An ever-increasing number of employers are sponsoring wellness incentives as a means of encouraging employees to developing healthy habits. In turn, employers gain healthier, more productive work forces.  Wellness incentive programs aren’t without their risks, however.  In this podcast, Denise Elliott discusses whether employees are covered by workers’ compensation benefits for injuries sustained while participating in an employer-sponsored wellness program.

Picture this.  You have just settled a problem workers’ compensation case and you or your carrier have disbursed settlement checks totaling $100,000 in exchange for a full and complete compromise and release of “any and all past, present and/or future benefits, including but not limited to, wage loss benefits, disfigurement benefits, medical benefits, or any other monies of any kind including, but not limited to, interest, costs, attorney’s fee and or penalties for or in connection with the alleged 08/12/2015 work injury claims Employee may have with or against Employer…”

Several months later, the same employee sues your company in Federal Court for violating his FMLA rights, retaliation for exercising FMLA rights, and for wrongful discharge based upon unlawful retaliation for filing a workers’ compensation claim in violation of Pennsylvania common law.

“What on Earth,” you say.  “But we just paid out a $100,000 settlement!” Unfortunately, the employee may pursue these additional claims because they were not properly released at the time of the workers’ compensation settlement.  The United States Court of Appeals for the Third Circuit recently held that a Compromise and Release Agreement under the Pennsylvania Workers’ Compensation Act, covers only those matters which “may fairly be said to have been within the contemplation of the parties when the release was given.”  Zuber v. Boscov’s, No. 16-3217 (United States Court of Appeals for the Third Circuit, opinion filed September 11, 2017).  In Zuber, the agreement referenced only work injury claims and as such, the settlement document was only read to prevent the employee from seeking additional money related to an alleged work injury claim.  Likewise, the employee certification page of the subject agreement specifically stated that the employee “understands that the Compromise and Release is a settlement of his workers’ compensation claim only” and thus, the document was “unambiguously” a specific and limited release rather than a general release.

The above problems could have been avoided, of course, by utilizing separate release documents, coupled with a properly worded letter of resignation, to make it clear that the employee was indeed consenting to and bargaining for a global resolution of all employment issues, including a full compromise and release of his workers’ compensation rights, and a settlement and release of other potential employment claims under other laws and statutes including the FMLA, ADA, ADEA and wrongful discharge.

Often times defense counsel assigned by an insurance carrier in workers’ compensation matters will proceed to settlement without proper consideration of other ancillary employment matters and exposures.  Accordingly, employers must be vigilant in making sure that their interests are properly protected and that employees who accept workers’ compensation settlements do not return to court seeking other costly benefits or remedies. Fully insured employers should insist that the carrier appointed attorney consult with employment law counsel on the settlement. Employers who are self-insured or have large deductible plans, who have more leeway in selecting defense counsel should insist on hiring workers’ compensation defense counsel who are familiar with employment laws and statutes, to avoid the result in the Zuber case.

For further information, on this subject, please feel free to contact Denise Elliott, Micah Saul or Paul Clouser, in our Lancaster office.

Most employers take proactive steps to prevent and eliminate workplace harassment. Until recently, courts recognized and rewarded the proactive approach.  Businesses in Pennsylvania, New Jersey and Delaware could avoid liability for hostile work environment claims if they rooted out the problem before it became “severe and pervasive.”

Courts had long held that a single slur, even if highly offensive, was not pervasive and therefore could not trigger employer liability.  The United States District Court for the Middle District of Pennsylvania upheld that standard in Castleberry v. STI Group, a 2015 case involving African American workers who were subjected to a racial slur and threatened with termination in a single incident.  The District Court dismissed the claim.

On appeal, the Third Circuit overturned the District’s ruling.  In doing so, the Court noted that the “plaintiffs alleged that their supervisor used a racially charged slur in front of them and their non-African-American co-workers…Within the same breath, the use of this word was accompanied by threats of termination (which ultimately occurred).”  Under these facts, the Third Circuit held that a single, isolated slur constitutes severe conduct that could create a hostile work environment.

