The Biden Administration announced earlier this summer that Long COVID may qualify as a disability under the Americans with Disabilities Act (“ADA”), the Rehabilitation Act and several other federal statutes offering protection for disabled individuals. The Centers for Disease Control and Prevention has defined “Long COVID” as new or ongoing symptoms of COVID-19 that can last for several weeks or months after an individual was infected with the virus.  Long COVID symptoms can include fatigue, “brain fog,” heart palpitations, joint or muscle pain, dizziness, and depression or anxiety.

The Department of Health and Human Services (“HHS”) and the Department of Justice (“DOJ”) subsequently issued guidance explaining how Long COVID may qualify as a disability under the ADA.  A physical or mental impairment is a “disability” if it substantially limits one or more major life activities, such as eating, breathing, working, etc. The guidance reminds us that the phrase “substantially limits” must be construed broadly and the limitation does not need to be permanent or severe in nature.  The guidance also provides several examples of how Long COVID can substantially limit a major life activity, including the following:

  • A person who has lung damage that causes shortness of breath, fatigue and related effects is substantially limited in respiratory function, among other major life activities.
  • A person who has symptoms of intestinal pain, vomiting and nausea that have lingered for months is substantially limited in gastrointestinal function.
  • A person who experiences memory lapses and brain fog is substantially limited in brain function, concentrating, and thinking.

The guidance goes on to state that Long COVID may not always be a disability and an individual medical assessment will be required to determine whether it creates a substantial limitation of a major life activity.  The EEOC recently issued a statement indicating that it agreed with HHS and DOJ’s guidance relating to Long COVID and that it would be updating its technical assistance on this issue in the next few weeks.

In the meantime, employers should be aware that if a COVID “long hauler” is found to have a disability, they may be entitled to a reasonable accommodation. Examples of a reasonable accommodation could include a leave of absence, remote work, job restructuring or part-time work. Employers do not have to alter or eliminate the essential functions of a job or provide an accommodation that causes an undue hardship to the business.

In addition to the ADA, Long COVID also may be covered by the Family and Medical Leave Act (“FMLA”) since it would be considered a serious health condition.  Employers need to understand the protections provided to employees by both the ADA and the FMLA and train managers and supervisors on the applicability of these laws. Employers also should review their existing leave and accommodation policies and procedures to ensure they can manage Long COVID in the workplace.

Should you have questions regarding this guidance, the ADA, or any other federal disability laws, please reach out to a member of the McNees Labor and Employment Group.

The 100-percent premium subsidy for eligible COBRA health care enrollees, enacted earlier this year as part of the American Rescue Plan Act (ARPA), period is ending September 30, 2021.

Group health plans need to send an expiration notice to eligible individuals 15 to 45 days before their premium assistance expires. The last day the notices must be mailed is September 15, 2021.

Plan sponsors should check with their COBRA administrators to ensure this final notice is delivered in a timely manner.

For more information on these changes and other employee benefit law changes, contact a member of our Labor and Employment or Employee Benefits Group.

An employee may sue an employer under the Pennsylvania Medical Marijuana Act (“MMA”) for discrimination because of the employee’s status as an individual who is certified to use medical marijuana. This was the recent holding of the Superior Court in the case of Moses Taylor Hospital v. Palmiter.  As you may recall, we discussed Palmiter in 2019, when the case was filed, and again in 2020 when the Lackawanna County Court of Common Pleas recognized the right of an employee to sue an employer for discrimination under the MMA – the first court in Pennsylvania to do so.  The Superior Court decision affirms the county court’s holding and creates binding legal precedent for courts across the Commonwealth of Pennsylvania.

As we previously discussed, the private cause of action allows employees to file suit against employers for discrimination because of their status as a certified medical marijuana user.  The employee can file their claims directly with the courts, without having to exhaust administrative remedies. This creates a disconnect between other discrimination claims (i.e. disability, race), which first require the exhaustion of administrative remedies. Accordingly, employers may face multiple actions arising from the same incident at different times.  Further, it remains unclear what statute of limitations period is applicable for alleged violations of the PA Medical Marijuana Act. It is also unclear what remedies an employee might recover from a successful PA Medical Marijuana Act cause of action.  Finally, and most notably, neither the Superior Court nor the Court of Common Pleas opined on whether the conduct alleged by Ms. Palmiter actually constitutes discrimination under the MMA.  The Courts have only determined that a cause of action under the MMA exists.  Whether Ms. Palmiter can ultimately prove her case remains to be seen.

