While most employers take many steps to avoid employment litigation, even the most meticulous of Human Resources departments sometimes find themselves facing a lawsuit in federal or state court.

In some respects, technology has made the discovery process easier, however, it has also complicated civil litigation. Rachel Hadrick, an Associate in our Litigation group, recently wrote an article about data encryption and its effect on litigation and discovery. Check it out here! And as you read, consider whether your “Bring Your Own Device” and technology policies adequately safeguard your company’s interests.

Recently, the Pennsylvania Labor Relations Board (PLRB) issued a Final Order indicating that members of a volunteer fire company which provided coverage to a local borough were actually Borough employees.   In doing so, both the hearing examiner who issued the Proposed Decision and Order and the Board determined that it did not matter that the firefighters were “appointed” and not “hired” by the borough, and further opined that the relationship of providing services for wages was an element of an employer-employee relationship.

The fire department was a non-profit corporation, with its building and most of its equipment and apparatus owned by the Borough.  In 1999, the Borough’s council adopted an ordinance establishing a fire department and officer ranks, providing for vehicles and equipment, and reserving the right for council to establish binding rules, regulations and Standard Operating Procedures (SOPs).  The ordinance further indicated that the Borough Council would appoint the officers, require the officers to take the same oath that was required for Borough officials, and allowed the Fire Chief (an employee of the Borough) to issue orders and an SOP manual.

In its review, the Board found that the Borough’s 2012 and 2013 budgets contained a number of line items for the Fire Department (and later included a fire services tax), and further noted that when an expense was incurred, it was paid directly by the Borough.  Significantly, volunteers were paid an hourly rate by the Borough, which had the power to set and approve the hourly rates plus incentives for further training.  The Board further noted that the Secretary of the Borough ran the day-to-day operations of the department (including scheduling), that the Borough had to authorize any overtime, and that the firefighters submitted time cards and received W-2s from the Borough.  Additionally, personnel matters, including disciplinary action, were handled by the Fire Chief.  Challenged disciplinary matters could be taken to the Borough Manager.

FIREFIGHTER HELMET-BlankBased upon the above information, the hearing examiner determined that the officers were actually employees and not volunteers.  The Borough did not challenge the findings that it controlled the wages, hours, or working conditions of the firefighters- all considered to be evidence of an employer-employee relationship- but did file exceptions on the basis of the hearing examiner’s finding regarding discipline.  Upon review, the Board found that because the Fire Chief, as an employee of the Borough, acted in the interest of his employer, the Borough “exercised control over disciplinary matters.”  The Borough made several other arguments, including that the hearing examiner’s findings would mean that the Borough was in violation of civil service and veterans preference laws.  However, the Board ultimately found no error in the examiner’s ruling and made the order final.

The order has been appealed to the Commonwealth Court, with support from both the Pennsylvania State Association of Township Supervisors and the Pennsylvania State Association of Boroughs.  If the Court agrees with the PLRB, this will have a huge impact on municipalities which rely on the services of volunteer fire companies but may not have the financial ability to absorb these volunteers and the costs that come along with them being declared employees of the municipalities.  This is definitely one to watch.

As you may recall, last July, President Obama signed an Executive Order prohibiting federal contractors and subcontractors from discriminating on the basis of sexual orientation and gender identity. While many large federal contractors already ban sexual orientation and gender identity discrimination (as well as a number of states and municipalities), there is no Pennsylvania or federal law broadly prohibiting discrimination based on sexual orientation or gender identity in the workplace.

Over the past year the Office of Federal Contract Compliance Programs (OFCCP) has drafted and adopted rules implementing the President’s Executive Order. Those rules became effective on April 8, 2015. So what steps should federal contractors and subcontractors take to ensure they comply with these new regulations? While the new regulations only apply to contracts entered into or modified after April 8, here are a few proactive steps federal contractors can take to ensure future compliance:

a) Make sure that sexual orientation and gender identity are included in your non-discrimination policies and polices against discriminatory harassment

b) Update the Equal Opportunity Clause on your website, job applications, and in job advertisements to make clear that your company prohibits discrimination based on gender identity and sexual orientation.

c) Ensure that your future Affirmative Action Plans indicate the Company will treat all applicants and employees the same regardless of their sexual orientation and gender identity.

d) Update your “EEO is the Law” poster when the EEOC releases a revised poster in the near future (but don’t hold your breath–they have been promising employers a new poster for over a year now!)

