In an important decision for employers and unions alike, the Third Circuit Court of Appeals, the federal appeals court with jurisdiction over Pennsylvania, New Jersey, Delaware, and the U.S. Virgin Islands, held that a union could be liable under the federal Racketeering Influenced and Corrupt Organizations (RICO) Act.  The decision opens a new avenue for unionized employers to seek to address inappropriate conduct during labor disputes, and no doubt will influence the tactics of organized labor during such periods of conflict.

In Care One Mgmt. LLC v. United Healthcare Workers East, the court was asked to consider an employer’s appeal of the trial court’s decision denying its RICO Act claims against the United Healthcare Workers East SEIU 1199, New England Health Care Employees Union, and the Service Employees International Union.  Although the RICO Act is a criminal statute, individuals and entities can also bring civil claims under RICO.   Essentially, in such cases, the plaintiff must establish that the defendant is conducting a pattern of racketeering activity through certain criminal predicate acts.  In Care One, the employer alleged that the unions engaged in a pattern of racketeering through mail and wire fraud as well as extortion.

Specifically, the employer alleged that, when negotiations for a new collective bargaining agreement failed, the unions called for a strike at various impacted facilities.  The employer alleged that the evening before strike was to start, the facilities were vandalized by union members. The employer also alleged that the unions publicly attacked the employer and that such attacks were false and fraudulent.  In addition, the employer alleged that the unions asked elected officials to initiate a government investigation into the employer’s labor and business practices.

The district court granted the union’s motion for summary judgment and dismissed the RICO claims.  The district court concluded that there was not sufficient evidence to establish that the union had authorized or directed the alleged inappropriate and criminal conduct.

However, the Third Circuit disagreed and reversed.  The Third Circuit found that there was at least enough evidence that a jury could find that the union’s members had committed the vandalism at the employer’s facilities and that the union had authorized such conduct given the timing of the incidents (the night before the strike).   The court also found there was a question about whether the request for the government to investigate the employer was inappropriate and unlawful.  The Third Circuit remanded the case for further proceedings.

There is no doubt that labor disputes can get ugly and, when they do, one side may be looking for a remedy.  From the employer’s perspective, although Care One sets a high bar, the decision has certainly opened the door to another possible remedy to address a labor union’s conduct during a labor dispute.  It is likely that unions will also take heed of the Care One decision when considering what conduct to employ during a labor dispute.

McNees recently announced the creation of HR Influenced, a human resource management consulting firm offering a variety of HR solutions.  Led by Kristen Evans, a dynamic HR professional with decades of experience, HR Influenced will offer clients a full array of professional services including: recruiting, leadership coaching, compensation and benefits analysis and support, employee recognition program development, employee training, succession planning and more.

We are excited for the launch of HR Influenced!  You can learn more here.

Maryland and Delaware recently joined the growing list of states that have enacted legislation requiring employers to offer paid family and medical leave.  Both states are still working on implementing regulations for the new laws; but, in the meantime, below is a brief summary of what you need to know about these laws and when they will take effect.

Maryland

Maryland’s new law will cover all employers with at least one employee in the state.  To be eligible for the leave, employees must have worked at least 680 hours over the 12-month period before the leave begins.  Employees also must exhaust all voluntarily provided paid leave before taking paid leave under this law.

Beginning on January 1, 2025, all eligible employees may take up to 12 weeks of job-protected leave in an application year for the following reasons:

  • To care for a child in the first year following a birth, adoption, or foster care placement;
  • For an employee’s own serious health condition;
  • To care for a family member with a serious health condition;
  • To care for a service member with a serious health condition who is the employee’s next of kin; or
  • For a qualifying exigency relating to a family member on active duty.

Employees may also be eligible for an additional 12 weeks per year for their own serious health condition if the initial 12 weeks of leave was taken to care for a new child, and vice versa.

The paid leave will be funded by employee wage deductions and, for employers with 15 or more employees, employer contributions or the establishment of self-funded private employer plans to provide paid leave.  The benefit amount will be determined by the state average weekly wage and the employee’s current rate of pay, with the maximum benefit for 2025 being $1,000 per week and the minimum amount being $50 per week.  The amount of the benefit will be adjusted annually based on the consumer price index.