The Superior Court also considered Ms. Palmiter’s wrongful discharge claim, which argues that terminating an employee who is lawfully using medical marijuana outside of work, violates public policy.  The Superior Court allowed the wrongful discharge claim to proceed alongside discrimination claim, noting that Section 2103(b)(1) of the MMA clearly demonstrates public policy against termination of employment and other types of discrimination based on certified marijuana use off the employment premises. The Court noted that when a qualifying patient uses medical marijuana in accordance with MMA, it is a lawful medical treatment and akin to a prescription drug.

What does all of this mean for employers?  Employers would be wise to review any policies, or lack thereof, regarding the treatment of employees and applicants who use medical marijuana outside of work. As the Superior Court pointed out, Section 2103(b)(2) of the MMA allows employers “to discipline an employee for being under the influence of medical marijuana in the workplace or for working while under the influence of medical marijuana when the employee’s conduct falls below the standard of care normally accepted for that position.” Accordingly, an employer’s hands are not completely tied with regard to preventing the use of marijuana in the workplace and preventing employees from creating an unsafe environment due to their marijuana use.  However, the days of zero tolerance for marijuana use, especially when the individual is certified to use medical marijuana under the MMA, appear to be gone.

Employers should also be mindful of their policies and determinations relating to certified medical marijuana use to ensure compliance with all of the various laws and regulations and the potential overlap with other state and federal discrimination laws.  For any questions or concerns regarding medical marijuana policies or any employment-related matters, contact Denise Elliott.

The full cite for Palmiter is as follows:  Scranton Quincy Clinic Company, LLC d/b/a Physicians Health Alliance and Scranton Quincy Hospital Company, LLC d/b/a Moses Taylor Hospital v. Pamela Palmiter, 2021 Pa. Super. 155 (August 5, 2021).

Last week, the Pennsylvania Supreme Court issued a decision that has broad implications for Pennsylvania employers.  The Court’s decision in In Re: Amazon.com, Inc., which can be read here, established two important differences between Pennsylvania’s overtime law and the federal Fair Labor Standards Act (FLSA).  These differences are likely to create significant potential compliance and liability risks for Pennsylvania employers.

The case arose after Amazon employees claimed they were required to undergo anti-theft security screenings after clocking out for the day but before leaving the work facility.  These screenings included metal detectors, bag searches, and secondary screenings if the employee set off an alarm.

In its decision, the Court considered the following two questions as to Amazon’s pay practices under Pennsylvania law:

1)         whether time spent on an employer’s premises waiting to undergo, and undergoing, mandatory security screening is compensable as “hours worked” within the meaning of the Pennsylvania Minimum Wage Act (PMWA); and

2)         whether the de minimis exception recognized under the federal FLSA exists under the PMWA.

On both questions, the Court’s majority (in a 5-2 decision that fell on political party lines) provided answers that were unfavorable for employers and inconsistent with the established requirements of the FLSA.

I.        Time Spent in Mandatory Security Screenings

On the first question, the Court began by noting that the U.S. Supreme Court held in a 2014 decision that time spent by Amazon workers going through the same security screenings was not compensable as “hours worked” under the FLSA, due to amendments made to the FLSA by the federal Portal to Portal Act of 1947.  See Integrity Staffing Solutions v. Busk, 574 U.S. 27 (2014).

However, the Pennsylvania Supreme Court found that the definition of “hours worked” in the PMWA regulations was both different and broader than the definition found in the Portal to Portal Act.  The Court also noted that Pennsylvania has never adopted the Portal to Portal Act’s amendments to the FLSA.

As a result, consistent with the PMWA regulations, the Court held that compensable hours worked under the PMWA for minimum wage and overtime pay purposes include any of four categories of time:

  • time during which the employer requires an employee to be on the employer’s premises;
  • time during which the employer requires an employee to be on duty or to be at the prescribed workplace;
  • time spent in traveling as part of the duties of the employee during normal working hours; and
  • time during which an employee is employed or permitted to work.