Unlike regulations governing minorities, women, protected veterans, and individuals with disabilities, these new regulations do not require contractors to conduct a data analysis related to the sexual orientation or gender identity of applicants or employees—nor is there any requirement that contractors ask employees and applicants to self identify their sexual orientation or gender identity.

Interestingly, an OFCCP FAQ states that contractors are required to “ensure that their restroom access policies and procedures do not discriminate based on the sexual orientation or gender identity of an applicant or employee. In keeping with the federal government’s existing legal position on this issue, contractors must allow employees and applicants to use restrooms consistent with their gender identity.”

Questions? Feel free to e-mail or call.

A few weeks ago, we told you about a jury awarding over eight million dollars to the families of two factory workers who were killed by a co-worker in 2010.  As it turns out, that award was just the beginning.  Last week, a separate jury in the same case awarded almost forty million dollars in punitive damages to those families.  Plaintiffs’ counsel argued that the security company acted recklessly, noting that not only did the company fail to escort the co-worker to her car or notify employees that she had reentered the building with a weapon, but that the security guard on duty did not know how to use the phone system that was in place—evidence that was also noted by the defense.  The security company has indicated its intent to appeal the latest jury verdict.  Stay tuned to this blog for updates.

There are many opportunities to reduce workers’ compensation liability exposure both before and after litigation commences.  Indeed, one of the best strategies for reducing costs is to develop a culture of “safety” in the workplace, and to actively assess and implement engineering and ergonomic changes to minimize injuries.  It is equally important to implement a list of workers’ compensation panel physicians, who are familiar with your business and who have exhibited a proactive “return to work” philosophy.  The focus of this article is on steps that should be taken from the defense attorney perspective.  Employers who take an active role in their litigated cases consistently experience lower workers’ compensation costs and fewer long term cases.

Accident Investigation

Although very basic, this step is sometimes overlooked by experienced safety and claims professionals.  The basics include:

  • Visiting the accident site to obtain a detailed understanding of how the alleged injury occurred. The investigation should be supplemented by a detailed incident report, wherein the employee must explain, in detail, how the injury occurred. Also, make sure the injured employee has been given a copy of the ”Notification of Rights and Duties” form, along with a copy of the posted panel physician list, even if these documents were provided during orientation or at a safety meeting.  Failure to provide these forms negate any obligation the employee has to treat with a panel physician for the first 90 days.
  • Interview witnesses to the incident, co-employees familiar with the allegations being made by claimant and claimant’s immediate supervisor:
    • Was there any evidence of pre-existing complaints or problems?
    • Was the claimant disciplined recently or are there other factors that make the allegation of a work-related injury suspect?
  • Review the personnel file and dispensary log for “credibility clues” (i.e., recent hire, disciplinary probation, recent demotion or change in shift or hours of work, personality conflicts or issues with supervisor, etc.).
  • Obtain HIPAA compliant authorization to gain access to family doctor records.
    • This is the single most important (yet often overlooked) step employers can take.
    • Remember that a “block 6” denial of a claim “pending further medical investigation,” is often the best move to make in a questionable case, where previous records might disclose a pre­ existing and non-work related medical condition.
  • If possible, request an IDEX search to disclose prior claims against other employers.

Be Your Own Advocate

Too often, employers feel obligated to continue to employ an injured employee because the employer relies on the advice of its insurance carrier’s attorney or claims representative. Very often, however, the insurance company’s advice is motivated by its desire to limit their own exposure, rather than by the employer’s operational needs or policies.  If you don’t know your rights as an employer and do not exercise those rights, it is far more likely that you will continue to employ an unproductive employee for a very long time, or that you will violate your own leave policies.  For example, by continuing to provide modified duty work, you may inadvertently be setting a precedent for “permanent” light duty assignments for disabled workers.  This benefits neither the employer who is paying for the unproductive employee, nor the injured employee, who is denied the training and opportunity to find a position where he or she can be productive.file5601297827370

Vendor Selection

The firms and individuals you select to represent your company in workers’ compensation matters will have a major impact on the results you achieve and your overall workers’ compensation exposure. The major players need to function well as a team; they need to respect the employers’ policies and rights as a “customer” and they should have a proven track record with regard to employment litigation.

