who do not participate in wellness programs.


The EEOC proposed regulations further prohibit employers from taking any “adverse employment action” due to an employee’s decision not to disclose medical information or submit to medical exams in connection with wellness programs.  For programs that offer financial incentives for participation, the “packaging” of these incentives will be important.  Premium discounts will remain lawful if they are within the applicable limits set forth in the ACA and the EEOC regulations.  However, premium “surcharges” for non-participation would likely be considered unlawful retaliation.

The EEOC will be accepting public comments on the proposed regulations through June 19, 2015.  Although the regulations are merely “proposed” at this stage, they provide a road map for how the Commission interprets the ADA in the context of wellness programs.  Non-compliant programs could conceivably be challenged even before the regulations are finalized.  For this reason, employers would be wise to reconsider their existing programs in light of the new proposed regulations now.

An OSHA Inspection Can Be Costly for the Unprepared Employer

Knock Knock!  Who’s there?  OSHA.  OSHA who?  OSHA, the federal agency responsible for workplace safety, which is going to hit your company with hefty fines if you are not prepared.

This is no joke.  OSHA is a very active and well-resourced organization with an aggressive agenda.  The statistics tell the story: OSHA’s total budget for 2015 exceeds $550 million, more than 36,000 inspections were conducted in 2014, the top 10 fines issued by OSHA in 2014 totaled more than $9.2 million, and significant fines (over $100,000) issued in 2014 averaged $2.6 million/month and totaled $30 million for the year.  With smart preparation, your company can avoid being included among these statistics.

Any company may be subject to an OSHA inspection as a result of an employee complaint, a work-related accident, or random selection for inspection designed to address or target specific workplace hazards (e.g., fall hazards, asbestos).  Regardless of how an inspection is initiated and any specific issue(s) that may be in play in connection with a particular inspection, OSHA will likely review certain records and various areas of compliance including: any required written plans/programs required for your workplace/industry (e.g., safety plan, emergency action plan,  lockout/tag-out procedures, fall protection program), written program and other required Hazcom materials (labels, Safety Data Sheets and training records), accident and injury logs (e.g., OSHA 300 if applicable), and the mandatory OSHA poster.  Taking a proactive approach and ensuring that certain essential OSHA compliance matters have been adequately addressed, before a government inspector is at your door, will best position your company to successfully navigate any future OSHA inspection and reduce potential liability.

For example, OSHA recommends that a compliant safety plan should address certain issues, at a minimum. OSHA recommends that each written plan include the following basic elements:

  • policy or goals statement,
  • identification of responsible persons,
  • hazard identification,
  • hazard controls and safe practices,
  • emergency and accident response, and
  • employee training and communication, and recordkeeping.

If you have a hazard plan, and you must if you are covered by OSHA, does it cover these elements?

Similarly, an OSHA compliant emergency action plan should (at a minimum) address:

  • the means to report fires and other workplace emergencies,
  • evacuation procedures and emergency escape routes,
  • procedures for employees who remain to operate critical plant operations before evacuation,
  • procedures to account for all employees after an emergency evacuation,
  • rescue and medical duties for certain employees with such responsibilities, and
  • names and titles of persons who can be contacted for further information or with questions about the plan.

GSF1Achieving OSHA compliance can seem like a daunting task, but ignoring workplace safety is not an option when there is so much at risk.  The unprepared company can suffer significant consequences and face substantial potential exposure in the event of an OSHA inspection. Those companies which take a proactive and coordinated approach, by first addressing the most critical needs/areas of concern and ultimately developing a comprehensive workplace safety program with full compliance as the goal, are much more likely to succeed.

Stay tuned for future blog posts that will feature additional advice regarding OSHA inspections and address other important OSHA compliance topics.

Contact any of the attorneys in Labor & Employment Practice Group if you have a question about this post or need assistance with OSHA compliance.

New Jersey’s Ban the Box Law Goes Into Effect

On March 1, 2015, New Jersey’s Opportunity to Compete Act (also known as “Ban the Box”) went into effect.  The Act applies to employers with 15 or more employees over 20 calendar weeks that do business, employ people, or take applications for employment in the Garden State.  During the initial employment application process, employers are prohibited from requiring applicants to disclose their criminal history on applications, from making any inquiry (oral or written) into an applicant’s criminal record, and posting job advertisements which exclude applicants with a criminal background. However, employers can make such inquiries after the initial process is complete.  Additionally, if the applicant voluntarily brings up his or her criminal history during the initial process, the employer can make a limited and reasonable inquiry into the history that has been disclosed.

The Act also provides for several exceptions, including whether the position being sought is in law enforcement, the judiciary, homeland security, corrections or emergency management; where a criminal background check is required by law, where an arrest or conviction may preclude the person from holding such a position as required by law, or where the employer is restricted by law, rule or regulation from engaging in specified business activities based on its employees’ criminal records; or where the position sought is designated as part of a program designed predominantly to encourage the employment of persons who have been arrested or convicted.  The Act also includes significant civil penalties for the first, second, and subsequent violations.

While the New Jersey Department of Labor and Workforce Development has issued a draft rule (which is currently in the comment period) in order to clarify some portions of the Act, employers should ensure they are compliant with the Act.  Employers should review their applications and job advertisements for any questions or information which may be considered violative of the Act.  Employers should also review the Act with and consider training its employees or agents responsible for handling the initial employment application process.

Data Encryption and Its Potential Effect on Litigation and Discovery

While most employers take many steps to avoid employment litigation, even the most meticulous of Human Resources departments sometimes find themselves facing a lawsuit in federal or state court.

In some respects, technology has made the discovery process easier, however, it has also complicated civil litigation. Rachel Hadrick, an Associate in our Litigation group, recently wrote an article about data encryption and its effect on litigation and discovery. Check it out here! And as you read, consider whether your “Bring Your Own Device” and technology policies adequately safeguard your company’s interests.