In so finding, the Court reaffirmed the principle that the PMWA manifests Pennsylvania’s “strong public policy protecting an employee’s right to be adequately compensated for all hours for which they work.”  The Court also cited two of its prior decisions finding that the FLSA “establishes only a national floor under which wage protections cannot drop, but more generous protections provided by a state are not precluded.”

With this analysis, the Court held that time spent by the Amazon employees waiting to undergo and undergoing mandatory security screenings on Amazon’s premises constitutes compensable hours worked for minimum wage and overtime pay purposes under the PMWA, because Amazon required the employees to remain on their premises for the screenings.

II.        De Minimis Exception

On the second question, a 1946 U.S. Supreme Court decision and U.S. Department of Labor regulations established a de minimis exception under the FLSA, providing that insubstantial and insignificant periods of time performing work outside scheduled work hours need not be treated as hours worked for overtime pay and minimum wage purposes.  See Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946); 29 C.F.R. § 785.47.

However, the PA Court again declined to apply this settled FLSA precedent to the PMWA, holding that there is no de minimis exception under the PMWA.  The Court found that recognizing a de minimis exception would be inconsistent with the underlying legislative purpose of the PMWA.

III.        Takeaways

The Amazon.com decision has enormous potential ramifications for Pennsylvania employers, reaching well beyond the realm of mandatory on-site security screenings.  The decision is the latest in a series of decisions issued by the Pennsylvania Supreme Court holding that the PMWA’s requirements are broader and more pro-employee than the established requirements of the FLSA.  Simply put, compliance with the FLSA’s overtime pay and minimum wage requirements, which are not simple or easy in their own right, will not ensure compliance with the PMWA.

Some areas where these laws’ requirements now differ include:

  • the white-collar overtime exemption tests;
  • the PMWA lacks an overtime exemption for the computer professional and highly compensated employee;
  • the fluctuating workweek method of computing overtime pay for salaried non-exempt employees is unavailable under the PMWA; and
  • thanks to the com decision, the Portal to Portal Act exclusion for certain preliminary and postliminary activities from “hours worked” and a de minimis exception are not recognized under the PMWA.

Pennsylvania employers should review their pay practices and determine whether non-exempt employees spend any time that the employer is not capturing as compensable hours worked, as this time may qualify under the hours worked test set forth in Amazon.com.  As explained above, this would include a number of situations that do not constitute hours worked under the FLSA.

Risk areas include, in particular, any time that a non-exempt employee is required by the employer to be on the employer’s premises.  Examples include time spent on mandatory security screenings, COVID-related screenings, and donning and doffing equipment or uniforms.  If non-exempt employees are spending any time engaged in such activities on the employer’s premises, this time may need to be included in hours worked for overtime pay purposes under the PMWA.  And these examples may be the tip of the iceberg.

The hours worked definition adopted by the Pennsylvania Supreme Court is broad and seemingly straight-forward.  But, as we’ve seen, it is also inconsistent with the long-standing definition applied under the FLSA.  And, without a potential de minimis exception, even a few minutes here or there could result in a class action lawsuit for the unwary employer.

Wage and hour compliance has long been a significant concern for Pennsylvania employers, even before the Amazon.com decision.  This decision only complicates an employer’s compliance challenges.  Failing to consider and address these issues could result in a heightened risk of expensive and time-consuming class action litigation.

On July 9, 2021, President Joe Biden signed a sweeping Executive Order on “Promoting Competition in the American Economy”.  The Executive Order includes 72 initiatives by more than a dozen federal agencies to address perceived competition problems across the U.S. economy, and signals increased enforcement of the antitrust laws in multiple industries (including agriculture, finance, healthcare, and technology).  For employers, the Executive Order targets competition in labor markets in at least two ways by (1) directing the Federal Trade Commission (“FTC”) to consider curtailing the use of non-compete agreements; and (2) directing the FTC and the Department of Justice (“DOJ”) to consider revising their previous guidance to human resources professionals to prevent employers from sharing information about wages and benefits.

Non-Compete Agreements

Non-compete agreements are used by employers to protect their legitimate interests in trade secrets and other confidential business information, customer relationships and goodwill, and investments in employee training.  The Executive Order, however, argues that non-compete agreements stifle competition and restrict workers’ ability to change jobs.  Accordingly, the Executive Order provides:

To address agreements that may unduly limit workers’ ability to change jobs, the Chair of the FTC is encouraged to consider working with the rest of the Commission to exercise the FTC’s statutory rulemaking authority under the Federal Trade Commission Act to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.

