This post was contributed by Tony D. Dick Esq., an Associate in McNees Wallace & Nurick LLC’s Labor and Employment Practice Group in Columbus, Ohio.

Summer has finally arrived. While many of us will soon become consumed with pool parties, backyard barbeques, and well-deserved vacations, a new crop of summer interns is just beginning their first endeavor in the working world with the hope of making a lasting impression on prospective employers in their chosen fields.

According to various surveys, the number of internships nationwide has climbed significantly over the last two decades. Approximately half of all college graduates report participating in some form of internship during their high school or college careers. Anywhere between 25% and 50% of these internships are unpaid. However, it is becoming an increasingly risky proposition for employers to take on unpaid interns. In fact, in just the past few days, Warner Music Group, Atlantic Records, and media giant Condé Nast have all been sued by former interns who claim that they should have been compensated for their internships. These latest lawsuits come on the heels of a sweeping New York federal court decision finding Fox Searchlight Pictures liable for violating minimum wage laws for failing to pay interns who worked on the 2010 movie Black Swan.

At the heart of these cases is whether the unpaid interns should have actually been classified as employees of the business. If so, the interns would be entitled to wages and overtime pay under the Fair Labor Standards Act (“FLSA”). While there are no bright line rules, the Department of Labor has developed a six-factor test to determine when an intern should be considered entitled to wages under the FLSA. Under these factors, an employer does not violate the FLSA by failing to pay wages to an intern only if:
 

Continue Reading Unpaid Internships May Cost Your Business Dearly in the Long Run

This post was contributed by Eric N. Athey, Co-Chair of McNees Wallace & Nurick LLC’s Labor and Employment Law Practice Group. 

In Pennsylvania, a non-compete agreement (NCA) must be supported by legal "consideration" in order to be enforceable. If a newly hired employee signs a NCA at the time of hire as a condition of employment, the new job is the consideration for the agreement not to compete in the future. On the other hand, once an employee is already employed, his employer cannot foist an NCA on him and expect it to be enforceable unless new consideration is given (e.g. a special bonus, job protection, promotion, severance benefits, etc.). These basic principles are well established under Pennsylvania law.  But what happens if an employer presents a NCA to a new hire after he accepts a written job offer but before he actually starts work?  This scenario was recently addressed by the Supreme Court of Pennsylvania in Pulse Technologies, Inc. v. Notaro.

In Pulse Technologies, the company provided Mr. Notaro with a 2 ½-page offer letter that included a description of the job, salary, benefits, and start date. The letter also stated: "You will also be asked to sign our employment/confidentiality agreement. We will not be able to employ you if you fail to do so." The letter further explained that the employment agreement would contain "definitive terms and conditions" of employment. Mr. Notaro signed and returned his offer letter as instructed. On his first day of employment, he was provided with an "employment/confidentiality agreement" that contained a non-compete provision. Notaro read and signed the agreement without objection, understanding that it contained restrictions on his ability to compete in the future. Significantly, he signed the agreement before he began performing his new job.

Over four years later, Mr. Notaro left Pulse Technologies to take a managerial position with one of the company’s competitors.
 

Continue Reading You’ve Got the Job, Details Will Follow – Employment Offer Letters & Non-Compete Agreements

As we discussed with participants in our recent Labor and Employment Law Seminar, despite recent setbacks, the National Labor Relations Board continues to issue decisions that are concerning for employers. These decisions, which impact union and non-union employers alike, often take an expansive view of the protections afforded employees by the National Labor Relations Act. In a recent case involving a complaint filed by an (alleged) independent contractor working for a non-union employer, the Board found that the contractor’s electronic communications, directed at employees of a different employer, were protected by the Act because the communications constituted union organizing activity.

In New York Party Shuttle (pdf), the Board first considered whether the complaining party, a tour guide, was an employee or an independent contractor. The Tour Guide was regularly hired by Party Shuttle to provide guided tours of New York City. He also maintained his own tour company, and booked and provided tours through his own company. The Board held that Party Shuttle failed to establish that that the Tour Guide was an independent contractor. In making its decision, the Board applied a common law test that considers a multitude of factors and places the burden on the employer to establish independent contractor status. In this case, the Board found that Party Shuttle failed to establish that the tour guide as an independent contractor.

