Pennsylvania Labor and Employment Blog : Pennsylvania Labor and Employment Lawyer & Attorney : McNees Wallace & Nurick Law Firm : Human Resources, Workplace and Business Law : Harrisburg, Lancaster, Allentown, Lehigh

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.

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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.

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 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.    

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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.

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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.

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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:

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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.

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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. 

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.

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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.

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