Importantly, the Executive Order does not implement any immediate restrictions on non-compete agreements, but instead directs the FTC to consider the issue.  If the FTC decides to act, it could ban most or all non-compete agreements or focus on restricting non-competes for low wage workers and/or non-exempt employees.  We think the latter approach is more likely, and several states (including Nevada and Virginia) have recently passed such laws.  In that regard, non-compete agreements have been traditionally regulated by the states, by either their courts or their legislatures.  As such, any regulatory action by the FTC – especially a wholesale ban on the use of non-competes – would likely raise federalism concerns and face legal challenges.

The FTC has not issued a statement or other formal response to the Executive Order’s directive on non-compete agreements or indicated when it might take up the issue.  If and when it does, such regulatory action would need to go through the full rulemaking process and could take several years.  Therefore, absent legislative action by Congress, we do not expect any restrictions on the use of non-compete agreements enacted at the federal level in the near future.

Information Sharing

In addition to encouraging the FTC to consider regulating non-compete agreements, the Executive Order encourages the DOJ and the FTC to consider revising the Antitrust Guidance for Human Resources Professionals (“Guidance”) in order to “better protect workers from wage collusion.”  In October 2016, the DOJ and FTC jointly issued the Guidance, which stated the intent of the DOJ to bring criminal prosecutions against participants in no-poaching and wage-fixing agreements.  The Guidance also cautioned employers that sharing information about wages and benefits with each other could subject them to civil antitrust liability, but noted that information exchanges may be lawful in certain circumstances if managed by a neutral third party.  The White House, however, argues that such third-party information exchanges may be used to collaborate to suppress wages and benefits.  Therefore, the Executive Order calls on the DOJ and FTC to strengthen the Guidance to prevent employers from collaborating by sharing wage and benefit information.

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We will be monitoring the FTC and DOJ and will keep you advised of their actions to implement the Executive Order.  If you have any questions about the Executive Order or other issues involving non-compete agreements, please contact any member of our Labor and Employment Practice Group.

The U.S. Supreme Court declared unconstitutional a California regulation that required agriculture employers to give union organizers access to their premises.  The Court held that by requiring employers to provide such access, the regulation amounted to an unconstitutional taking of private property in violation of the Fifth and Fourteenth Amendments to the U.S. Constitution.

Below, we examine the facts and holding of the Cedar Point Nursery case.  Although the case examined a California regulation for an agricultural employer, who is exempt from the National Labor Relations Act (NLRA), we will also look at how this holding may impact the rights and obligations of private employers everywhere with respect to prohibiting on-premises union organizing by non-employees.

The Cedar Point Nursery Case

Union organizers from the United Farm Workers union entered the premises of Cedar Point Nursery, a strawberry grower in Northern California, early one October morning.  Cedar Point Nursery employs about 500 seasonal and full-time workers, none of whom live on the premises.  According to Cedar Point Nursery’s complaint, in October 2015, at five o’clock in the morning, members of the union entered Cedar Point’s property without prior notice and used bullhorns to rally hundreds of workers, causing some to join the organizers in protest and others to leave the worksite altogether.

The union claimed it had the right to enter the property unannounced to rally workers under California’s Agricultural Labor Relations Act, which protects agricultural workers right to form and join unions.  Under the regulations adopted under the Act, this right of organization includes the right of union organizers to “access” agricultural employers’ property in order to solicit support for the union.  In other words, the employees’ statutory right to organize compelled employers in California to open their premises to union organizers (for up to 3 hours per day, 120 days per year by the terms of the regulation).  Note that these union organizers were not employees, so their only business on an employer’s premises was to solicit support for union activities.

Cedar Point filed suit in federal court to ask for an injunction to prevent the union organizers from attempting to enter their property again.  Cedar Point argued that the regulation requiring it to provide the union organizers’ access to its property was an unconstitutional physical taking of their land.

The Court agreed.  A 6-3 majority held that the access regulation was a per se physical taking because it gave the unions a right to “physically invade” the employer’s property.  The Court found that this right to “invade” the property given by the regulation was different from those regulations that merely restrict how a property owner uses land.  That is, the access regulation here did not simply restrain the employer’s use of its own property; it took away entirely the company’s right to exclude others from its land and gave the right of access to a third party – union organizers.  Thus, the access regulation was unconstitutional.