  • Claims Administrator – – This person should be familiar with the complexities of Pennsylvania law, proper reserving practices, the employer’s return-to-work program and policies, and any industry-specific safety issues. Quarterly claims review meetings, to review both litigated and “medical only” claims should be offered.
  • Rehab Nurse – – Perhaps the most important member of the team, if used correctly, the nurse should offer advice on establishing and maintaining the physician panel list, attend physician appointments on lost time cases, make recommendations for Independent Medical Exams (“IME” and fitness-­for-duty examinations and attend claims review meetings. While telephonic nurse case management may save on vendor costs, there is no substitute for an aggressive “hands on” approach, to reducing wage loss exposure.
  • Panel Physicians – -At least 6 providers or provider groups, covering the range of expected injuries in your particular workplace. All providers need to be “screened” with respect to return to work attitudes and willingness to provide critical causation opinions. The “gate keeper” provider should be familiar with the employer’s operation and the range of modified duty positions that are available for injured workers.

Counsel Selection

Employers should not be shy about making their preferences for legal representation known to the carrier or third party administrator.  The attorney’s primary practice should be in workers’ compensation and employer references should be readily available. Your attorney should have a good working knowledge of ADA, FMLA, Unemployment Compensation, PHRC, OSHA and wrongful discharge, since workers’ compensation cases often involve other related issues. Often times, large carriers and Third Party Administrators (“TPAs”) use “captive firms” to handle all their cases at a reduced rate or “flat fee.”  Although there may be a short-term cost savings in terms of reduced fees, the lawyers handling these cases typically have extremely large case loads and lack the time to effectively manage tough cases and lack the training and expertise to advise the employers on ancillary matters, including discrimination, termination, and FMLA issues, which may involve an even higher exposure to the employer than the workers’ compensation case. Most carriers and TPAs are willing to make exceptions and offer a recommended “non-panel” lawyer to handle a workers’ compensation case, but only if the employer specifically asks for the assignment. Likewise, many carriers and TPAs offer “telephone nurse case management,” which does save on vendor costs in the short term, but is largely ineffective when direct face-to-­face meetings with treating physicians are required.

When You Must Go to Court

If your testimony is required in a given case:

  • Know the file – – Review the personnel records, dispensary file, claimant’s testimony, and all other available documentation. This will allow you to address any unanticipated issues that may arise on cross-examination.  It will also give you confidence that will, in turn, make your testimony more credible and believable. Make sure the “right” witnesses are available to testify to avoid “hearsay” objections.
  • Review your testimony with counsel – -Do not hesitate to ask for a separate meeting, in advance of the hearing, to find out what specific questions you will be asked on direct examination and what questions might be asked on cross. You need to know how the hearing will be conducted by the WCJ and what the goal of your testimony will be.  Although the testimony should not seem “rehearsed,” you should be confident in your ability to effectively handle tough questions under pressure.
  • On the witness stand, answer the question directly– -Focus on the question and try to start with a direct response first, such as “yes” or “no,” followed by an explanation. However, do not speculate or guess at answers–do not be afraid to say “I don’t remember” or “I don’t know,” or “could you repeat the question,” if you need clarification.
  • Don’t be afraid to “take on” opposing counsel— If you have prepared in the manner suggested above, the chances are excellent that you are much better prepared than your adversary. Rather than letting the attorney “bully” you by mischaracterizing your testimony, feel free to point out that he/she may have “misunderstood” your previous answer and offer to “clarify” things for them.  Keep in mind that your attorney will also have a chance to “rehabilitate” any damage done on cross-examination, by allowing you to elaborate on your prior answers during redirect examination.

Be Creative

Make your case “stand out.”

  • These are the direct comments of a Lancaster WC Judge.
  • Plant visits, job videos/photos, unusual exhibits, diagrams/maps, accident reconstruction, etc. are often useful ways to supplement employer testimony.

If you have questions about a pending workers’ compensation matter, please contact Paul Clouser or Denise Elliott.

You may recall that over a year ago, President Obama directed the Secretary of Labor to “modernize and streamline” the existing Fair Labor Standards Act (FLSA) overtime regulations, specifically with respect to the “white collar” exemptions. The FLSA’s white collar exemptions apply to covered executive, administrative, professional, and outside sales employees. To qualify for an exemption to the FLSA’s minimum wage and overtime compensation requirements, these regulations generally require that an employee receive a guaranteed minimum salary of at least $455 per week and meet one of the duties tests.

Since the President issued this directive, many have speculated about the changes that may be in store for the white collar exemptions. Most speculation has focused on an anticipated significant increase in the minimum salary amount and changes to the duties tests that would eliminate the exemptions’ application to many positions currently exempt from the federal overtime requirements.