Castleberry is now the law of the land for all Pennsylvania employers (and those in New Jersey and Delaware) who are subject to federal anti-discrimination laws. And it is certainly bad news for employers.  The ruling makes it much easier for a hostile work environment plaintiff to survive summary judgment, leading to increased defense costs and greater potential for a costly verdict.

In light of the Third Circuit’s holding, employers would be wise to take inventory of its anti-discrimination and anti-harassment policies to ensure that they are up to date and prohibit all occurrences of discriminatory harassment. Supervisors and managers should also be made aware that even a single, isolated racial slur can now lead to liability.

We will continue to monitor Third Circuit cases that develop under Castleberry and any updates will be reported here on our blog.

The Pennsylvania Personnel Files Act (also known as the Inspection of Employment Records Law), grants employees in Pennsylvania, or their designated agents, the right to inspect certain portions of their personnel records. The Act requires employers, upon an employee’s request, to permit the employee to inspect the portions of his or her personnel file used to determine qualifications for employment, promotion, additional compensation, termination or disciplinary action.  Employers must make the records available during regular business hours and may require employees to submit a written request form.

Until recently, the right to inspect records even extended to former employees within 30 days following their date of discharge pursuant to a rule adopted by the Pennsylvania Department of Labor and Industry.  However, in Thomas Jefferson University Hospitals, Inc. v. Pa. Department of Labor & Industry, the Pennsylvania Supreme Court held that former employees do not have the right to inspect their personnel records.

Allowing discharged employees and their attorneys to access personnel files prior to litigation afforded them great insight into potential legal claims. This type of access to information was often used in developing a strategy for negotiations, future litigation or deciding which claims to assert.  The discharged employees and their attorneys could weigh how the employer’s articulated reason for termination lined up with (or in some cases did not line up with) what the employer documented in the personnel file.

Now, because of the Supreme Court’s decision, employers can safely refuse to grant discharged employees access to their personnel files.  The background behind the Supreme Court’s decision in Thomas Jefferson University Hospitals is explained below.

At the outset, a former employee filed a request, through her attorney, to view her personnel file just one week after she was discharged. The employer denied this request on the basis that the former employee was no longer employed.  The former employee filed a complaint with the Department of Labor and Industry claiming that the employer wrongfully denied her request for access to her personnel file. Ultimately, the Department granted the former employee’s request to inspect her personnel file.  The employer appealed to the Commonwealth Court.  On January 6, 2016, the Pennsylvania Commonwealth Court issued its decision in Thomas Jefferson University Hospitals, Inc. v. Pa. Department of Labor & Industry, finding a recently discharged employee, was still an “employee” under the Personnel Files Act.

While the definition of employee under the Act (any person currently employed, laid off with reemployment rights or on a leave of absence) appears straightforward, the Commonwealth Court found that the definition did not prohibit a recently terminated individual from obtaining his or her personnel file.  The Court did note that the request must be made contemporaneously with termination or within a reasonable time immediately following termination.  This rationale was based on the 1996 Commonwealth Court decision in Beitman v. Department of Labor & Industry.  In that case, an employee requested access to her personnel file 2 years after her employment was terminated.  The majority of the Commonwealth Court found that the former employee was not permitted to access her file under the Personnel Files Act 2 years after her termination from employment.  However, the Court left open the possibility that discharged employees could access their personnel file when they requested access within a reasonable time following their termination from employment.

Following the Beitman case, the Pennsylvania Department of Labor & Industry adopted a policy that provided former employees access to their personnel files so long as they made the request within a reasonable time after termination from employment, which they determined to be approximately 30 days.  Because of this policy, employers were often required to provide former employees with access to their personnel files even after their termination from employment.

This was the background leading up to the Supreme Court’s decision.   The Supreme Court’s full opinion can be found here.