What does this case mean for private employers?

Much like California’s Agricultural Labor Relations Act, the National Labor Relations Act also gives employees a right to self-organization.  So too does the NLRA make it an unfair labor practice for an employer to interfere with this right.

Most private employers in the United States are governed by the NLRA.  Access rights are often an issue under the NLRA.  But, the NLRA has been construed to permit employers to exclude non-employee union organizers from their premises except under two circumstances – 1) when the union organizers have no other reasonable means for accessing the employees (for instance, if the employees live on the premises), and 2) when the exclusion would be discriminatory.

The National Labor Relations Board (NLRB) recently narrowed the circumstances that would constitute discrimination under the second exception.  In a 2019 case, the NLRB determined that an employer would commit an unfair labor practice by excluding union organizers only if it permitted other groups access for activities similar to what the union sought to engage.  In other words, an employer could deny access to non-employees seeking to engage in organizing activities on its property while allowing non-employee access for other charitable, civic, or commercial activities that are not similar in nature to organizing activities.

Interestingly, Justice Kavanaugh noted in his concurring opinion that the circumstances compelling an employer to permit access to union organizers under those NLRA exceptions constitute a “necessity” that will not amount to a taking because, as the Majority put it, it is consistent with longstanding background restrictions on property rights.  This seems like a massive stretch.  The right of non-employee union organizers to enter employer premises to solicit union support is hardly a traditional common law privilege to enter private property, like entering to avoid an imminent public disaster or the right of law enforcement to enter to conduct a search or arrest.  To the contrary, it is a statutory right created within the last century.

Whether the access rules under the NLRA will withstand a constitutional challenge in light of the holding in Cedar Point Nursery remains to be seen.  For now, employers should gain a full understanding of the access rules applicable to their property in the states where they operate and be sure to have appropriate polices in place to protect their property rights to the extent permissible under the law.

This week, Governor Wolf signed House Bill 1024, allowing certain revisions to the Pennsylvania Medical Marijuana Act (the “Act”).  While the revisions do not specifically implicate the workplace, and do not provide guidance to employers on navigating medical marijuana use by employees, employers should, nonetheless, pay attention.

What changed?

House Bill 1024 makes permanent three revisions to the Act put in place during the pandemic:

  • Curbside pick-up from dispensaries;
  • Telemedicine visits for certification exams; and
  • Dispensing of a 90-day supply.

Additionally, the bill added two new conditions for which patients may obtain certification – cancer remission therapy and neuropathies of the central nervous system.

Why should employers pay attention to these changes?

First, the added conditions – especially, neuropathies of the central nervous system – will expand the number of individuals who can use marijuana.  So, if you have not yet dealt with the question of employee use, you soon may.

Permanent allowance of telemedicine visits for certification exams could also expand use.  In theory, it should be much easier for patients to find a provider, schedule an appointment and obtain certification to use medical marijuana.  However, for employers who require certification from a medical provider that an employee’s use of medical marijuana will not impact workplace safety, it may be harder for an employee to obtain this certification.  A doctor who sees a patient virtually, for a few minutes and for a limited discussion as to the employee’s qualification to use medical marijuana, may (understandably) be hesitant to complete a safety certification – particularly when the doctor likely will not set eyes on the patient again for at least a year.

If the certifying provider will not complete a safety certification, what about the dispensing provider?  While that is a possibility, dispensing providers also may be less willing to do so when patients are obtaining an increased 90-day supply of marijuana.  Under the Act, it is the dispensing provider who speaks with the patient on a regular basis, evaluates the type and form of marijuana a patient may take and discusses side-effects, palliative effects, dosage and frequency of use with the patient.  Previously, these discussions occurred monthly, allowing for frequent dialogue and tweaking of use.  Now, for patients who can afford to obtain a 90-day supply, less frequent contact between patient and provider could make the provider unwilling to complete a safety certification.  And, even if the provider is willing to complete the safety certification, employers may feel less confident in the opinion.

