By existing OSHA regulations, most employers (those with more than 10 employees) are required to complete and maintain records pertaining to serious work-related injuries and illnesses, using the OSHA 300 Log, OSHA 301 Incident Report and OSHA 300A Annual Summary. Certain employers in low-risk industries as determined by OSHA (such as law offices, realtors) are exempt and not required to keep these records. In addition, all employers that are required to keep injury and illness records must report to OSHA any workplace incident resulting in a fatality, in-patient hospitalization, amputation, or loss of an eye.

Under a new rule that becomes effective January 1, 2017, certain covered employers will be subject to additional reporting obligations requiring the electronic submission of certain workplace illness and injury information to OSHA. (Under current regulations, employers are not required to provide illness and injury data to OSHA except upon request, as in the case of an OSHA inspection, or in the case of fatality, in-patient hospitalization, amputation, or loss of an eye.) The new rule will not change the existing recordkeeping requirements noted above.

The employers covered by the new rule and the additional reporting requirements are as follows:

  • Establishments with 250 or more employees in non-exempt industries (those currently required to keep OSHA injury and illness records) must electronically submit information from OSHA Forms 300 – Log of Work-Related Injuries and Illnesses, 300A – Summary of Work-Related Injuries and Illnesses, and 301 – Injury and Illness Incident Report.
  • Establishments with 20-249 employees in certain industries with historically high rates of occupational injuries and illnesses (such as construction and manufacturing operations) must electronically submit information from OSHA Form 300A. This link lists industries with historically high workplace injury/illness rates.  Covered employers must electronically submit the required injury and illness information annually. OSHA will provide a secure website with three electronic submission options: manual entry of the data into a webform. Uploading of CSV files to process single or multiple establishments at the same time, and electronic data transmission via an API (application programming interface) for users of automated recordkeeping systems. The site is scheduled to go live in February 2017.

The new reporting requirements will be phased in over two years according to the following schedule:

– For covered employers with 250 or more employees in industries covered by the recordkeeping regulation

  • only 2016 Form 300A information must be submitted in 2017 – by July 1
  • all required 2017 injury and illness information (Forms 300A, 300, and 301) must be submitted by July 1, 2018, and
  • beginning in 2019 and every year thereafter, the required information must be submitted by March 2

– For covered employer establishments with 20-249 employees

  • 2016 Form 300A information must be submitted by July 1, 2017,
  • 2017 Form 300A information must be submitted by July 1, 2018, and
  • beginning in 2019 and every year thereafter, the information must be submitted by March 2.

Some of the electronically submitted data will also be posted to the OSHA website and become accessible to the public. According to OSHA, Personally Identifiable Information (PII) that could be used to identify individual employees will be removed and not posted. OSHA believes that public disclosure will encourage employers to improve workplace safety and provide valuable information to workers, job seekers, customers, researchers and the general public. However, employers and industry groups have expressed concern that increased reliance upon recordkeeping information when targeting establishments for inspection, and the public availability of the information, will serve to hold employers accountable for the mere occurrence of a recordable incident and create other unwarranted consequences detrimental to employers. The recordkeeping standards have historically been thought of as a no-fault system: work-related incidents need to be recorded even if they are unpreventable. The new rule could create an incentive to under-report and reward employers that do so, while punishing employers with robust safety programs and effective incident reporting systems. But the new rule is here to stay, so only time will tell if these employer concerns are warranted.

The new rule also includes provisions designed to promote complete and accurate reporting of work-related injuries and illnesses. These include: employers must inform employees of their right to report work-related injuries and illnesses free from retaliation, which can be satisfied by posting the OSHA Job Safety and Health – It’s the Law worker rights poster; an employer’s procedure for reporting work-related injuries and illnesses must be reasonable and not deter or discourage employee reporting; and, an employer may not retaliate against employees for reporting work-related injuries or illnesses. These provisions became effective August 10, 2016, but enforcement has been delayed by OSHA until November 1, 2016, to allow time for covered employers to adjust.

Please feel free to call any member of our Labor and Employment Law Practice Group if you have any questions about this post/the new reporting rule, and for further guidance regarding OSHA compliance and workplace safety issues.