In contrast to the Commonwealth Court, the Supreme Court took a plain language approach in interpreting the definition of “employee.”  In doing so, the Supreme Court concluded that former employees who were not laid off with re-employment rights and who were not on a leave of absence, have no right to access their personnel file under the Act, regardless of how soon after termination the employee made the request.  The Supreme Court also specifically overruled the Beitman decision stating that the Commonwealth Court’s holding was dicta and not controlling.

While the Supreme Court’s decision is favorable to employers, this a good time to remember the importance of including proper documentation in personnel files. A well-documented personnel file that persuasively demonstrates that an employee was discharged for legitimate, nondiscriminatory reasons will go a long way in supporting an employer’s defenses to a former employee’s legal claims.  After all, while a former employee may not be able to review his or her record pursuant to the Act, he or she may be able to obtain a copy pursuant to a subpoena or discovery request in litigation.

Prior to June 20, 2017, a powerful tool was available to employers and workers’ compensation carriers to cap exposure on long term workers’ compensation claims.  That tool, provided by the Act 44 amendments in 1996, was called an impairment rating evaluation (IRE) and generally worked like this: once a claimant had received 104 weeks of total disability benefits and had reached maximum medical improvement, the employer could request an IRE.  A doctor was assigned to perform the evaluation and was required by statute to consult the most recent version of the American Medical Association’s guidelines.  If, under those guidelines, the IRE doctor determined that the claimant’s injury caused less than 50% whole body impairment, the employee’s workers’ compensation benefits could be modified from total to partial disability status, with a corresponding time limitation on future indemnity benefits.  The process was helpful in resolving serious injury cases, where the employee was too disabled to work but had reached a medical plateau.

Pennsylvania workers’ compensation law places no cap on the length of time in which a claimant can receive total disability benefits.  Partial disability benefits, however, are capped at 500 weeks.  Thus, via the IRE process, it was possible to prevent a claimant from receiving total disability benefits indefinitely by modifying their status to a maximum of 500 weeks of partial disability benefits.

On June 20, 2017, the Pennsylvania Supreme Court changed all of this with its decision in Protz v. Workers’ Compensation Appeal Board.  In that case, the Court held that the IRE process was unconstitutional because the legislature is not permitted to delegate its authority to issue impairment rating guidelines to a non-legislative body (i.e. the American Medical Association).  Since the IRE provisions are legislated to be applied under the most current version of the American Medical Association guidelines (which are frequently updated), the Supreme Court struck down the IRE provisions of Pennsylvania’s Workers’ Compensation Act as an unconstitutional delegation of legislative authority.

The immediate impact of Protz on future claims is clear – unless the Pennsylvania Supreme Court reconsiders and reverses its decision, the IRE process is no longer available to employers and workers’ compensation insurance carriers.  This means that it will be considerably more difficult to cap exposure on workers’ compensation claims where an employee has received 104 weeks of temporary total disability benefits and has reached maximum medical improvement.  Indeed, a reversion to the use of vocational experts to establish job availability is likely, where light duty work at the time-of-injury employer is not available.  For claims where the IRE process was used prior to the court’s decision in Protz, outcomes are less clear.

Employers who are litigating a modification of benefits based on an IRE would do well to withdraw the modification petition.  Now that the IRE process has been deemed unconstitutional by the Pennsylvania Supreme Court, an IRE can no longer serve as a valid basis for future modification of benefits.  Without a valid basis to litigate a modification petition, employers who continue to rely on an IRE in litigation are exposed to penalties and unreasonable contest fees.

Likewise, employers who are actively seeking to obtain an IRE should refrain from doing so.  Again, the evaluation cannot provide a valid basis for modification of benefits, and the Bureau of Workers’ Compensation has also indicated that it will no longer assign IRE physicians in the wake of Protz.

So what about claims where benefits have been modified or a claimant’s status has been changed as the result of a past IRE where the claimant failed to appeal?  Employers likely have no affirmative obligation to restore the pre-IRE, pre-modification status quo, but claimants may file petitions seeking to do just that.  While Pennsylvania law typically prevents the retroactive application of judicial decisions to matters that have been fully and finally determined, it is unclear how workers’ compensation judges, the Appeal Board, and Pennsylvania Courts will approach the issue. In cases where an employer obtained a modification of benefits because of an IRE and the claimant did not appeal, the doctrine of res judicata may serve to prevent re-litigation of the case.