Is there a solution?  That remains to be seen.  For now, we recommend that employers consult with counsel regarding employee medical marijuana use, especially in safety sensitive positions.  Sending certain employees for a fitness for duty evaluation may be an option, under the right circumstances.  Certainly, we recommend training managers and supervisors regarding the signs and symptoms of impairment – not just of marijuana, but of alcohol and all drugs.  You also should ensure that your drug and alcohol policy provides for reasonable suspicion testing and makes clear that on premises/on-duty use of medical marijuana is prohibited.

Should you have questions regarding employee medical marijuana use or if you would like to discuss revisions to your drug and alcohol policy, please contact Denise Elliott or another member of the McNees Labor and Employment Group.

As legitimate unemployment compensation claims have spiked in the wake of the COVID-19 pandemic, so too have fraudulent ones.  Just yesterday, Maryland’s Department of Labor announced that the state has detected over 508,000 new, potentially fraudulent unemployment claims since May 1, 2021.  Last year, a $650million unemployment fraud scheme rocked Washington state.  In April 2021, the Pennsylvania Treasury and Department of Labor & Industry announced that they had recaptured nearly $800million in unemployment benefits targeted by scammers.

Many employers are searching for solutions to rampant unemployment benefit fraud. What can be done when a worker reports that a fraudulent claim was filed in their name?  Fortunately, there are some answers available to Pennsylvania employers and workers.  Several steps should be taken to address suspected fraud.

If an employee suspects that a fraudulent unemployment claim has been made in their name, they should:

  • Not accept any paper check payments or debit cards received;
  • Monitor their bank account for direct deposit of unemployment benefits (and return any benefits that were wrongly deposited);
  • Immediately report the suspected fraud to the local police department that serves the area where they live;
  • Report the suspected fraud to the Department of Labor & Industry either electronically or by telephone by following the steps listed here; and
  • Report the suspected fraud to their employer.

If an employer suspects that a fraudulent unemployment claim has been filed on behalf of a current or former employee, they should:

  • Contact the employee to notify them of the potentially fraudulent claim;
  • Verify that the worker did not file the claim;
  • Share this link with affected employees and encourage reporting to the Department of Labor & Industry and the employee’s local police department;
  • Investigate whether employee data has been breached if there are multiple fraudulent claims;
  • Ensure that only legitimate claims are listed on the weekly unemployment claims report; and
  • Report suspected fraud to the Department of Labor & Industry as indicated at the link above.

Unemployment claim volumes have yet to return to pre-pandemic levels.  While claims remain high, employers are well-advised to remain alert and develop an action plan to address possible unemployment fraud.

We do not often have good news to report for Pennsylvania employers in this blog.  The complexities associated with the employment laws, and the costs of non-compliance, continue to increase for employers seemingly with each passing year.  Today is one of those rare days when we bring good news.

Late last week, the Republican-controlled Pennsylvania legislature and Governor Wolf reached a final deal on the state budget for 2021-2022.  While annual state budgets typically do not impact employment laws for private employers in the Commonwealth, this one is an exception.

As part of the overall budget deal, Governor Wolf agreed to a provision repealing the Pennsylvania Minimum Wage Act (PMWA) regulations published in October 2020 that would have increased significantly the minimum salary requirements for the white-collar overtime exemptions under this law. We previously wrote about these regulations and the impact they would have on Pennsylvania employers.

As background, the PMWA is the state-law equivalent of the federal Fair Labor Standards Act (FLSA).  The PMWA’s requirements apply to essentially all employers in Pennsylvania.  The PMWA and FLSA both place minimum wage and overtime pay obligations on Pennsylvania employers.  While the laws’ requirements are similar, they are not identical.  Employers in Pennsylvania must meet the requirements of both laws to ensure compliance.  In areas where one law is more favorable to employees than the other, Pennsylvania employers must comply with the more employee-friendly requirements to avoid liability for unpaid minimum wages or overtime pay.

The DLI’s October 2020 overtime exemption regulations increased the minimum salary requirement for the PMWA’s white-collar overtime exemptions to $684 per week ($35,568 annually) on October 3, 2020, which matched the current level required by the FLSA.  However, they also were set to increase the minimum salary requirements under Pennsylvania law beyond the FLSA’s requirements as follows:

  • $780 per week ($40,560 annually) on October 3, 2021; and
  • $875 per week ($45,500 annually) on October 3, 2022.

