In an effort to combat opioid addiction, the Wolf Administration recently rolled out a set of opioid prescribing guidelines to assist health care providers treating workers’ compensation patients. Highlighting the need for reform, Governor Wolf stated: “[i]n 2017, there were more than 174,216 workers’ compensation claims made in Pennsylvania, and our state ranks third highest in the nation in the percentage of injured workers who become long-term opioid users.” The Administration reported that workers who received longer-term opioid prescriptions for work-related lower back injuries had a substantially longer duration of temporary disability.

Accordingly, it is no surprise that the average lost time claim for injured workers, prescribed with opioids, is 900% higher than injured workers who were not prescribed the drug. To improve these numbers, the Administration identified the following objectives for the guidelines:

  • To promote the delivery of safe, quality health care to injured workers;
  • To ensure patient pain relief and functional improvement;
  • To be used in conjunction with other treatment guidelines, not in lieu of other recommended treatment;
  • To prevent and reduce the number of complication caused by prescription medication, including addiction; and
  • To recommend opioid prescribing practices that promote functional restoration.

The guidelines include recommendations for the treatment of acute, sub acute, post-operative pain, and chronic pain. The Wolf Administration released a detailed seven-page instruction on how health care providers should approach treatment for such conditions. Generally, under the guidelines, opioid prescription should be done in combination with other treatment options, at the lowest dose, and for the shortest length of time possible.

While the Administration’s newly issued guidelines are an important step toward fighting opioid addiction in the Commonwealth, it is important to remember that they are just that—guidelines. They are not legally binding and are intended only to supplement, not replace clinical judgment. By following these guidelines, however, health care providers will play a significant role in promoting safe and effective treatment for injured workers so that they may return to work as soon and as safely as possible.

Should you have a question regarding this article, please feel free to reach out to a member of our Labor and Employment Group.

 

Another Obama-era National Labor Relations Board policy may be on the ropes.  Four years ago, the Board issued its controversial Purple Communications decision.  In that case, it determined that employees have the right to use employers’ email systems to unionize and engage in other activities protected under the National Labor Relations Act. You can access our break down of Purple Communications here.

On August 1, the Board approved an invitation to file briefs on whether Purple Communications should be modified or overruled altogether.  Some interpret this approval as a signal that employees’ ability to use their employer’s email systems to unionize and engage in non-business, protected activity could soon be in jeopardy.

In other words, another employer-friendly NLRB ruling could be on its way.  We’ll continue to follow the issue and updates will be reported here.  Stay tuned!

The Commonwealth Court issued several interesting “unreported memorandum opinions” in the past several weeks.  The Court revised its Internal Operating Rule 414 several years ago, allowing unreported or unpublished opinions to be cited and relied upon by counsel, for persuasive value, but not as binding precedent in future cases.  Thus, it is sometimes important to pay attention to unreported cases, which the Court has chosen not to circulate more broadly, to advance arguments and defenses in pending cases.

In McKee v. WCAB (Geisinger Medical Center), the employee, a nursing assistant, sustained an admitted right knee meniscus tear, while moving a patient from a wheelchair to a stretcher.  She underwent an arthroscopic surgery two months later, followed by a total knee replacement, another three months after that.  The employer refused to accept the total knee replacement, and the employee sought to amend the injury description to include “aggravation of pre-existing osteoarthritis.”  Her medical records revealed a lengthy history of knee complaints, which included as part of the work injury, at least two prior surgeries.

The employer offered medical evidence, found credible by the WC Judge, that the work incident, despite causing a discrete meniscal tear, did not cause or materially worsen the underlying arthritic condition. In legal terminology, the work incident was not a “substantial contributing factor” in her needing a knee replacement.  Specifically, Claimant’s medical expert could not provide a credible explanation of any “biomechanical, biochemical, tissue or cellular changes in the knee” that would demonstrate an aggravation of the knee osteoarthritis, which necessitated the joint replacement surgery.