We will continue to monitor the status and impact of Protz; additional developments will be reported here on our blog.

In September of 2015, two delivery drivers filed a class action lawsuit in the United States District Court for the Middle District of Pennsylvania. The employees alleged that their former employer violated the Fair Labor Standards Act by failing to pay them overtime between 2012 and 2015. The class subsequently ballooned to 474 members (and an additional 588 former and current delivery drivers remain eligible to opt into the class). The members asserted that over that three year period, the employer denied them overtime for five to ten hours per workweek, totaling over $10 million in allegedly unpaid wages.

The employer initially argued that the employees were exempt from overtime requirements. It claimed that in addition to making deliveries, as “Route Sales Professionals,” the drivers could make additional sales, fill orders, and upsell when making deliveries. Therefore, according to the employer, the drivers fell within the FLSA’s “outside sales person” exemption. The drivers maintained that sales were not part of their job duties; they were simply delivery drivers who did not fit within the outside sales exemption.

After two years of discovery, in April of this year, the parties notified the court that they had reached a settlement agreement. They asked the court to approve agreement, as is required with both FLSA claims and class actions lawsuits.

The amount: $2.5 million.

This month, the court approved the FLSA settlement. It also preliminarily granted approval of the class action settlement, subject only to a fairness hearing scheduled for September.

For our blog subscribers that have delivery drivers who also engage in incidental sales, now is the time to reevaluate how you classify those employees. In addition, this case serves as an important reminder for all employers that FLSA classifications turn on the actual job duties of the position, not the job title. In fact, a written job description will not even be controlling, unless it is an accurate reflection of the employee’s job duties.

Employers often shy away from discharging employees for disciplinary reasons when those employees are receiving workers’ compensation benefits, such as in instances where the employee is working a modified duty assignment.  However, such employees can and should be held to the same standards as other employees, including compliance with applicable policies and procedures.  Additionally, so long as the discharge is found to be related to the disciplinary violation, any subsequent loss of earnings will be deemed to be unrelated to the work injury, thus rendering the discharged employee ineligible for reinstatement of workers’ compensation wage loss benefits.

In a recent unreported Commonwealth court case, (Waugh v. WCAB, No. 702 C.D. 2016), the Claimant was employed as a certified nursing assistant (CNA) at a medical center.  She had sustained an accepted work injury to her right arm, when a patient grabbed and twisted her arm in the course and scope of her employment.  She underwent two surgeries and eventually returned to work in a modified duty capacity.

While working modified duty, Claimant was reprimanded for acting outside the scope of her employment for administering medication to a patient.  Several months later, there was a similar incident, in which Claimant applied a tourniquet to a patient while assisting a phlebotomist, who was attempting to draw blood.  Employer’s policy in the event a phlebotomist cannot locate a vein, is to call a specialized IV team to insert the needle and draw blood.  Claimant was terminated for this second instance of acting outside the scope of her employment.  Despite her protests that she was “only trying to help,” the termination was held to be proper, as was the workers’ compensation determination denying reinstatement of benefits.

The Court reaffirmed the longstanding rule that a lack of “good faith” on the part of the claimant, is sufficient to deny reinstatement of workers’ compensation wage loss benefits.  This is so, even where unemployment benefits are awarded, on the basis that the employer had not established a case of willful misconduct under the Pennsylvania Unemployment Compensation Act.

The determination of good faith or bad faith is obviously “fact sensitive,” but in situations where the employer would discharge the employee absent a workers’ compensation backdrop, this factor alone should not discourage the employer from taking the appropriate disciplinary action, including discharge.

For further information, on this subject, please feel free to contact Denise Elliott, Micah Saul or Paul Clouser, in our Lancaster office.