After determining that the Tour Guide was an employee, the Board turned to the next issue, the Tour Guide’s termination.

Continue Reading NLRB Finds Discussions With Employees of Another Employer Can Constitute Protected Activity

This post was contributed by Andrew L. Levy, Esq., a Member in McNees Wallace & Nurick LLC’s Labor and Employment Practice Group.

The Occupational Safety and Health Administration (“OSHA”) recently released a Letter of Interpretation authorizing employees at non-union workplaces to designate union organizers to act as their employee representative during an OSHA inspection. The following is an excerpt from the Letter of Interpretation, the full version of which is available here:

Question:         May workers at a worksite without a collective bargaining agreement designate a person affiliated with a union or community organization to act on their behalf as a walk around representative?

Answer:           Yes . . . [a] person affiliated with a union without a collective bargaining agreement or with a community organization can act on behalf of employees as a walk around representative so long as the individual has been authorized by the employees to serve as their representative.

Continue Reading Interpretation Letter Permits Union Organizers to Be Employee Representatives during OSHA Inspections at Non-Union Worksites

In a recent decision involving employee social media activity, the National Labor Relations Board held that a high-end clothing boutique in San Francisco violated the National Labor Relations Act when it terminated employees who complained on Facebook about working late at night in an unsafe neighborhood. The Board also found that a policy in the employer’s handbook prohibiting disclosure of wage and compensation information was unlawful.

The employees at issue in Bettie Page Clothing (pdf) raised concerns to the store manager and others about the store’s hours, which required that the employees close the store after dark. The employees were concerned about being harassed by "street people" after closing up. When the employees’ internal complaints were not successful in having the store hours changed, the employees criticized the store manager during multiple discussions on Facebook. Shortly after the posts, the employees were terminated.

The employees filed a complaint with the Board challenging their terminations. The Board affirmed the decision of an Administrative Law Judge (ALJ), holding that the employees’ complaints and sarcastic remarks about the store manager on Facebook were a discussion about the terms and conditions of employment. The Board stated that the discussions about the manager’s refusal to address their concerns over store hours were "classic" concerted protected activities, and therefore, the employees’ terminations based on those discussions were unlawful. The Board ordered the employees reinstated.

In addition, the Board affirmed the decision of the ALJ finding that the policy in the employer’s handbook that prohibited the disclosure of wage and compensation information violated Section 7 of the Act. The Board ordered the employer to rescind the policy.

As we have discussed in the past, the Board continues to take a hard line when it comes to employee discipline for social media activity. The Board has made clear its position that discussions on Facebook are the equivalent to discussions around the water cooler, but I am not sure I agree. For example, discussions around the water cooler typically do not create electronic records and have a worldwide audience. Only time will tell whether the Board’s decisions in this area will be affirmed by the courts.

Please also keep in mind that it appears that the Board has been reviewing employer policies with increased scrutiny. If you haven’t done so already, it is a good time to proactively review your policies to ensure compliance with the Act.
 

McNees Wallace & Nurick LLC’s Alcoholic Beverage and Liquor License Practice Group recently published a Liquor Law Update, which can be accessed by clicking here.  The Update contains an article on employee tip pools that readers may find interesting. 

Whether you need to acquire a liquor license, sell a liquor license, keep a liquor license, move a liquor license, expand the use of a liquor license, restrict a liquor license, or just need some advice about what you can do with a liquor license, McNees attorneys in the Alcoholic Beverage and Liquor License Practice Group are ready and able to assist you. We are familiar with the workings of both the Pennsylvania Liquor Control Board (PLCB) and the Ohio Department of Commerce, Division of Liquor Control (DOLC), and routinely interface with personnel at PLCB and DOLC.

This post was contributed by Bruce D. Bagley, Esq., a Member in McNees Wallace & Nurick LLC’s Labor and Employment Practice Group.