Delaware

Delaware’s new law creates a statewide insurance program for paid parental, family caregiving, and medical leave funded through employer and employee contributions.  Employers with at least 25 employees in Delaware during the prior 12-month period must provide eligible employees with a maximum of 12 weeks of job-protected leave.  Employers with 10 to 24 employees only need to offer parental leave.  Employer contributions begin on January 1, 2025, and eligible employees will be permitted to take leave beginning on January 1, 2026.

Similar to the federal FMLA, employees are eligible for this leave if they have worked 1,250 hours during the previous 12-month period and have worked for a covered employer for at least one year.  Eligible employees will be able to take leave for the following reasons:

  • To address their own serious health condition;
  • To care for a family member with a serious health condition;
  • To bond and care for a child during the first year following birth, adoption, or foster placement; or
  • To address a family member’s military deployment.

Employees can take up to 12 weeks in an application year for parental reasons and 6 weeks in a two-year period for their own health condition, to care for a family member, or for a family member’s military deployment.  Employers may require employees to use accrued paid time off to substitute for paid leave.

Eligible employees will receive 80% of their average weekly wage, with a minimum weekly benefit of $100 and a maximum weekly benefit of $900 for 2026 and 2027.  For each year thereafter, the state will adjust the contribution rate based on consumer price index.  The benefits are funded by employer contributions, but employers may deduct up to 50% of the premiums from employees’ wages.

Employers have some time to prepare for these new requirements, and now is a good time to start reviewing your existing policies to prepare for these changes.  For more information, or for assistance with policy drafting and training, please contact any member of the McNees Labor and Employment Group.

At our 31st Annual Labor and Employment Law Seminar, there was a panel discussion regarding the War for Talent.  As part of that presentation, we reviewed some of the new and creative application processes that employers are adopting to help attract, screen and onboard employees more effectively and efficiently. We also discussed the use of Artificial Intelligence, AI, in the applicant review process.

AI is being used to solve a number of problems for organizations of every size. More and more, AI is being used in Human Resources settings, and there is no doubt that we will continue to see a proliferation of AI tools.  These are great tools, so it’s all good, right?

Well, if AI perpetuates some of the same biases that have long been problematic for regular human intelligence, then employers will continue to face disparate treatment and disparate impact claims.  These are exactly the concerns that were recently noted by the Equal Employment Opportunity Commission.  On May 12, 2022, the EEOC issued guidance regarding the Americans with Disabilities Act and the use of software, algorithms and artificial intelligence to assess job applicants and employees.

The EEOC’s guidance outlines three areas where AI could potentially violate the ADA:

  1. The employer does not provide a reasonable accommodation to allow an applicant to be rated fairly by AI;
  2. The employer relies on AI that screens out qualified applicants with a disability, intentionally or unintentionally; or
  3. The employer utilizes an AI tool that makes an unlawful disability-related medical inquiry.

Employers adopting AI in the hiring process need to be aware of these risks and must be sure to discuss how they will be addressed with the vendors offering these products and services.

This same topic was discussed at a recent Employment Law Alliance conference, where Keith Sonderling of the EEOC offered some helpful insights.  Mr. Sonderling emphasized that the EEOC is trying to be proactive in providing guidance regarding the use of AI in this setting, noting that there are already thousands of AI tools available for use at every stage of employee life cycle and compliance is the goal for so many employers and service providers. Understanding the legal issues and how employers can work to ensure compliance on the front end is a better outcome for all involved.

Keep in mind that state laws may also impact your organization’s use of automated decision tools as well. We will be sure to keep you up to date as additional guidance is issued and as the use of AI in the hiring process continues to develop.

And, if you have any questions about rolling out AI to help some humans in Human Resources, please do not hesitate to give us a call.

Despite our best attempts to suppress the memory, we all remember it well.  Just over two years ago, the pandemic triggered state-ordered shutdowns.  Our economy obviously slowed to a crawl, and employers everywhere immediately found themselves with surplus workers.  The result was mass layoffs, flooding the labor market with available employees.  To get employees back to work, Congress passed the CARES Act to assist employers with wages and to encourage the rehiring of America’s workforce.  The ARPA followed in an attempt to stimulate a static economy.  The injection of this cash into the economy – along with our adjustment to living with the pandemic and the availability of vaccines – created high demand for goods and services.