Workplace rights for LGBT individuals has been a rapidly developing area of the law.  A little over two years ago, former President Obama signed an executive order prohibiting federal contractors from discriminating against employees on the basis of their sexual orientation or gender identity.  The Office of Federal Contract Compliance Programs followed suit by issuing regulations protecting the rights of LGBT workers employed by federal contractors and subcontractors.  Then, the Equal Employment Opportunity Commission published guidance suggesting that the Agency considers sexual orientation and gender identity to be protected by Title VII of the Civil Rights Act of 1964.  Despite these developments, no federal appellate court had ever ruled that Title VII protects workers from discrimination on the basis of sexual orientation.  That changed earlier this week.

In a groundbreaking 8-3 decision, the U.S. Court of Appeals for the Seventh Circuit (having jurisdiction in Illinois, Indiana, and Wisconsin), ruled that sexual orientation is a protected trait under Title VII and that employers may not discriminate against employees on that basis.  The case, Hively v. Ivy Tech Community College of Indiana, involved an openly lesbian professor who had worked for the college as an adjunct staff member for over fourteen years.  She applied for six different full-time jobs during her tenure and was rejected for each of them.  Then, the college failed to renew her adjunct contract in 2014.  She filed a Charge of Discrimination with the EEOC alleging that she was discriminated against on the basis of her sexual orientation.

The district court dismissed her case on the basis that sexual orientation was not recognized as a protected trait under Title VII.  On appeal, the Seventh Circuit reversed.  It held that sexual orientation was a protected characteristic because, in essence, actions taken on the basis of sexual orientation are a “subset of actions taken on the basis of sex,” which is protected by Title VII.  The Court reasoned that sexual orientation discrimination claims are “no different from the claims brought by women who were rejected for jobs in traditionally male workplaces, such as fire departments, construction, and policing. The employers in those cases were setting the boundaries of what jobs or behaviors they found acceptable for a woman (or in some cases, for a man).”

The Seventh Circuit’s ruling is not binding precedent on Pennsylvania employers.  However, as we reported last year, at least one federal district court in the Commonwealth considers sexual orientation to be a protected trait under Title VII.

The Seventh Circuit’s ruling may ultimately prove to have a much broader impact.  The Hively decision now means that circuit courts are officially split on the issue of whether Title VII protections include sexual orientation (last month, the Eleventh Circuit held that sexual orientation and gender identity are not protected under the statute).  When federal circuit courts provide conflicting rulings on the same legal question, the Supreme Court of the United States is more likely to issue its own ruling on the subject in order to ensure consistent application of the law.

We will continue to monitor any future developments on the subject.  As always, we’ll report any updates right here.

As a general rule, an employee who is injured while commuting to or from work is not entitled to workers’ compensation benefits, as the injuries are not deemed to be “in the course and scope of employment” by virtue of the longstanding “going and coming rule.”  There are exceptions to the rule, including: (1) situations where there is no fixed place of employment and the employee is therefore deemed to be a “traveling,” as opposed to “stationary” employee; (2) the employee is on a special assignment for the employer; (3) the employment contract includes transportation to and from work; or (4) special circumstances exist, such that the employee was furthering the interests of the employer when injured.

In an interesting recent case, the Commonwealth Court awarded compensation under the special circumstances exception, despite the fact that Claimant was commuting to work at the time of his motor vehicle accident.

The employee, Miller, was a salaried director of maintenance services, exempt from the overtime requirements of the Fair Labor Standards Act. His regular work hours were from 7:00 a.m. to 3:30 p.m., Monday through Friday.  The employer maintained a four building campus as a facility for senior residents.  The campus had a system of security cameras, whose maintenance was an important priority for the employer.

Miller testified that in addition to his regular hours, he would be called in while off-site two to three times monthly.  In such instances, he received “comp time,” in lieu of additional pay.  The comp time accrued from the time he answered the phone, until he arrived back at home.  On the morning in question, Miller was “feeling very poor and weak.”  He stayed home past his usual 7:00 a.m. start time, with the intention of taking a sick day.  However, the employer called and requested that he stop in to reset the security cameras, after which he could return home for the rest of the day.  En route to the facility, Miller became nauseous and veered off the road, hitting a telephone pole.  He sustained multiple injuries, including a broken eye socket, broken pelvis, ruptured bladder and multiple scars and disfigurements.