In a second unreported case, Kozlowski v. WCAB (Lehigh Valley Imaging), the Court found that a medical secretary who works in a seated position while scheduling and checking in patients, answering phone calls, filing and faxing, did not sustain a work injury, when she spontaneously experienced a sudden onset of low back pain while scheduling patients at work.  The employee had injured her low back several years prior (but could not recall how that injury occurred).  The medical evidence she submitted to support her claim, reflected only the history that “her chair is very uncomfortable and is the cause of her pain.”  Her physician also noted that her radiating low back pain was “related to repetitive activity” and “prolonged sitting” at work.

The employer’s expert diagnosed a non-work related, non-specific low back pain with leg pain and numbness, and pre-existing symptomatic mild lumbar disc degeneration.  He felt that there was no precipitating event, trauma or repetitive activity to suggest that Claimant suffered a work-related lumbar spinal injury.  The Court found no error in the Judge’s acceptance of the employer’s evidence because Claimant failed to meet her burden of proof by presenting unequivocal medical testimony establishing a causal connection between her injury and the alleged work-related cause.  Such evidence was necessary, because there was no obvious connection and no “act requiring force or strain” that had caused her pain.

The above fact patterns are fairly typical in today’s aging workforce and the holdings in these cases, may be helpful in defending against various non-work-related conditions or circumstances.

Should you wish to discuss a particular workers’ compensation case or issue, please do not hesitate to contact Paul Clouser, Denise Elliott or Micah Saul, in our Lancaster office.

This morning the Supreme Court issued its long-awaited opinion in Janus v. AFCSME , holding that requiring public sector employees to pay fair share fees to unions violates the First Amendment. As we discussed in our prior posts , a fair share fee (sometimes called an agency fee) is a fee that non-union members must pay to the union to cover the expenses incurred by the union while representing bargaining unit employees.

Until this morning, fair share fees were legal under most state laws, and required by many collective bargaining agreements. This was true despite the fact that the employees paying the fees had intentionally opted not to join the union, because the union still had a legal obligation to represent all employees within the bargaining unit, regardless of whether the employee is a member of the union. These laws became common after the Supreme Court issued its 1977 opinion Abood v. Detroit Bd. of Educ., which held that fair share fees were constitutional and maintained labor peace by preventing “free riders.”

In recent years, there have been increasing challenges to the constitutionality of fair share fees and the validity of Abood. Back in 2014, we discussed the Supreme Court’s ruling in Harris v. Quinn. The Court in Harris began to question the validity of Abood and its supporting rationale. As we noted, the Court came close to overruling Abood but ultimately decided Harris on its specific facts. It held that collection of the fair share fees in the specific context (personal assistants in Illinois) violated the First Amendment. In 2016, another challenge made it to the Court, but we got a 4-4 split decision, due to Justice Scalia’s passing shortly after oral argument

Now, with Justice Gorsuch on the bench, as was foreshadowed in Harris, the Court ruled that fair share fees violate public sector employees’ right to free speech. As a basic premise, the Court recognized that the right to free speech includes the right to refrain from speaking at all. Thus, “[c]ompelling individuals to mouth support for views they find objectionable violates the cardinal constitutional command, and in most contexts, any such effort would be universally condemned.” Accordingly, forcing employees to pay fair share fees (i.e., compelling employees to speak in support of the union when they may otherwise remain silent) violates the First Amendment. Finally, the Court overruled Abood, dissecting and dismantling its labor peace and free rider justifications.

The end result of the Court’s holding is clear: “States and public-sector unions may no longer extract agency fees from nonconsenting employees. . . . Neither an agency fee nor any other payment to the union may be deducted from a non-member’s wages, nor may any other attempt be made to collect such payment, unless the employee affirmatively consents to pay.”

The Court recognized that the loss of these fair share payments would cause unions to “experience unpleasant transition costs in the short term,” but it did not think that such a challenge justified continued constitutional violations. Rather, it pointed out that such a disadvantage must be weighed against the considerable windfall that unions received in fair share fees for the 41 years after Abood.

Surely, there will be many questions that follow and we will be here to help our public sector clients navigate this new territory.

In a recent case, decided on June 19, the Supreme Court of Pennsylvania granted appeal to clarify the scope of subrogation reimbursement under the Pennsylvania Workers Compensation Act (the “Act”).