The only problem was that during employees’ time in unemployed isolation, something happened.  People reevaluated their lives – particularly their work lives.  For myriad reasons (and reasons we have yet to fully understand), many chose to temporarily remain outside of the workforce or to exit the workforce permanently. As a result, despite the propellant applied to the economy, there remained a hole where the American workforce once was, and employers found themselves in need of labor, fast.

And so, the war for talent was born.  Employers have been competing with each other to secure the limited pool of available workers with ever-increasing and creative incentives.  They have tried everything from increases in pay, signing bonuses, remote work, increases in time off, tuition assistance, free food, and many, many other employer-specific perks.  For a great number of employers, the war for talent has been long, frustrating, and fruitless.  Just ask any entity looking for drivers with a commercial driver’s license.  Or a healthcare facility looking for registered nurses. Or a manufacturer looking for a factory worker. (All to say nothing of the skilled trades; they are in a league all of their own).

As employers are fully engaged on the battlefield for talent, they are also starting to notice a[nother] storm cloud on the horizon.  In November 2021, and again in January this year, investment strategist Jeremy Grantham was the first to sound the alarm that the economy was likely in a super bubble (three to be exact), and the economy was starting to show all the signs that the bubbles were about to pop (or at least deflate).  All that was unknown was the catalyst.  In February, Russia invaded Ukraine.  Last week, the first bank (Deutsche) warned that a major recession is coming.  Netflix’s share price dropped by a third.  Amazon reported a $4 billion loss.  On Friday, we learned that the economy shrank in Q1.

It certainly remains to be seen whether we will see a recession, and if so, how bad.  But it begs the question: could it be that employers are in a war to secure talent they will ultimately be unable to keep if the predictions of recession come true?  Should employers really be evaluating the affordability of the hiring incentives they are offering based on today’s demand?  Should employers be engaging in the war for talent at all?  The answer for each employer will be different. At a minimum, employers should reevaluate how they wage the battle.  They should reevaluate their plan, including the long-term sustainability of the incentives offered to prospective employees (i.e., are they recession proof).  My colleagues Adam Santucci and Bill Boak will be speaking about the war on talent at our upcoming seminar on May 13.  You can register here.

In January, we wrote about Allegheny County’s paid sick leave regulations that took effect in December 2021.  Now, we write to tell you that the regulations have changed.  The change will affect only one key industry – construction.

When the Allegheny County Board of Health drafted its paid sick leave regulations, it clearly modeled them after Pittsburgh City’s Paid Sick Leave Act.  Except for the number of employees that trigger the sick leave requirement, Allegheny County’s draft regulations were nearly identical to the City’s.  Ostensibly, the County drafted its regulations so similarly to the City’s to allow for ease of administration.  With nearly identical ordinances, employers did not need to try to administer two materially different ordinances depending on whether their employees were working in the City or the County.  But, when Allegheny County enacted the final version of its regulations, it had one significant difference compared to the City’s Act – the definition of “employee.”

The City’s definition of employee explicitly excludes any member of a construction union covered by a collective bargaining agreement.  The County’s regulations left out that explicit exclusion.

Almost immediately, there was surprise and pushback in the construction industry in Allegheny County.  On the heels of that pushback came rumors that the omission was an oversight, and that the County was going to amend its regulations to exclude construction unions, too.  Those rumors proved to be true.

At its March meeting, the County’s Board of Health unanimously approved an amendment to the definition of “employee” within the paid sick regulations.  The County’s paid sick leave now excludes any member of a construction labor union covered by a collective bargaining agreement.  The amendment goes one step further and defines “construction labor union.”  That is defined as “a labor union that represents, for purposes of collective bargaining, employees involved in the work of construction, reconstruction, demolition, alteration, custom fabrication or repair work and who are enrolled or have graduated from a registered apprenticeship program.”

With this revision, unionized construction employers should review the language and scope of their paid sick leave policies.  Such policies should be tailored to cover only non-unionized employees.

A recent report from a Pennsylvania Department of Labor & Industry task force describes the economic impact of worker misclassification in Pennsylvania and makes several significant recommendations to the legislature.  These recommendations, if implemented, could dramatically impact how some Pennsylvania employers manage their workforce, particularly those employers in the construction industry.

The report was issued on March 1 by the “Joint Task Force on Misclassification of Employees.”  The Task Force looked at the frequency and extent to which workers in Pennsylvania are classified as “independent contractors” when the nature, type, and oversight of their work would suggest they should actually be classified as an “employee.”