On September 9, 2016, the Pennsylvania Superior Court upheld an award of $4.5 million in punitive damages against several former employees, who violated non-compete/non-solicitation agreements with their former employers.  In B.G. Balmer & Co. Inc. v. Frank Crystal & Co., Inc., et al., the court determined that among other things, the former employees’ used confidential information and trade secrets they obtained during their employment to solicit more than twenty-five of their former employer’s more profitable clients.  The actions of the former employees were also in violation of the non-solicitation provisions contained in their employment agreements. The Superior Court’s full opinion can be found here.

In affirming the $4.5M punitive damages award, the Superior Court found that there was extensive evidence showing the blatant efforts of the former employees to lure away other Bamler employees as well as clients. More specifically, the Court noted that the former Executive Vice President and President of Strategic Planning formulated a plan with the new employer, a competing insurance brokerage agency, to entice other employees to leave and work for the new company.   As part of this plan, the former employees were encouraged to bring clients and customers with them after they departed their employment.

During the process of finalizing the planned departure, the new company was made aware that each of the employees were subject to the non-solicitation restrictions within their employment agreements.  Despite knowing this, the new company extended offers to all Balmer sales and marketing employees, which represented all Balmer’s employees other than the owner himself.  Prior to resigning from employment, several of the employees took confidential information and trade secrets including client lists and insurance policy details.  Shortly after receiving employment offers, all of the employees resigned from Balmer and utilized the confidential information and trade secrets to attempt to solicit and/or transfer clients’ to the new company.

The Superior Court affirmed the trial court’s finding that such conduct was sufficiently outrageous to award punitive damages. This decision is a reminder for employers about the potential value post-employment restrictive covenants, like non-solicitation provisions, have in protecting their workforce and customer/client base.  While punitive damages may not always be warranted as they were in the Balmer case, employers who utilize enforceable restrictive covenants like non-solicitation provisions, may be entitled to injunctive relieve as well as some form of compensatory and other damages when former employees breach restrictive covenants.

From a different perspective, this case is also a warning of the potential risks associated with hiring employees who may be subject to post-employment restrictions such as non-solicitation provisions.  When hiring new employees who are subject to restrictive covenants, employers would be well advised to understand the limitations imposed by such covenants and provide the new employee with specific directives to avoid any form of conduct that may be in violation of the restrictive covenants.  A failure to abide by the limitations of an enforceable restrictive covenant, may lead to exposure.

In a recent decision, the Third Circuit emphasized the need for employers to capture and compensate all hours worked by non-exempt employees, even if the employer pays the employees for break time that it could treat as non-compensable under the Fair Labor Standards Act.

In Smiley v. E.I. DuPont De Nemours & Company, the plaintiffs filed an FLSA collective action and Pennsylvania state law class action seeking compensation for unpaid time spent donning and doffing their uniforms and safety gear and performing other activities before and after their shifts.  This unpaid time averaged approximately 30 to 60 minutes per day.  The plaintiffs worked 12-hour shifts and, per DuPont’s written policy, were paid for a 30-minute meal break and two other 30-minute breaks per shift.  DuPont counted the paid break time as hours worked for overtime purposes, even though the FLSA did not require it to do so.  The paid break time always exceeded the unpaid pre-shift and post-shift donning and doffing time.

DuPont argued that the plaintiffs’ claims for unpaid overtime fail, because it voluntarily treated the break time as hours worked, effectively serving as an offset against the 30 to 60 minutes of daily unpaid pre-shift and post-shift time.  The District Court agreed with DuPont’s offset argument and dismissed the lawsuit entirely.

On appeal, the Third Circuit rejected the offset argument and overturned the dismissal.  After mentioning the FLSA’s “broad remedial purpose,” the Court observed that employers have some flexibility when considering whether to treat bona fide meal breaks as hours worked.  The Court also noted that the FLSA explicitly permits offsets against overtime pay only in three specific situations, none of which addressed paid meal breaks.