By way of background, the Act makes an employer liable for paying disability benefits and medical expenses of an employee who sustains an injury in the course of his/her employment, regardless of whether the employer was negligent. Under Section 319 of the Act, however, employers are entitled to reimbursement for certain expenses where a third party caused the employee’s injury. Specifically, an employer (or its insurance carrier) has the absolute right to collect the workers’ compensation benefits it paid if the employee recovers from the third party who caused the injury. This is known as subrogation.

The Supreme Court in its recent decision addressed the scope of the reimbursement under Section 319 of the Act. Section 319 states, in pertinent part:

Where the compensable injury is caused in whole or in part by the act or omission of a third party, the employer shall be subrogated to the right the employe…against such third to party to the extent of the compensation payable under this article by the employer; reasonable attorney’s fees and other proper disbursements incurred in obtaining a recovery or in effecting a compromise settlement shall be prorated between the employer and employe…Any recovery against such third person in excess of the compensation theretofore paid by the employer shall be paid forthwith to the employe…and shall be treated as an advance payment by the employer on account of any future instalments of compensation.

The critical question the Court addressed was whether the term “future instalments of compensation” encompasses both future disability benefits and payment of future medical expenses. In other words, the Court addressed whether an employer can credit the excess third part recovery against both future disability and future medical payments.

The Commonwealth Court, our intermediate appellate court, concluded that the term “instalments of compensation” encompasses both disability and medical expenses. The Commonwealth Court reasoned that since the objective of subrogation is to protect the presumably innocent employer from ultimate liability, the credit should apply to both medical expenses and disability benefits.

In its June 19th ruling, the Supreme Court disagreed. The Court’s assessment of the issue was in some ways quite straightforward, but it requires an understanding of how an employer must pay disability and medical expenses. The long and short of it is that disability benefits are required to be paid in installments, while medical expenses are not. Accordingly, the Court found that the term “instalments of compensation” under Section 319 spoke for itself and meant “compensation that is paid in installments” which can only include disability benefits, not medical expenses.

In a nutshell, the Court found that when a workers’ compensation claimant recovers proceeds from a third-party settlement under Section 319, the employer (or the insurance carrier) is limited to drawing down against that recovery only to the extent that future disability benefits are payable to the claimant.

What does this mean in plain language?

If the third-party recovery exceeds the employer’s accrued subrogation lien (workers’ compensation payments made prior to resolution of the third-party claim), the employer can treat the excess recovery (which will be paid to the employee) as a credit against future workers’ compensation payments. However, the credit may only be taken against future disability (aka wage loss or indemnity) benefits. There may be no credit taken against future medical benefits.

For this reason, employers looking to settle with an employee who has sustained a serious work injury that was caused by the negligence of a third party should proceed with caution! This is especially true when only the wage loss portion of the claim is resolved in the settlement and the medical portion is left open (either indefinitely or for some set time in the future). When resolving a claim in this way, employers must remember that no excess recovery credit can be taken against future medical benefits. This new reality should be factored into the valuation of the case.

If you need any assistance with subrogation rights or have any questions regarding this Article, please feel free to reach out to any member of our Labor and Employment group for assistance.

Back in January, Governor Wolf announced that the Pennsylvania Department of Labor and Industry (DLI) would propose new regulations under the Pennsylvania Minimum Wage Act (PMWA) that would increase the minimum salary requirement for the white-collar overtime exemptions under this law.

The PMWA is the state-law equivalent of the federal Fair Labor Standards Act (FLSA). The PMWA and FLSA both place minimum wage and overtime pay obligations for 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 pro-employee requirements to avoid liability for unpaid minimum wages or overtime pay.

Last week, DLI submitted a proposed rulemaking to amend the PMWA regulations that govern its overtime and minimum wage exemptions for executive, administrative, and professional salaried employees. The proposed changes to the regulations are significant and will seem like déjà vu for employers who recall the saga of the 2016 FLSA regulations.