The key issue before the WC Judge was whether Miller was commuting to a fixed place of employment, such that the “going and coming rule” barred his claim, or whether special circumstances existed, such that an exception to the rule applied.

Since “but for” the security camera emergency, Miller would not have made the trip to work, the Judge, and subsequently the Commonwealth Court, concluded that this factor brought the case within the “special circumstances” exception to the going and coming rule, and awarded benefits.

The key takeaway is that commuting cases are often fact sensitive and need to be analyzed carefully, to determine whether workers’ compensation benefits are appropriate.  For example, construction workers who might at first glance appear to be “traveling” as opposed to “stationary” employees, are frequently deemed to be “stationary,” if they are working at only one job site at a time.  As such, the “going and coming” rule might preclude compensation in such cases, absent special circumstances.

Please contact Paul Clouser, Denise Elliott or Micah Saul, if you have questions about situations in which your employees may or may not be deemed to be “in the course and scope” of their employment, pursuant to the Pennsylvania Workers’ Compensation Act.

The use of temporary employees provided by agencies that supply laborers, secretaries, nurses or other skilled or unskilled workers to the public and private sector is increasing. Employers who use these temporary agency workers’ must be wary of the relationships created by the use of the temporary agency workers. Are the temporary workers “employed” by the agency, the borrowing employer, or both, for purposes of the Pennsylvania Workers’ Compensation Act (the “Act”)?  The answer will determine which entity or entities may claim immunity from a common law action, under the exclusive remedy provisions of the Act.

The critical test for determining whether a worker furnished by one entity to another is “employed” by the latter, is whether the worker is under the latter’s right of control with respect to both the work performed and the manner in which the work is performed.  For example, suppose a municipal township needs a temporary worker to ride on the back of a municipal trash truck.  After receiving only minimal instruction, the worker falls from the moving truck on his first day of work and dies ten (10) months later.  Suppose the agency, Labor Ready, pays $770,000 in workers’ compensation benefits.  A civil suit is then initiated by the decedent’s estate against both Labor Ready and the Township.  Does the decedent’s estate have a viable civil claim against either entity? Under this fact pattern, the trial judge dismissed, on summary judgment, both Labor Ready and Rye Township, finding that both entities were “employers” entitled to protection under the immunity provisions of the Act.  The ruling was affirmed by the Commonwealth Court on appeal.  Nagle v. Labor Ready and Rye Township (Pa. Cmwlth. 2016).  Similar results have been reached in volunteer fire fighter liability cases, where both the volunteer fire company and the sponsoring township enjoy immunity.  Indeed the “borrowed employee” doctrine provides broad immunity in both the public and private sectors, at least where the borrowing employer exerts the requisite degree of control over the borrowed employee, (See, e.g., Hendershot v. Emmeci Northampton County 2016). A temporary agency supplied a machine operator to its manufacturing client and the agency employee sustained serious injuries while cleaning the machine.

Nevertheless, despite broad interpretation on the “borrowed employee” doctrine, employers have been found to be liable for damages beyond workers’ compensation, in circumstances where: (a) the requisite degree of control does not exist (i.e. a company leases a piece of equipment with an operator and the operator is then injured on the company’s premises) or (b) the borrowing employer forfeits its immunity by filing an Answer to the workers’ compensation claim petition denying that it is the employer, and alleging that the temporary agency is solely responsible.  Black v. Labor Ready (Pa. Super. 2010).

Employers should be sensitive to the range of potential outcomes when staffing positions with “borrowed employees,” and should review any temporary agency agreements to insure the broadest possible immunity from suit, along with proper indemnification language, with respect to agency employees who are hired into temporary positions or assignments.

Please contact a member of our Labor and Employment Group for specific legal analysis of temporary employment arrangements at your facility.