The Department of Labor previously announced multiple target dates, including November 2014 and February 2015, to issue the proposed regulations. These dates have come and gone without any announcement. We still fully expect the DOL to comply with the President’s directive and issue proposed regulations in the near future. But with no new target date, when in 2015 that will occur is anyone’s guess.

In the meantime, employers should continue to work to comply with the current FLSA regulations and ensure that all employees they classify as exempt from the overtime requirements safely fall within one of the recognized exemptions. Even after the DOL publishes proposed regulations, those regulations will not take effect until completion of a public notice and comment period and issuance of final regulations. Thus, the rules we have now likely will remain the rules in effect for a fair time to come.

Don’t Forget About State Law!

Regardless of what the DOL does with the FLSA regulations, any changes will have no effect on the overtime requirements and exemptions of the Pennsylvania Minimum Wage Act (PMWA). While it tracks the FLSA in many areas, the PMWA is a separate and distinct state law that applies to Pennsylvania employers. Complying with the requirements of the FLSA is not enough, and employers in Pennsylvania risk liability by failing to ensure compliance with both overlapping wage and hour laws. New FLSA regulations likely will widen the gap between the requirements of the two laws, increasing the compliance headaches that employers currently face.

Waiting Doesn’t Justify Inaction

Wage and hour class actions filed on behalf of current and former employees remain a significant threat to employers, with the number of such actions increasing each year. Overtime exemption misclassification cases remain near the top of the list of types of wage and hour class actions filed. Unfortunately, patiently waiting for new regulations is not a defense to liability in such actions.

Many employers blindsided by wage and hour class action litigation wish they had identified and addressed risk areas long before they resulted in expensive and time-consuming class-based litigation. When the new proposed FLSA regulations are issued, we will let you know and explain their expected ramifications. In the meantime, stay vigilant about wage and hour compliance, as the risks associated with non-compliance continue to grow.

Wage and hour requirements are frustrating, but employers cannot escape them or the significant risks associated with non-compliance. At our upcoming 25th Annual McNees Labor and Employment seminar, we are going to take an in-depth look at key wage and hour cases and regulatory activity from the past year, including the anticipated new FLSA overtime exemption regulations. The session also will highlight critical compliance issues relevant to our evolving 24/7 workplace and provide recommendations for the proactive employer.

 

The National Labor Relations Board’s Office of General Counsel recently released a Report of the General Counsel Concerning Employer Rules, which is apparently designed to offer guidance to employers regarding workplace rules. We can summarize the 30 page memo as follows: the GC does not like your rules.

The memorandum contains several examples of rules that the GC had deemed unlawful in the past and then several examples of policies deemed lawful in the areas of confidentiality, employee conduct toward the company, employee conduct toward other employees, employee conduct toward third parties (i.e. the media), rules restricting the use of company logos and trademarks, rules restricting photographs and recordings in the workplace, rules restricting employees from leaving the workplace without permission (which could impact striking workers), and employer conflict of interest rules. The GC provides an explanation regarding the distinctions between the lawful and the unlawful rules.

The GC also uses a recent settlement with a large fast food chain to provide examples of several policies it would view as lawful under the National Labor Relations Act.

The Report is confusing at times and appears to be contradictory, particularly when the sections regarding conduct toward the employer and conduct towards other employees are read together. When you boil those two sections down, there isn’t much that is off limits in the GC’s view.

That view is certainly eye-opening. For example, the Report notes GC’s conclusion that employees have the right to publicly criticize employers, and that protected conduct does not lose the protection of the Act even if it is abusive and inaccurate. To be fair, the Report is helpful to the extent you are seeking to craft policies that will withstand the rigorous review of the Board’s current GC. Whether the Board and the courts will ultimately sustain that aggressive approach remains to be seen. However, we do recommend reviewing the Report and adjusting your policies appropriately.

Recently, a Philadelphia jury awarded over $8 million dollars to the families of two factory workers killed by a co-worker in 2010. Concerns about the employee had been reported in the past, and she was suspended the day she committed the murders for making threats against co-workers.  However, after her suspension she was not stopped by the factory’s security company from reentering the premises, where she shot and killed two co-workers and injured another.