Increased Salary Requirement

The DLI’s proposed regulations would increase the minimum salary level for the PMWA’s white-collar exemptions to:

  • $610 per week ($31,720 annually) effective on the date the final rule is published in the Pennsylvania Bulletin;
  • $766 per week ($39,832 annually) effective one year after the publication of the final rule; and
  • $921 per week ($47,892 annually) effective one year later.

By comparison, the current minimum salary requirement for the FLSA’s white-collar exemptions is $455 per week ($23,660 annually). Thus, the proposed regulations would more than double the minimum salary requirement for the white-collar exemptions for Pennsylvania employers by 2021.

And that’s not all. Three years after the publication of the final rule in the Pennsylvania Bulletin, and on January 1 every three years thereafter, the minimum salary requirement automatically will be updated to the 30th percentile of weekly earnings of full-time non-hourly workers in the Northeast Census region in the second quarter of the prior year as published by the United States Department of Labor, Bureau of Labor Statistics.

The proposed regulations would allow up to 10% of the salary amount to be paid with “non-discretionary bonuses, incentives or commissions” that are paid at least quarterly.

Changes to the Duties Test

To qualify for most of the white-collar exemptions, an employer must be able to prove both that the employee at issue meets the minimum salary requirement and meets the exemption’s duties test. Unlike the 2016 FLSA regulations, DLI has proposed changes to the duties tests for the PMWA’s white-collar exemptions, in addition to the big increases to the minimum salary requirement.

DLI explained that the proposed changes to the duties tests were designed to more closely align them with the duties tests for the FLSA’s exemptions. However, with both the changes they propose and changes not proposed, the proposed regulations fail to do so.

For example, the proposed regulations would require exempt executive employees to “customarily and regularly exercise discretionary powers,” a requirement that does not expressly exist in the FLSA exemption. Similarly, the proposed regulations modify the administrative exemption to require that exempt administrators “customarily and regularly” exercise discretion and independent judgment with respect to matters of significance. The FLSA regulations require only that the exempt administrator’s primary duty “includes” the exercise of discretion and independent judgment with respect to matters of significance. While these language differences seem minor, they likely would be used by plaintiffs’ attorneys to argue that the duties requirements for the PMWA and the FLSA’s white-collar exemptions are not the same, complicating compliance efforts, increasing the risks for employers, and contradicting DLI’s stated objective with the proposed changes.

More disappointing, however, are the many areas where the PMWA’s regulations will continue to differ from the FLSA’s regulations even if the proposed regulations take effect. For example, unlike the FLSA and its regulations, DLI did not in its proposed regulations:

  • Recognize a computer professional exemption under the PMWA;
  • Recognize a highly compensated employee exemption under the PMWA;
  • Recognize a specific exemption for administrative employees of educational establishments under the PMWA; or
  • Make the requirements of the outside sales exemption the same under both laws.

The differences between the overtime exemption requirements of the FLSA and the PMWA create confusion and inhibit compliance efforts by employers. The proposed regulations will allow significant differences to continue to exist.

What’s Next?

The proposed regulations are expected to be published in the Pennsylvania Bulletin in the very near future. After publication, DLI will accept written public comments on the proposed regulations for a period of 30 days. After the public comment period closes, DLI will consider the submitted comments and then likely prepare a final rule, which DLI anticipates issuing in 2019.

It is unclear whether the final rule will be the same as the proposed regulations or different in substantive ways. It is likely that the new minimum salary requirements will be challenged in court, just as the 2016 FLSA regulations were challenged and ultimately blocked. Whether and to what extent any court challenge would be successful is unclear, and there certainly is no guarantee that a challenge would be successful. In other words, the defeat of the 2016 FLSA regulations in federal court in Texas by no means assures a similar fate for new PMWA regulations in this area.

We will continue to monitor the progress of DLI’s efforts to change the PMWA’s white-collar overtime exemption regulations and provide updates as they occur. Stay tuned.