In its report, the Task Force estimated that 49,266 Pennsylvania employers currently have at least one misclassified worker, and that 389,000 workers are misclassified annually in Pennsylvania.

The report makes several important recommendations to the legislature.  Most notable are the recommendations that relate to construction industry employers and Act 72.  Currently, Act 72, or the Construction Workplace Misclassification Act, prohibits employers from misclassifying workers as independent contractors and provides for a three-part test to determine whether a worker is an independent contractor.  The Task Force recommends that Act 72 be amended to include stiffer penalties for employers who misclassify workers, including enhancing the criminal penalties for “knowing” violations.  It also recommends giving the Department of Labor & Industry resources to hire additional investigative personnel and support staff, and, notably, to give L&I subpoena power to collect employer records as part of misclassification investigations.

The Task Force also recommends that L&I be given the authority to issue stop-work orders against companies or individuals found to have employed misclassified workers, and even to debar those companies who knowingly or repeatedly violate Act 72.  This would eliminate L&I’s obligation to petition the court for issuance of a stop-work order.  The Task Force also recommends imposing liability on a general contractor for subcontractor misclassifications if the general had clear evidence of a “knowing” misclassification violation.

Finally, the Task Force recommends that Act 72 be extended beyond the construction trades to cover other industries in Pennsylvania.  It also recommends that the legislature adopt the “ABC Test” as a baseline standard in Pennsylvania to delineate between an employee and independent contractor.

It is important to remember that these are only recommendations to the legislature, and it remains to be seen whether any of these proposals will ever become law.  But this report highlights a trend we have seen elsewhere – an increased emphasis on enforcement of worker classification laws and greater efforts to revise classification schemes that would make “employee” a worker’s default status unless the employer could prove otherwise.

With more aggressive enforcement of worker misclassification on the horizon, there’s no time like the present to take a close look at your workforce and to make any necessary adjustments to the ways in which workers are classified.

For any questions about these issues, contact any member of the McNees Labor & Employment group.

Historically, the Office of Federal Contract Compliance Programs (“OFCCP”) has not required federal contractors to submit proof that their written affirmative action plans were completed.  The only time that a contractor had to produce evidence of its plan was during an OFCCP audit.  As many federal contractors now know, that is about to change.

In December, OFCCP announced the creation of an online Contractor Portal.  Through the Contractor Portal, federal contractors (assuming jurisdictional thresholds are met) will be required to certify they have complied with affirmative action plan requirements.  Registration for the Contractor Portal opened on February 1, 2022.  Starting on March 31, 2022, contractors will be able to use the portal to certify compliance.  Existing contractors will have until June 30, 2022 to complete the certification process.

Even though the certification process begins in less than a month, there are lots of unanswered questions about the new requirement.  As federal contractors begin to contemplate registration and certification, here are a few things to consider:

  1. Do All Federal Contractors Have to Certify?

No.  First, only service and supply contractors (and subcontractors) are required to certify compliance.  Construction contractors do not have a certification requirement (yet).  Further, service and supply contractors only have written affirmative action plan requirements when certain thresholds are met.  Contractors with 50 or more employees and a contract of $50,000 or more have plan requirements (under Executive Order 11246 and Section 503 of the Rehabilitation Act).  Contractors with 50 or more employees and a contract of $150,000 or more have additional plan requirements under Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA).  It is service and supply contractors who meet either of these jurisdictional thresholds that would have certification requirements.

  1. What Does “Certification” Mean?

No one knows, exactly.  OFCCP has released information on the Contractor Portal itself, including registration and user permissions.  It has not, however, identified exactly what the certification process will entail.  More information on certification is expected at the end of March, as the certification mechanism in the portal opens.  Regardless of form, a contractor can expect to certify (under penalty for providing false information) either: (1) it has a written plan for its current plan year; (2) it does not have such a plan; or (3) it does not believe it is subject to any plan requirements. Stay tuned for more information on this at the end of the month.

  1. How Often Is Certification Required?

Consistent with the obligation to prepare written affirmative action plans on an annual basis, OFCCP will require annual certification.  Contractors should add certification to their annual compliance checklist and complete it as part of its written plan process.