The Court concluded that nothing in the FLSA authorized the offsetting of discretionary compensation that the employer included in calculating the employee’s regular rate of pay.  Even though the FLSA did not require DuPont to pay for the meal and other breaks or to treat that time as hours worked, once it did so, it could not use that time as an offset against other time spent working that it did not count for overtime purposes.

In other words, using the strict FLSA definition, the employees had a total of 11 to 11 1/2 hours worked per day (including the pre-shift and post-shift activities and excluded the 90 minutes of break time) and were paid for 12 hours worked per day.  Nevertheless, the Court held that DuPont’s practice violated the FLSA.

The Smiley decision is an important reminder for employers to review their pay practices and ensure that all hours worked by non-exempt employees are captured and compensated.  Even if an employer goes beyond what the FLSA requires and pays an employees for meal breaks, that generosity cannot be used to offset other potential overtime violations.

The Third Circuit again reminded us that the FLSA exists to protect employees, not employers, and the need for technical compliance with its requirements.  Unless a pay practice is expressly authorized by the FLSA or its regulations, the pay practice may run the risk of creating potential class-based liability for even generous employers.

On September 28, 2016, the United States House of Representatives passed a bill that would postpone implementation of the FLSA’s new salary threshold for “white-collar” overtime exemptions. As we noted earlier this month, the Department of Labor’s regulation will more than double the minimum weekly salary requirement to $913 and is set to take effect December 1. The recently passed House bill would push the effective date to June 1, 2017.

Employers shouldn’t get their hopes up for breathing room, however. Even if the bill makes it past the Senate and onto President Obama’s desk, the Commander-in-Chief has threatened a veto. With the overwhelming majority of congressional Democrats supporting the salary requirement increase, the chances that Congress will override the President’s veto are slim.

So, employers should stay the course and continue planning as if the new regulations will take effect on December 1, 2016. A helpful list of considerations and action steps can be found here.

The calendar (if not the weather) tells us that fall is almost here. With the change in seasons comes another reminder that the effective date of the U.S. Department of Labor’s new Fair Labor Standards Act “white-collar” overtime exemption regulations is fast approaching.

Effective December 1, new rules that more than double the minimum weekly salary requirement for the FLSA’s white-collar overtime exemptions to $913 will be the law of the land. If an employer cannot show that an employee meets the requirements of one of the exemption tests, that employee will be legally entitled to overtime, and the employer could face significant potential liability for unpaid overtime pay, liquidated damages, and attorneys’ fees.

Now is the time for Pennsylvania employers to consider the following action items:

  • Identify those employees you currently treat as exempt from overtime pay and determine whether their salaries will meet the new threshold of $913 per week (i.e., $47,476 annually).
  • For those employees currently treated as exempt who earn less than $913 per week, consider whether to increase their salaries to meet the new salary requirement or convert the employees to non-exempt status and pay them for overtime worked. This decision will require an in-depth cost/benefit analysis that considers the employee’s pay, the hours worked by the employee, the employer’s ability to record and control or manage the hours worked, and the relative strength of the employer’s position that the employee meets the duties test for one of the exemptions.
  • Review all positions you treat as exempt, regardless of salary, and determine whether you could prove, if challenged, that the employee meets the duties test for one of the exemptions. For most of the FLSA’s white-collar exemptions, an employee can be treated as exempt only if the employee meets both the minimum salary requirement AND the duties test for the exemption. Simply paying a salary, even in excess of $913 per week, is not enough to exempt an employee from overtime pay.
  • Confirm that you are properly tracking all hours worked and calculating the overtime rate for your non-exempt employees. Even though the new regulations do not change the pay rules applicable to non-exempt employees, they likely will increase the number of non-exempt employees you have, making compliance in this area even more critical.

December 1 will be here before we know it, and much work needs to be done by employers to prepare for the changes that take effect on that date. Are you ready?

In yet another reversal of precedent, the National Labor Relations Board has ruled that students who perform work for a university for which they are compensated can form and join labor unions under the National Labor Relations Act.  Key to the Board’s holding was that these students, including teaching assistants and research assistants, were more akin to employees, as opposed to well, students.  Yeah, we know.