On June 6, 2018, Governor Wolf signed Executive Order 2018-18-03, which is designed to combat the gender pay gap in Pennsylvania. The Executive Order directs all state agencies under the governor’s jurisdiction to:

  • no longer inquire about a job applicant’s current compensation or compensation history at any stage during the hiring process;
  • base salaries on job responsibilities, position pay range, and the applicant’s knowledge, skills, competencies, experience, compensation requests, or other bona fide factor other than sex, except where compensation is based on:
      • a collective bargaining agreement;
      • a seniority system;
      • a system of merit pay increases;
      • a system which measures earnings by quantity or quality of production, sales goals, and incentives
  • clearly identify the appropriate pay range on job postings.

The Executive Order does expressly state that applicants are not prohibited from volunteering information about their current compensation level or salary history in negotiating a salary. However, no agency can request that an applicant disclose current salary or salary history information.

So why the need for the Executive Order? Some argue that by asking an applicant to reveal their current salary or salary history, employers are perpetuating pay inequality between men and women. The reasoning is that because women have been paid less than men historically, asking applicants their salary history and then basing salary determinations on prior pay information further continues the cycle of pay inequality.

While the Executive Order is only applicable to Commonwealth agencies under the Governor’s jurisdiction, it may signal a push to address the gender pay gap throughout Pennsylvania.

Please feel free to contact any member of the McNees Wallace & Nurick Labor and Employment Practice if you have any questions regarding this article.

If you have followed our blog over the past year, you are aware of the long and tortured history of the National Labor Relations Board’s joint employer standard.  The recent history starts with the Obama Board’s decision to overturn decades of case law.  But the saga continued.

Just last month, we reported on the Trump Board’s proposal to promulgate regulations adopting a joint employer standard.  According to the Board, issuing regulations will clear up the uncertainty currently surrounding the standard that was created by years of case law.  Those who have been following this matter might view the Board’s proposed rulemaking as a welcome opportunity for clarity on an issue that has vexed employers and unions alike in recent years.

But not everyone was pleased by the Board’s announcement.  In a joint letter to Trump-appointed Board Chairman John Ring, United States Senators Elizabeth Warren, Kirsten Gillibrand, and Bernie Sanders questioned the Board’s ability to remain independent on the issue given its overturned decision in Hy-Brand (in February 2018, the Board reversed its own ruling after its Ethics Officials determined that one of the Board Members should have been disqualified from participating in the case due to a conflict of interest).  Essentially, Senators Warren, Gillibrand, and Sanders accused the Board of using rulemaking to reinstate the Hy-Brand decision.  In other words, they believe that the Board has already decided on the final rule to be issued based on personal bias and without regard for the notice-and-comment process.  Serious allegations, to be sure.

Earlier this week, Chairman Ring responded to the Senators with a letter of his own.  The Chairman explained, in no uncertain terms, that a majority of the Board will engage in rulemaking on the joint employer issue and that it intends to issue a notice of proposed rulemaking sometime this summer.  He reminded the Senators that all Board Members, both past and present, have personal opinions formed by years of experience.  After assuring the Senators that the Board has not pre-determined the final joint employer rule, Chairman Ring also pointed out that the courts have held that personal opinions do not render Members incapable of engaging in rulemaking unless it can be shown that their mind is “unalterably closed” on the issue.

If we’ve learned anything from this dust-up between the Senators and the Board, it’s that the Board will proceed with rulemaking on the joint employer standard, and that accusations of bias from U.S. Senators will not stop it from doing so.  As we said last time – stay tuned.  More news is coming, and soon.

President Trump recently signed into law Congress’ $1.3 trillion, 2,232-page omnibus budget bill.  Notably, tucked away on page 2,025 of the bill, Congress amended the Fair Labor Standards Act to address rules affecting tipped employees.  These rules have been a hot topic lately and there is a lot of misinformation floating around.  Here is what you need to know:

To recap, the FLSA requires employers to pay employees the minimum wage, currently $7.25 per hour for most employees.  In the restaurant industry, however, employers are allowed to count up to $5.12 per hour of employees’ tips against their total minimum wage obligation.  In other words, restaurants can pay tipped employees such as servers, bartenders, bussers, and runners as little as $2.13/hour plus customer tips.  The Department of Labor’s rules make it clear that employers cannot take this “tip credit” if the employer uses a tip pooling arrangement where any portion of tips are kept by the house, or if the restaurant requires employees to share tips with managers or employees who do not “customarily and regularly” receive at least $30 per month in tips (e.g., “back of the house” personnel such as cooks, dishwashers, etc.).  These basic rules are still in place.