  1. I am Considering Becoming a Federal Contractor. When Would I Need to Certify?

New federal contractors have 120 days from the start of the contract to create their plans.  Under the certification requirement, a new contractor will have 90 days from the development of the plan to certify compliance.

  1. How Will This Impact OFCCP Audit Activity?

This remains to be seen.  One thing is for sure – certification is not meant to replace compliance audits.  So, contractors should not expect to avoid closer scrutiny simply by certifying themselves as compliant.  Many commentators have predicted just the opposite.  There are a few reasons why this may be true.  First, by registering and certifying, each contractor is identifying itself as being under the jurisdictional authority of OFCCP.  For contractors that have flown under OFCCP’s radar to date, that is about to end.  Second, contractors that certify they have not complied with the plan requirements (or otherwise indicate they believe they are not subject to the plan requirements), should certainly not be surprised to find themselves on OFCCP’s scheduling list for audits.

With a June 30th deadline, existing federal contractors need not rush to register and certify.  The best approach may be to wait until after the end of March to initiate the process, when more information is available on what “certification” actually entails.  However, contractors should begin to contemplate compliance and prepare accordingly – including updating any outdated plans.

Many employers require their workers to sign arbitration agreements at the outset of employment, and it’s no wonder why.  These agreements allow employers to require arbitration of many employment-related disputes, rather than participate in lengthy, expensive lawsuits.

On February 10, 2022, the United States Senate passed a bill that will prohibit this practice with respect to claims of sexual assault or sexual harassment in the workplace.  The bill, known as the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, was passed by the House of Representatives on February 7, and now heads to President Biden’s desk for signature. Prior to its passage in Congress, the President expressed support for the measure and he is expected to sign it into law.

The bill amends the Federal Arbitration Act for disputes involving sexual assault and sexual harassment in order to stop employers and businesses from forcing employees and customers out of the court system and into arbitration.  Under the law, employees who file claims of workplace sexual harassment or sexual assault are no longer bound by agreements compelling them to arbitrate.  Instead, they can choose whether to pursue their claims in court or arbitrate the matter under the arbitration agreement.  This option is available regardless of whether the claims are brought under federal, tribal, or state law.

As its name implies, the Act applies only to claims of sexual assault and sexual harassment. Employers will still be able to compel arbitration under agreements with employees for claims involving other forms of workplace harassment.  Employers can still enforce arbitration agreements as to claims of sex-based disparate treatment.

With the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 set to become law, employers and businesses that use arbitration agreements should take note and plan accordingly.  Those agreements no longer guarantee that sexual harassment and sexual assault claims can be forced into arbitration.

As explained in our previous post, on January 13, 2022, the United States Supreme Court blocked the OSHA vaccination or testing Emergency Temporary Standard (“ETS”) pending full consideration of the matter by the Sixth Circuit Court of Appeals.  In  response to the Supreme Court’s decision, OSHA is withdrawing the ETS, effective January 26, 2022.

Although OSHA is withdrawing the ETS as an “emergency temporary standard,” the ETS also serves as a proposed final rule, and OSHA made clear that its action does not affect the ETS’s status as such.  Therefore, it is possible that OSHA could issue a final vaccination or testing rule.  In response to the Supreme Court’s decision, OSHA could issue a narrower vaccine or test mandate limited to workplaces where the virus poses a special danger due to the nature of the work.

According to a statement on OSHA’s website, “[t]he agency is prioritizing its resources to focus on finalizing a permanent COVID-19 Healthcare Standard.”  A permanent COVID-19 standard for healthcare workers could be similar to the COVID-19 Healthcare ETS, which OSHA issued in June 2021 and which we summarized in a previous post.  The Healthcare ETS was in effect for six months until it expired and was withdrawn by OSHA in December 2021.  OSHA’s statement also “strongly encourages vaccination of workers against the continuing dangers posed by COVID-19 in the workplace.”

In the meantime, OSHA will enforce workplace safety issues related to COVID-19 under its existing authorities, including the COVID-19 National Emphasis Program and General Duty Clause.  The National Emphasis Program targets businesses in “high-hazard industries” whose employees have an increased risk of exposure to COVID-19.  Under the General Duty Clause, employers have a duty to furnish their employees “employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to [their] employees.”

For more information, or if you have any questions, please contact any member of the McNees Labor and Employment Group.