Recently, Adam R. Long, a Member in McNees Wallace & Nurick LLC’s Labor and Employment Law Group prepared a White Paper regarding the Top Ten Wage and Hour Developments in 2012 for Pennsylvania Employers. 

For Pennsylvania employers, 2012 was another eventful year in the world of wage and hour law. Even in the absence of new federal legislation, a number of noteworthy developments occurred at both the federal and state levels, confirming that wage and hour compliance remains a moving target for employers. This complimentary white paper summarizes ten of the more significant wage and hour developments in 2012 for Pennsylvania employers.

Click to view the entire white paper.

This post was contributed by Eric N. Athey, Esq., a Member in McNees Wallace & Nurick LLC’s Labor and Employment Practice Group.

The Patient Protection and Affordable Care Act ("PPACA") requires "large employers" (i.e., those regularly employing 50 or more full-time equivalents) to provide "affordable" health coverage of "minimum value" to "full-time employees" and their dependents. The term "full-time employee" is defined to include those who are employed "an average of at least 30 hours of service per week." Effective January 1, 2014, large employers who fail to provide such coverage to all of their full-time employees and dependents may be subject to "shared responsibility" monetary penalties. These penalties will be triggered whenever a full-time employee (or his or her dependent) of a large employer qualifies for and uses a tax subsidy or credit to purchase coverage on a health care exchange.

School districts, colleges and other educational organizations preparing to comply with PPACA should begin by analyzing whether all of their "full-time employees" (as defined in the law) are offered coverage that is affordable and of minimum value. A common question raised by schools and colleges is whether summer break periods may be counted when calculating whether a 9-month (or 10-month) employee is employed an average of 30 hours per week. Until recently, the answer appeared to be yes. However, proposed regulations issued by the Internal Revenue Service ("IRS") on December 28, 2012 state otherwise.

The new proposed regulations provide that employers may use "initial measurement periods" and "standard measurement periods" of up to 12 months in duration for purposes of calculating whether new and ongoing employees are employed for an average of at least 30 hours of service per week. However, the regulations further state that "educational organizations" may not account for "employment break periods" of at least four consecutive weeks in duration when making calculations as to average hours of service. 

The proposed regulations permit educational organizations to take either of two approaches with respect to employment break periods (e.g., summer break periods) when making determinations as to average hours of service: 1) the employment break period may be excluded when calculating average hours during the measurement period; or 2) the employee may be credited with hours of service during the employment break period at a rate equal to his or her average hours of service during non-break periods. When calculating average hours of service, no more than 501 hours of service during employment break periods are required to be excluded (or credited) by an educational organization per employee each calendar year.

Notably, shorter break periods of less than four consecutive weeks may be factored into average hour of service determinations. However, the proposed regulations make it clear that "hours of service" are not limited to hours actually worked.  The new regulations define an "hour of service" to include "each hour for which an employee is paid, or entitled to payment by the employer for a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence…." For this reason, shorter breaks will be treated as "hours of service" to the extent they are paid.

The proposed regulations contain a number of other clarifications regarding PPACA’s shared responsibility provisions; however, the "employment break period" requirements will surely be of greatest interest to educational organizations. Additional information regarding the new regulations will be posted on our blog at www.palaborandemploymentblog.com. Although the proposed regulations are not yet final, the IRS has indicated that employers may rely upon them until additional guidance is issued. The IRS has invited public comments to the new proposed regulations. Comments may be submitted in written or electronic form on or before March 18, 2013. 

Earlier this month, a federal judge in Pennsylvania ruled that the protections of the Pennsylvania Human Relations Act (“PHRA” or “Act”) do not extend to employees who neither live nor work in Pennsylvania. The PHRA is Pennsylvania’s comprehensive anti-discrimination law that promotes equal opportunity and prohibits discrimination in employment based on race, color, sex, age, religion, disability, and other protected traits.

In Blackman v. Lincoln National Corp. (pdf), plaintiff Kathy Blackman filed an employment discrimination case against her former employer alleging she was subject to discrimination on the basis of sex and age in violation of the PHRA. At the time of the alleged discriminatory act, Blackman lived in Illinois and worked in the Illinois office of a company headquartered in Pennsylvania. The judge dismissed Blackman’s PHRA claim after concluding that the PHRA does not apply to non-resident, out-of-state workers.

In reaching this conclusion, the judge noted that the sections of the PHRA addressing discrimination in employment are silent as to their application to nonresidents not working in Pennsylvania. Finding no guidance in these sections of the PHRA, the judge looked to the purpose and intent of the statute as a whole. Because the Act clearly provides that the intent of the PHRA is to protect “the inhabitants of” and “the people of the Commonwealth,” the court ruled that the PHRA does apply extraterritorially (i.e., outside of the state’s border).