On May 7, 2013, a three-member panel of the U.S. Court of Appeals for the DC Circuit vacated the NLRB’s Notice Posting Rule, originally issued by the Board in August 2011. The Rule required that virtually all private-sector employers post a Notice to Employees, informing employees of various rights under the National Labor Relations Act (Act), such as the rights to engage in union organizing, form or join a union, and strike. The Notice also described various actions by employers or unions that would be illegal under the Act.

The Rule was immediately subject to legal challenge. Notably, the National Association of Manufacturers (NAM) challenged the validity of the Rule in the U.S. District Court for the District of Columbia. In March 2012, the District Court struck down several provisions concerning how the Rule would be enforced by the Board but ultimately held that the Board did have legal authority to promulgate the Rule. Thereafter, NAM appealed the District Court’s decision to the D.C. Court of Appeals. Meanwhile, another federal District Court, in South Carolina, had vacated the Rule in its entirety in April 2012. The NLRB appealed that decision to the Fourth Circuit Court of Appeals, where it remains pending at this time.

Continue Reading NLRB’S Notice Posting Rule Invalidated by DC Court of Appeals

 This post was contributed by Joseph S. Sileo, Esq., a new addition to McNees Wallace & Nurick LLC’s Labor and Employment Law Practice Group.  McNees recently welcomed Joe, Jennifer LaPorta Baker and Jennifer J. Walsh in Scranton, Pennsylvania.

As employers know all too well, an employee who is injured in connection with work can receive workers’ compensation benefits simply by establishing that the injury occurred in the course of employment and resulted in a loss of wages. Proof of employer negligence or fault is not required. In exchange for this benefit, workers’ compensation is generally the "exclusive remedy" for employees who sustain work-related injuries.   In other words, injured employees are not permitted to sue their employers for negligence in connection with their injuries. This exclusive remedy reflects the public policy bargain between employers and employees underlying Pennsylvania’s workers’ compensation system, by which workers give up the right to bring personal injury suits against their employers in court in exchange for the guaranty of workers’ compensation benefits for work-related injuries. 

Pennsylvania’s Workers’ Compensation Act does not, however, prevent injured employees from taking legal action against third parties, such as an employer’s clients, customers or vendors. For example, an employee who is injured while working on the property of an employer’s client may, in some circumstances, file a workers’ compensation claim against his or her employer and file a lawsuit against the client for negligence. 

A recent decision by Pennsylvania’s Supreme Court confirms that employers can take steps to prevent such employee-initiated third party lawsuits relating to injuries covered by workers’ compensation. In Bowman v. Sunoco, a security guard employee was injured during work when she fell on an icy sidewalk at a facility owned by her employer’s client. In addition to filing a claim with her employer for workers’ compensation benefits, the employee also sued the client for negligence. The Court held that a disclaimer signed by the employee when she was hired – stating that she waived her rights to sue the employer’s clients for injuries covered by workers’ compensation – was valid and precluded the employee’s lawsuit against the employer’s client.   

For obvious reasons, employers have an interest in protecting their clients, customers and vendors from embarrassing, costly and time-consuming employee lawsuits. In light of the Bowman decision, employers should consider using disclaimers to prevent employee lawsuits against third parties relating to work injuries covered by workers’ compensation. Such disclaimers may be particularly useful in the case of employees who routinely have direct interaction with an employer’s customers and vendors, or who perform work at client facilities or other remote locations.

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.    

This post was contributed by Jennifer LaPorta Baker, Esq., an attorney in McNees Wallace & Nurick LLC’s Labor and Employment Law Practice Group and based in the Scranton, Pennsylvania office.

U.S. Citizenship and Immigration Services (USCIS) recently released the revised Employment Eligibility Verification Form I-9, which employers are required to use to verify the identity and employment authorization of newly hired employees. Starting May 7, 2013, employers must use the new Form I-9 (with a revision date of 03/08/13) to comply with their employment eligibility verification responsibilities. The new Form I-9 was first published by U.S. Immigration and Customs Enforcement (ICE) on March 8, 2013, and had been authorized for use, along with the previous Form. Now, use of the new Form I-9 will be mandatory.