These regulations included additional automatic “adjustments” (i.e., increases) set to start in 2023.

What does this mean?  As of October 3, 2021, any employee in Pennsylvania classified as exempt under a white-collar exemption that has a minimum salary requirement who earns less than $780 per week would have needed to receive a salary increase to at least equal this amount or be reclassified as non-exempt (and made eligible for overtime pay) going forward.

The net result would have been more white-collar employees eligible for either a salary increase or overtime pay and the increased risk of liability for unpaid overtime for Pennsylvania employers.

Now, as a result of the broader budget negotiations, a one-sentence provision was placed in the budget-related legislation repealing these regulations, a little more than three months before the next minimum salary increase was set to take effect.

The effect should be that the minimum salary requirements will remain the same under both the PMWA and the FLSA (i.e., $684 per week ($35,568 annually)).  At least for the time being.  It is expected that the U.S. Department of Labor under the Biden administration may attempt to increase the FLSA’s minimum salary requirement for these exemptions.  The Obama DOL made a similar attempt to more than double the minimum salary requirements then in place in 2016, but those regulations ultimately were blocked by a federal court.

That, however, is possible bad news for employers best left for another day.  Today is a good news day.  Pennsylvania employers avoided an impending wage and hour compliance landmine, thanks to the always interesting annual budget negotiations.

This post was authored by Frank Lavery, II, a Law Clerk with McNees.  Frank is currently a student at the University of Notre Dame Law School and expects to earn his J.D. in May of 2022.

On June 21, 2021, the United States Supreme Court issued its opinion on the hotly contested issue of compensation allowed to Division I student-athletes for their athletic participation.  In NCAA v. Alston, the Supreme Court affirmed the NCAA’s prohibition on student-athlete compensation unrelated to education (think pay for play), while its cap on “education-related” compensation was invalidated.

The plaintiffs—current and former Division I football and basketball players—filed suit against the National Collegiate Athletic Association under the Sherman Antitrust Act, which prohibits contracts, combinations, or conspiracies that restrain trade or commerce.  Generally, the Act prohibits monopolies, unless an exception applies.  For example, certain restraints are viewed as necessary to ensure that the spirit of certain undertakings—like collegiate sports.  The plaintiffs argued that the NCAA’s restrictions on student-athlete compensation constituted an undue restraint on trade.

Utilizing the traditional “rule of reason analysis,” which requires courts to employ a fact-specific consideration of market power and market structure, the trial court held that the NCAA’s caps on education-related benefits, such as rules that limit scholarships for graduate or vocational school, payments for academic tutoring, or paid post-eligibility internships violated the Act.  However, the Court also found that none of the NCAA’s prohibitions on compensation unrelated to education were precluded by the Act.

The Ninth Circuit affirmed the trial court’s ruling and found that it “struck the right balance in crafting a remedy that both prevents anticompetitive harm to [s]tudent-[a]thletes while serving the procompetitive purpose of preserving the popularity of college sports.”  The plaintiffs did not petition the Supreme Court for Certiorari, but the NCAA did, hoping for a finding that all of its restrictions were valid under the Act.

First, the High Court found that most Sherman Act challenges are subject to rule of reason analysis, and the NCAA’s restrictions did not fall within the slim subset of restraints that require only a “quick look.”  The NCAA’s objection to the rule of reason analysis based on the allegation that it was not a commercial enterprise was also dismissed with relative ease.  The Supreme Court found that that the Sherman Act has been applied to nonprofit organizations in the past, and the fact that the NCAA’s restrictions “fall at the intersections of higher education, sports, and money” is of no consequence.  The Court was unwilling to grant a blanket exemption to the NCAA from otherwise applicable Sherman Act requirements.

Despite the intricate analysis and legalese, the holding in Alston is actually a fairly simple one.  The NCAA’s rules limiting athletic scholarships to the full cost of attendance at a college or university remain intact.  In other words, student-athletes still cannot receive an outright salary for their participation in athletic programs.  Conversely, the Supreme Court expressly prohibited the NCAA from limiting the amount of education-related compensation and benefits that schools may provide to student-athletes.  Thus, NCAA v. Alston should stand as a milestone for student-athletes who hope to get the most benefit for their education out of their participation in Division I athletics, while preserving the amateurism that has made collegiate sports so popular for centuries.