In nonetheless attempting to come within the scope of the PHRA, Blackman argued that the statute applies because (i) her employer’s corporate headquarters and principal place of business are located in Pennsylvania, (ii) she worked in Pennsylvania on occasion and frequently communicated with Pennsylvania employees, and (iii) the decision to take adverse employment action against her was made by a Pennsylvania-based decision-maker. The judge rejected all of these arguments. Specifically, he noted that the relevant location for determining the application of the state anti-discrimination law is where the employee works, not the employer’s location or the location where the alleged discriminatory decision occurred. Furthermore, attending quarterly meetings in Pennsylvania and having daily interactions with employees located in Pennsylvania is not sufficient contact with the state to trigger application of the PHRA.

While Blackman forecloses extraterritorial application of the PHRA to nonresident, out-of-state workers, one important question remains outstanding: whether the Act protects only those who live in Pennsylvania or also those who work in the state but reside elsewhere. The Philadelphia-based judge declined to answer this question, but not before noting that limiting the scope of the PHRA to only those who live in the state could result in an unfair result to many New Jersey residents who come to the Commonwealth for work.

On September 20, 2011, we reported on Hispanics United of Buffalo, Inc., the first National Labor Relations Board Administrative Law Judge decision examining an employee’s discharge for social media activity. Recently, the Board made Hispanics United its second decision examining protected, concerted activity involving Facebook, and held that the employer violated the National Labor Relations Act when it discharged five employees for criticizing another employee on Facebook. Although examining a new media, the Board stated that it was relying on established precedent to find that the activity in question was for “mutual aid or protection” within the meaning of Section 7 of the Act. Accordingly, the Board affirmed the ALJ’s decision ordering reinstatement of the discharged employees.

The employees who were discharged were discussing another employee who had often criticized the job performance of her coworkers. One of those employees initiated a discussion of the criticism online, and several other employees vented in a thread on Facebook. The discharged employees essentially stated that the criticism was unfair because of staffing and other concerns. The employee who was the target of the Facebook thread complained to Hispanics United’s executive director, and after an investigation, the employees who engaged in the discussion were terminated for violated Hispanics United’s harassment policy.

The Board stated that in determining whether rights under the Act are implicated, one must consider all of the facts and circumstances. Unfortunately, this directive does not offer much guidance for employers. Needless to say, employers must continue to be careful and must evaluate all available information before discharging an employee based on his or her social media activity.
 

This post was contributed by Eric N. Athey, Esq. and Kelley E. Kaufman, Esq., attorneys in McNees Wallace & Nurick LLC’s Labor and Employment Practice Group.

With the re-election of President Obama in November, the Patient Protection and Affordable Care Act (a.k.a. "healthcare reform" or "Obamacare") survived its second major challenge in 2012. Many employers had been awaiting the outcome of the election before devoting substantial effort to long-term compliance planning. The period of "wait and see" is now over and employers are well-advised to start looking ahead to 2014, when the Act’s most significant provisions take effect. Employers should expect a steady stream of PPACA guidance and regulations flowing out of Washington over the next twelve months. The first significant post-election installment of PPACA guidance was issued on November 20, 2012 when the Internal Revenue Service ("IRS"), U.S. Department of Labor ("DOL") and U.S. Department of Health and Human Services ("HHS") jointly issued two Proposed Rules and one Notice of Proposed Rulemaking. 

 Incentives for Nondiscriminatory Wellness Programs in Group Health Plans.  Let’s start with the good news (and the easiest to explain). Since 2006, employers offering wellness programs that tie a financial incentive to the attainment of certain health outcomes have been governed by HIPAA nondiscrimination regulations. The 2006 regulations impose five basic compliance requirements for these “health-contingent” plans, including a general limit on the amount of financial incentives to 20% of the total cost of coverage under the plan. PPACA increased this limit to 30% (and  up to 50%) in 2014. A Notice of Proposed Rulemaking recently issued by the agencies addresses this increase. 

Continue Reading Healthcare Reform Update: Recent Federal Guidance Focuses on 2014

We have been getting a lot of questions from employers about how employees’ legal use of marijuana impacts an employer’s ability to enforce its drug testing policy. Most of these questions were generated by the recent actions by voters in Colorado and Washington who legalized the recreational use of marijuana in those states. While Colorado and Washington are the first states to approve the recreational use of marijuana, numerous other states have legalized the use of marijuana for medical purposes for several years. Now, however, employers are asking: what happens if an employee tests positive for marijuana under our workplace drug and alcohol policy, but says that he or she used marijuana legally either for medicinal purposes or while in a state that has legalized marijuana for all purposes?

Our answer is usually:

Continue Reading Drug Testing Policies Up in Smoke?