An electronic version of the new Form I-9 is available on the USCIS website. USCIS has also released an updated Handbook for Employers (M-274) available here (pdf). A Spanish version of the new form is also available on the USCIS website for use in Puerto Rico only. Spanish-speaking employers and employees in the 50 states, Washington, DC, and other U.S. territories may use the Spanish version for reference, but must complete the English version of the form.

Employers using an electronic version of the Form I-9 should receive an updated product from their software providers. Those employers must transition electronically to the new Form I-9, or otherwise take steps to implement a compliant system for completing the new Form I-9, by May 7.

Employers who fail to use the new Form I-9 on and after May 7 may be subject to penalties issued by ICE and/or the Department of Justice.

Employers should conduct internal audits of immigration policies and protocols as necessary to assess and maintain legal compliance and reduce the significant risks and liabilities associated with non-compliance. Failure to maintain compliance may result in hefty fines and stiff penalties. Common employer violations include failure to obtain the correct employee documentation as required by federal law, as well as improperly completed I-9s. Remember, there is no “good faith” defense for I-9 paperwork violations. The best defense is to conduct annual self-audits and correct defective I-9 Forms before an aggressive government agency is at your door.

This post was contributed by Adam R. Long, Esq., a Member in McNees Wallace & Nurick LLC’s Labor and Employment Practice Group.

In 2011, the Third Circuit held that a pre-certification offer of judgment made by a defendant-employer to an individual plaintiff would not require dismissal of the plaintiff’s entire FLSA collective action, even if the offer of judgment would fully satisfy the plaintiff’s own individual claims. (Third Circuit opinion available here.) Before this decision, employers increasingly had used offers of judgment made pursuant to Rule 68 of the Federal Rules of Civil Procedure to "pick off" individual plaintiffs and defeat FLSA collective actions early in the litigation before they could be certified. The Third Circuit held that even though an offer of complete relief could moot the plaintiff’s individual claims (regardless of whether the offer was accepted), it would not defeat the broader FLSA collective action.

In June 2012, the Supreme Court agreed to review the Third Circuit’s decision on this issue. In Genesis Healthcare Corp. v. Symczyk, a 5-4 decision announced earlier this week, the Supreme Court reversed the Third Circuit’s decision and held that if the individual plaintiff’s own claims were made moot by an offer of judgment prior to certification of the FLSA collective action, the broader FLSA collective action must be dismissed. (Supreme Court opinion available here.) Justice Thomas, writing for the majority, noted that both the District Court and Third Circuit found that the defendant-employer’s unaccepted offer of full remedy made pursuant to Rule 68 had mooted the sole plaintiff’s individual FLSA claims. Justice Thomas explained that because Symczyk, the plaintiff, had not challenged this finding in a timely manner, the question of whether an unaccepted offer of complete relief mooted Symczyk’s individual claims was not properly before the Court. The Court simply accepted the Third Circuit’s position on this issue and assumed that the Rule 68 offer mooted Symczyk’s own claims. Based on this unchallenged assumption, the Court held that the FLSA collective action must be dismissed because the only plaintiff’s individual claims were moot.

In her dissent, Justice Kagan maintained that the majority decision had no effect beyond the specific case at issue, because she believed that the Third Circuit’s underlying decision on the mootness of Symczyk’s individual claims was clearly erroneous. In the view of Justice Kagan, the assumption on which the majority decision was built (i.e., an unaccepted offer of complete relief mooted the plaintiff’s individual claims) was faulty, making the Court’s holding meaningless.

Unfortunately, the Supreme Court’s decision in Genesis did not provide litigants with a definitive answer on the viability of the Rule 68 "pick off the plaintiff" strategy in FLSA collective actions. While the majority expressly held that the strategy can defeat a pre-certification collective action if the individual plaintiff’s claims truly were made moot, it did not address the underlying question of whether an unaccepted offer of complete relief actually would moot the individual plaintiff’s own claims. Justice Kagan and the three other dissenting Justices believe that such an offer would not moot the individual claims. While the Genesis decision breathes new life into the Rule 68 offer strategy for defendant-employers, the individual claims/mootness issue seemingly will continue the uncertainty for courts and litigants in FLSA collective actions.