Now, the students will have the opportunity to participate in an election to determine if they will be represented by a labor union.  There are some issues that remain unresolved, including who should be considered part of the unit, given the transient nature of these positions.  The Columbia University teaching and research assistants will then have the opportunity to vote in a representational election.

The decision does not come as a surprise to most observers, many of whom believed that the Democratic majority on the Board would take the opportunity to reverse the 2004 Brown University decision, which had held that graduate assistants were primarily students and not employees covered by the Act.  In Columbia University, the Board noted that the Brown decision was not grounded in the language of the Act, because no specific exemption exists under the Act for students.  The Board held that the Brown University decision “deprived an entire category of workers of the protections of the Act.”  To us, this begs the question – are they really workers?

Importantly, the decision applies only to private universities covered by the Act, and not public universities that are governed by state labor law.  Those universities who are covered will need to take proactive steps to evaluate their teaching and research assistants, both graduate and undergraduate.  While for many, the decision may have limited practical impact, it is likely that one or two negative consequences will flow from the decision: there will be fewer opportunities for teaching and research assistants; and/or the cost of tuition will increase.

As the cost of providing health coverage increased over the past fifteen years, many employers began to offer employees cash payments if they “opted out” of coverage.  Some expected that the Affordable Care Act (ACA) would put an end to opt-out incentive programs.  The ACA does not prohibit opt-out payments; however, the IRS recently issued proposed regulations that highlight how the ACA impacts these payments.  The IRS’s proposed regulations recognize two types of opt-out arrangements: a) unconditional opt-out payments; and b) eligible opt-out arrangements. 

Unconditional Opt-Outs.  An “unconditional” opt-out payment offered to an employee for having declined health coverage will be viewed by the IRS as increasing the employee’s required contribution for purposes of determining the affordability of the health plan to which the opt-out payment relates.  This is true regardless of whether the employee enrolls in the plan or elects to opt-out and takes the payment.  Put another way, the cost of coverage to employees for purposes of determining affordability under the ACA must include not only monthly employee contributions, but also the amount of any opt-out payment that is offered to them.  If an opt-out payment incentive increases the total employee cost of coverage above applicable affordability thresholds (9.66% for 2016), the employer may face a pay or play penalty.

Eligible Opt-Out Arrangements.  Employers may avoid the potential affordability problem outlined above by offering an “eligible opt-out arrangement.”  An eligible opt-out arrangement conditions the payment of the incentive on  the employee’s declining coverage and providing, at least annually, reasonable evidence that the employee and his or her “tax family” (those for whom the employee expects to claim a personal exemption) will have minimum essential coverage (other than individual market coverage) during the period covered by the opt-out arrangement.  If the opt-out payment covers a full plan year and the employee’s “tax family” includes a spouse and one child, payment must be conditioned upon reasonable evidence that all three individuals will have coverage for the full year.  Requiring such evidence allows employers to exclude opt-out incentives from the cost of coverage they offer for purposes of calculating affordability.

Effective Dates and Transition  Relief.  The IRS proposed regulations will apply for plan years beginning on or after January 1, 2017.  Although the regulations are in proposed form, employers and plan administrators may rely on them immediately.  Unconditional opt-out arrangements that were adopted before December 16, 2015 may be exempted from the affordability calculation if certain conditions are met.  Similarly, unconditional opt out arrangements that are included in a current collective bargaining agreement (CBA) are exempt from the affordability calculation until the later of (1) the start of the first full plan year after the CBA expires (excluding any CBA extensions on or after December 16, 2015), or (2) the start of the first plan year beginning on or after January 1, 2017.

What To Do Now?  Employers that wish to continue offering opt-out incentive payments may certainly do so under the proposed regulations.  However, it is now important that opt-out payments be structured as an “eligible opt-out arrangement” which clearly conditions payment on sufficient proof of other coverage (other than individual market coverage).  Employers should also be aware that opt-out payments could impact the calculation of non-exempt employee overtime earnings under the Fair Labor Standards Act (regardless of whether the employee opts out and receives payment), unless properly structured. 