This post was contributed by Michael R. Kelley, Esq., Chair of McNees Wallace & Nurick LLC’s Insurance Recovery & Counseling Group.

Let’s say that you are having a Holiday party (with alcohol served) at your home, or you are a business owner and have a voluntary "company" party for your employees. If someone becomes "visibly intoxicated" at your party, are you as the host of the party liable if the visibly intoxicated guest leaves your party and injures himself or someone else? Does your homeowners or commercial liability policy cover you for defense costs and for a settlement or judgment if you get sued? What about worker’s comp coverage for your employees?

In Pennsylvania, the courts have ruled that the Dram Shop Act (which covers alcohol-related liabilities) limits liability for serving intoxicated persons to only those who serve for money, unless the servee is under 21. So, social and business hosts that are not in the business of providing alcohol for money can definitely be civilly liable for serving persons under 21 years of age. However, social and business hosts are generally not liable under the Dram Shop Act for serving alcohol to those 21 and older. But, courts leave open the possibility of a common law action for negligence if a social or business host serves a visibly intoxicated person and knows or should know that the person will be driving, or engaging in some other dangerous activity.

The answer to the insurance coverage question depends on your specific coverages. In some cases, unless you specifically purchased liquor liability coverage, your homeowners and commercial liability policies will not cover you if you are sued under either the Dram Shop Act or the common law. Check your insurance policy. If "liquor liability" is a specific exclusion, you are not covered. If the policy is silent on this, you are covered. This is an area of coverage that has evolved over time, so make sure to check your policy. We recommend having insurance for liquor liability claims if you plan to spike the egg-nog this holiday season.

If an employee becomes intoxicated and is subsequently injured after attending a "voluntary" company party, there is a question as to whether your worker’s comp policy will cover it. If the party is truly voluntary, the claim may not be covered. If, despite being "voluntary," employees are expected to attend the party and it is seen by employees has having an impact on their employment status, worker’s comp coverage likely will cover the injuries. Based on experience, courts look to find worker’s comp coverage in these scenarios and only deny coverage if employees clearly were not required to attend and attendance had no bearing on employment status.

So, what is a good social or business host to do? Make sure that your guests don’t have too much to drink this Holiday season, and, if they do, make sure that they have a safe ride home. It’s not only good sense, it’s good insurance sense too. Also, make sure you have liquor liability coverage on your homeowners or commercial liability policy – just in case.
 

This post was contributed by Kelley E. Kaufman, Esq., a Member in McNees Wallace & Nurick LLC’s Labor and Employment Law Group. A version of this post appeared in an Employer Alert published by McNees Wallace & Nurick LLC’s Labor and Employment Group in October 2012. The Employer Alert can be accessed here.

The Equal Employment Opportunity Commission ("EEOC" or the "Agency") recently released a draft of its Strategic Enforcement Plan for Fiscal Years 2012 through 2016.  The Agency has requested public comment on the Plan, which describes its strategy for targeted enforcement and the integration of administrative and legal enforcement activities.  These efforts that are meant to help the Agency meet its responsibilities in the face of increasing demand and limited resources.

Most notably for employers, the EEOC’s Plan outlines the nationwide priorities for its enforcement efforts in private, state and local government, and federal sectors.  These priorities include:

  • Eliminating systemic barriers in recruitment and hiring, which includes targeting not only class-based intentional hiring discrimination, but also facially-neutral hiring practices that have an adverse impact on certain protected groups (e.g., race, age, gender).  Those topics of particular interest to the EEOC under this initiative will include pre-employment testing, background screening, date of birth screenings in Internet applications.
  • Protecting immigrant, migrant and other vulnerable workers by targeting practices such as disparate pay, job segregation, harassment and trafficking, as well as policies that may include discriminatory language.
  • Targeting retaliation, as well as policies and practices that are designed to discourage or prohibit the exercise of rights under the anti-discrimination laws.  Retaliation claims represent the largest category of EEOC charges filed.  The Plan indicates that this initiative will, in part, also target over-broad waivers, settlement provisions that prohibit filing charges with the EEOC or providing information in EEOC and other legal proceedings, and the failure to retain records as required under the EEOC regulations. 
  • Addressing "emerging employment issues" including a variety of issues under the Americans with Disabilities Act, as amended, and those involving pregnancy leave.  Another emerging issue in the EEOC’s crosshairs include coverage for lesbian, gay, bisexual and transgender individuals under the anti-discrimination laws.  Most recently, the Agency has taken the position that discrimination based upon an individual because he or she is transgender is discrimination because of sex.  Macy v. Department of Justice, EEOC Appeal No. 0120120821 (April 20, 2012).
  • Continued targeting of harassment, including a renewed focus on national education and outreach for both employees and employers.