The families’ attorney claimed in a pre-trial memorandum that the security guards were aware of the potential for violence, but were not properly trained and failed to follow protocol, including failure to escort the employee to her car, call 911, or notify employees that she had reentered the plant with a weapon.  An expert report cited by the families’ attorney noted that had the guards followed the security program in place, the violence could have been prevented.  The jury ultimately found the security company to be partially liable for the deaths of the coworkers.  The employee, convicted in 2012, was also found liable by the jury.19-08-10

Although such extreme violence is a rare workplace occurrence, there are valuable lessons to be learned by all employers from this tragedy.  Review your workplace policies and procedures periodically.  If you don’t have workplace violence and/or weapons policies already in place, it may be time to adopt and implement them.  Training your employees on these and all of your workplace policies is crucial.  Providing training can help ensure that they are grounded in all practices, including security and emergency procedures.  Educating your employees can save your company valuable resources and may even help to save a life.

In a new decision, the first on the subject by a federal appellate court, the Third Circuit has ruled in McMaster v. Eastern Armored Services Inc. that drivers who spend a portion of their work driving “covered” commercial motor vehicles (those over 10,000 pounds) and non-covered (those under 10,000 pounds) do not fall within the Motor Carrier Act exemption, and therefore must be paid overtime as required by the Fair Labor Standards Act (“FLSA”).  The Motor Carrier Act exemption had previously been construed to exempt interstate truck drivers (regardless of vehicle weight) from the overtime guarantees of the FLSA.  The Third Circuit (the federal appellate court whose decisions are binding in Pennsylvania, New Jersey, and Delaware) considered amendments to the FLSA contained in the Technical Corrections Act of 2008 (“TCA”), and found that Congress therein made:

“a plain statement that a “covered employee” is to receive overtime even where section 13(b)(1)—the Motor Carrier Act Exemption—would ordinarily create an exemption. We see no plausible alternative construction . . . Statutory construction points to one conclusion: ‘covered employees’ are entitled to overtime.”

file2811244091888

Under the McMaster decision, employees who spend at least a “part” of their work week driving vehicles weighing less than 10,000 pounds are entitled to overtime pay for all time worked in excess of 40 hours in the week.  Employers who fail to pay overtime when it is due may be made to pay back wages of up to three years, in addition to attorney’s fees and other types of damages.

Collective actions by employees for overtime pay under the FLSA are on the rise.  This decision creates clear liability and therefore increased exposure for any business that employs drivers to transport property (including some delivery drivers) using vehicles weighing less than 10,000 pounds (e.g., smaller trucks and cars).

Questions? Feel free to contact the author, your McNees Employment attorney, or a member of our Transportation, Distribution and Logistics Group.

Welcome to the new McNees Wallace & Nurick Labor & Employment Blog!

Our goal is to provide you with the latest updates, analysis, and commentary on how the law impacts employers at the national, state, and local level. Our attorneys in Harrisburg, Lancaster, Scranton, State College, and Columbus, Ohio discuss topics (with a focus on Pennsylvania law) including employment litigation, wage & hour issues, unions, social media, discrimination & harassment, employee benefits, affirmative action, workers’ compensation, and more.

Over the past year, we have been lucky to welcome five new members to the Labor & Employment Group:

  • Paul Clouser joined McNees in August, practicing in the firm’s Lancaster office. Paul has 25 years of experience representing clients in workers’ compensation matters and employment litigation.
  • Denise Elliott also joined McNees in August and also practices in the firm’s Lancaster office. Denise focuses her practice on defending self-insured employers in workers’ compensation matters and providing representation and counsel to clients in employment discrimination litigation, ADA/FMLA compliance, and safety and health issues.
  • Sarah Ivy joined McNees in July. As an attorney in the firm’s Employee Benefits  group within the Labor & Employment practice group, Sarah brings over 15 years of experience in the areas of employee benefits law, taxation, and executive compensation. She will reside in the firm’s Lancaster office.
  • Finally, Gina McAndrew joined the firm’s Scranton office where her practice focuses on private and public sector labor relations, equal employment opportunity, and general employment and labor law, emphasizing collective bargaining, arbitration, and defense of all forms of wrongful discharge and discrimination claims.

Contributions to the blog and staying ahead of trends and challenges is important–but most important is our “Clients First” mentality and foundation of quality service. It’s a dynamic time to be a business owner, Human Resources professional, or labor & employment attorney. With constantly changing laws and regulations, a new Governor, a looming presidential election, and multiple major employment law cases before the United States Supreme Court, we are excited to bring you articles and stories that impact your business.