In sum, opt-out incentive programs have survived the ACA.  However, employers must be careful in designing these programs or they may run afoul of affordability requirements.  If you have any questions regarding the IRS regulations or this article, please don’t hesitate to contact any member of our Labor & Employment Practice Group.



Since 2012, the United States Department of Labor (DOL) reports that it has recovered over $40 million in back wages for employees in the oil and gas industry.  Employers in the industry can expect claims to rise as the DOL continues its enforcement initiatives.  The leading cause of back pay awards? Worker misclassification.  The DOL’s nearly 1,100 investigations into the oil and gas industry’s workforce classifications have focused primarily on two areas; independent contractors and white-collar exemptions.

Misclassifying Employees as Independent Contractors

Many employers in the energy sector commonly pay certain types of workers on a per diem or flat rate basis, irrespective of the number of hours that they work.  Oftentimes, these workers are classified as independent contractors and many even enter into independent contractor agreements with their employers.  As many companies in the oil and gas industry have learned the hard way, these factors alone are not enough to establish the existence of an independent contractor relationship.  Instead, there are a number of criteria that must be met in order for a worker to be properly classified as an independent contractor (and lawfully exempt from minimum wage and overtime provisions of the Fair Labor Standards Act).  Employees in the energy sector who are misclassified as independent contractors are often entitled to considerable back pay due to the considerable amount of overtime that they work.

Misclassifying Employees as Exempt Based on Job Title

The DOL’s investigations of oil and gas employers also commonly uncovers employees who are misclassified as exempt from minimum wage and overtime requirements under the Fair Labor Standard Act’s white collar exemptions. These employees are frequently and improperly considered by their employers to qualify for the executive, administrative, or professional exemptions in particular.  Employers operate under the inaccurate assumption that these exemptions apply based upon the employees’ job titles which regularly include one or more of the following “buzzwords”: manager, foreman, engineer, technician, and specialist.  As the DOL has made clear, however, job titles are not determinative of exempt status.  Instead, employees’ salary levels and job duties are the true measure of whether they are eligible for these exemptions.

Employers in the oil and gas industry (and in general) are well-advised to ensure proper classification of workers who they consider as independent contractors or as exempt from minimum wage and overtime under a white collar exemption.  In the meantime, the DOL can be expected to continue pursuing its misclassification enforcement initiative.

Employers with more than 100 employees and federal contractors are probably more than familiar with the EEO-1 reporting requirements, but those requirements are about to change. On July 13, 2016, the Equal Employment Opportunity Commission published a revised version of a proposed rule to broaden the scope of data collected in the EEO-1 report. Earlier this year, the EEOC issued an initial version of the proposed rule, which would have required additional reporting on each of ten categories of employees and pay information reported by race and gender.  The July 13 version of the rule contained some key changes.

Changes to Proposed Rule

Under the new proposal, the EEOC will require reporting on an employer’s established pay ranges for positions and hours worked. In response to the comments received regarding the initial proposal, the revised proposal proposes moving the due date for filing the required report from September 30, 2017 to March 31, 2018. This change will allow employers to use employee’s W-2 earnings for reporting. Because of the revisions to the proposal, a new 30 day notice and comment period commenced with the release of the new revised proposal in the federal register.

Purpose of Data Collection

EEOC explained that it intends to use pay data for early analysis of discriminatory complaints. Investigators will examine the data for pay disparities and perform statistical analyses, yet to be determined in order to investigate whether compensation discrimination appears likely. EEOC has further stated that it will compare periodic reports on pay disparities by gender and race based on the data. Finally, the agency will use the data to enhance its support for training programs by, among other things, providing supporting evidence for training programs.

What Should I Do Now

EEOC actually pays attention to the comments it receives as is evidenced by the new revised proposed rule. We strongly encourage employers to make comments on the hardships the proposed revised rule would create. EEOC has remained silent on how it will account for the merit based non-discriminatory factors that could lead to differences in pay in the same job category. This is an issue we suggest employers should press heavily in their comments. Tenure, skill sets and even the broad nature of the job categories themselves can be pivotal in determining wage differences. Stay tuned, we will likely see more changes when the final rule is published.