As the EEOC notes in its Plan, this targeted approach on clearly-identified issues and strategies "shifts the enforcement paradigm from complaint-driven to priority-driven." 

Employers should take note of the target areas, which highlight the areas on which the Agency will be focusing in the coming years – and areas on which employers should be focusing now.  Taking time to review company policies, procedures and training in these target areas now may help avoid costly and time-consuming claims in the future. 

This post was contributed by Eric N. Athey, Esq., a Member in McNees Wallace & Nurick LLC’s Labor and Employment Law Group. A version of this post appeared in an Employer Alert published by McNees Wallace & Nurick LLC’s Labor and Employment Group in October 2012. The Employer Alert can be accessed here.

The Patient Protection and Affordable Care Act (“PPACA”), otherwise known as Health Care Reform, is now 2 ½ years old. It narrowly survived its first major legal challenge with the Supreme Court’s decision in July. PPACA survived its second big hurdle with the re-election of President Obama earlier this month. While many of PPACA’s biggest requirements do not take effect until 2014, employers and health plans must be mindful of the flurry of compliance requirements that will soon take effect under the Act. Here is a quick look at the PPACA compliance issues that employers and health plans should be focused on now:

Is Your Health Plan Ready to Disclose SBCs?

This new disclosure requirement takes effect for open enrollment periods beginning on or after September 23, 2012 (or plan years beginning on or after that date). In a nutshell, insurers must now provide four-page summaries of benefits and coverage (“SBCs”) to group health plans (“GHPs”) within 7 days after a plan applies for coverage with the insurer. GHPs must, in turn, SBCs to plan participants without charge as part of any written application materials that are distributed for enrollment. Individuals also have the right to request an SBC at any time and must receive it within 7 days of the request. A sample SBC is available on the U.S. Department of Labor’s (“DOL”) website at www.dol.gov/ebsa. Additionally, a 60-day advance notice requirement now applies to “material modifications” affecting the content of an SBC; however, special disclosure rules apply in plan renewal situations. Willful failures to comply with these disclosure requirements may trigger a fine of up to $1000 per violation; however, the DOL has indicated that the agency’s focus will be primarily on compliance assistance, not enforcement, as employers work to comply with this new requirement in the coming months.

Is Your Company Prepared for W-2 Reporting of Health Coverage?

W-2 forms for 2012 (to be issued in early 2013) must report the aggregate cost of applicable employer-sponsored group health plan coverage – this includes both employer and employee cost shares. Employers filing fewer than 250 W-2 forms for the preceding calendar year are currently exempt from this requirement. Ancillary benefits such as long-term care, HIPAA excepted benefits (i.e., certain dental and vision plans), disability and accident benefits, workers’ compensation, fixed indemnity insurance and coverage for a specific illness or disease are excluded from the value to be reported. Similarly, the IRS has issued guidance allowing employers to exclude reporting of contributions to consumer-directed health plans such as HRAs and FSAs in most instances. The value of coverage under an Employee Assistance Program (“EAP”) may also be excluded if the coverage does not qualify as a COBRA benefit. The IRS has issued guidance (Notice 2012-9) approving three methods for calculating the value of coverage: 1) the COBRA applicable premium method (COBRA premium less the 2% administrative charge); 2) the premium charged method (for insured plans); and 3) the modified COBRA method (when an employer subsidizes the COBRA premium).

Continue Reading Health Care Reform Update – Five Compliance Issues Employers Should Focus on Now

On October 31, 2012, the National Labor Relations Board’s (NLRB) Office of the General Counsel issued two advice memoranda addressing at-will provisions in employee handbooks. In both cases, the NLRB concluded that the specific at-will provision could not reasonably be interpreted to restrict protected activity and, therefore, was permissible under federal labor law.

The NLRB’s guidance follows a controversial decision earlier this year from an NLRB administrative law judge (ALJ). In that decision, the ALJ held that an at-will disclaimer adopted by an American Red Cross regional unit was unlawfully overbroad to the extent it conveyed that at-will status could never be changed. Notably, Red Cross employees were required to sign a form stating “I further agree that the at-will employment relationship cannot be amended, modified, or altered in any way.” In the Red Cross matter, the ALJ found the language to be unlawful because it implied any concerted effort undertaken by employees to alter the at-will status would be futile. (We previously commented on the Red Cross decision in our October 2012 Employer Alert.)

The ALJ’s ruling in Red Cross generated significant attention and raised concerns that more challenges to the at-will language commonly included in employee handbooks would follow. The NLRB’s recent advice memos, however, provide welcome guidance and serve to allay these concerns.

Continue Reading NLRB Provides New Guidance on At-Will Employment Provisions