What was not clear, until now, was whether the FLSA imposes any restrictions on tip pooling arrangements for employers who do not take the tip credit (i.e. pay their employees at least the minimum wage).  In 2011, the Obama administration said yes, tips could never be shared with managers or kitchen staff even if the restaurant paid the servers the full minimum wage and did not take advantage of the tip credit.  In 2017, the Trump administration, and several federal courts, said no, restaurants paying the full minimum wage could do whatever it wanted with customer tips.  The Trump Administration’s 2017 proposed regulation started a process aimed at reversing the Obama Administration’s 2011 regulation.

The 2018 Omnibus Budget Bill settles the tug of war.  Buried deep in the law is an easy-to-overlook provision relating to “Tipped Employees.”  The Tipped Employees provision establishes a compromise and permits tip splitting among and with non-supervisory, non-service employees (such as cooks and dishwashers) where no tip credit is taken. Otherwise, the amendment specifically prohibits employers from requiring employees to share their tips with the employer, including any managers or supervisors, whether or not the employer takes a tip credit. This is significant because it means that an employer can now violate the FLSA through an improper tip pooling arrangement even if it is paying employees the full minimum wage.

Employers who unlawfully keep any portion of an employee’s tips may now be liable to injured employees for the amount of tip credit taken and the amount of the tip unlawfully taken, plus an additional, equal amount as liquidated damages. Furthermore, the amendment authorizes the Secretary of Labor to assess a civil penalty of $1,100 per violation.

Ultimately, Congress’ new amendment means that, for now, employees who are paid at least the minimum wage in cash can be required to share tips with cooks, dishwashers, and other non-management, non-supervisory “back of the house” employees.  When deciding the right tipping strategy, restauranteurs should consult with legal counsel.  Particularly, tip pooling policies should be carefully reviewed with counsel before implementation to ensure compliance with all applicable federal and state requirements.

Please 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.

With increasing frequency, when employees sue their employer or former employer, they also name individual managers or the company’s owners as defendants in their suit.  Under federal EEO laws (e.g. Title VII, ADA, ADEA), individuals generally cannot be held liable for acts of discrimination.  However, employment laws such as the FMLA, FLSA and the Pennsylvania Human Relations Act do allow for individual liability under some circumstances.  In Abdellmassih v. Mitra OSR (February 28, 2018), the U.S. District Court for the Eastern District of Pennsylvania addressed whether individuals may be held liable under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for failing to issue required COBRA notices.

Mr. Abdellmassih was terminated from his position at a KFC restaurant and sued his employer under a variety of laws.  He named the co-owners of the company as individual defendants with respect to his claims under several laws, including COBRA.  The basis for his COBRA claim was that he was allegedly never issued a COBRA notice after he lost his health coverage due to the termination of his employment.

COBRA provides that a plan administrator who fails to comply with COBRA’s notice requirements may, at a court’s discretion, be held personally liable for up to $100 per day that the required notice is not provided.  Mr. Abdelmassih argued that his former employer’s co-owners served as the health plan’s administrators and, therefore, should be individually liable for the plan’s failure to issue required COBRA notices.  However, upon reviewing the company’s health insurance brochure, the court noted that the owners were not named anywhere in the document – as plan administrators or otherwise.  Indeed, the brochure merely directed employees to contact a human resources representative if they had questions regarding their COBRA rights.  Since the co-owners were not named in the document, the court found there was no basis to impose individual liability upon them under COBRA.  However, Mr. Abdelmassih’s COBRA claim against the corporate entity remained intact.

The lesson of the Abdelmassih case is simple.  When identifying the “plan administrator” in a plan document or summary plan description, avoid naming individuals.  A general reference to the employer (or third party administrator firm) – or the department with responsibility for plan administration (e.g. human resources) –  is the best way to avoid individual liability situations under COBRA.  A quick check of your company’s plan language on this point may save you (or someone in your company) from significant liability!