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

Employers and wellness advocates have long been confounded by the complex gauntlet of federal laws and regulations that must be considered when structuring wellness programs. HIPAA’s non-discrimination requirements, the Genetic Information Nondiscrimination Act ("GINA") and, perhaps most daunting, the Americans with Disabilities Act ("ADA") are among the laws that come into play when an employer is considering its wellness plan options.

Perhaps the most closely watched legal issue concerning wellness programs is this: May an employer offer a health coverage premium discount to those employees who complete a "health risk assessment" ("HRA")? Or, put another way, may employees who choose not to complete an HRA be subject to a premium surcharge? HIPAA regulations clearly allow employers to offer "bona fide wellness programs" with limited premium discounts; however, tying a discount to completion of an HRA presents a potential rub under the ADA. 

Continue Reading Federal Appeals Court Gives Wellness Program a Clean Bill of Health

This post was contributed by Rick L. Etter, an associate in McNees Wallace & Nurick LLC’s Labor and Employment Group.

The National Labor Relations Board recently issued a decision holding that an employer violates the National Labor Relations Act by establishing workplace investigation procedures, policies, or forms that attempt to prohibit employees from discussing ongoing workplace investigations with their coworkers. Specifically, the Board concluded that such a rule violates Section 7 of the NLRA, which protects employees’ rights to engage in “concerted activities” for their mutual aid and protection.

In Estrella Medical Center, the employer established a standard investigation process that included the reading of six introductory statements before each witness interview. One of the six statements was a confidentiality statement instructing the witness that he or she was prohibited from discussing matters related to the investigation until the investigation was complete. The Board determined that the employer failed to establish that its interest in protecting the integrity of the at-issue investigation outweighed the employee’s Section 7 rights because the employer developed a “blanket approach” of reading this statement before every interview. The Board explained that it is the employer’s burden to determine – on a case-by-case basis – whether the circumstances of each specific investigation are such that witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, or there is a need to prevent a cover up. Only when one of these concerns is present will the employer’s interest in protecting the integrity of the investigation outweigh the employees’ Section 7 rights.

As a result of this decision, it would be prudent for all employers – union and non-union – to review their investigation policies, procedures, and forms to ensure that they cannot be interpreted as creating a blanket prohibition against employee discussion of workplace investigations.

Under the Pennsylvania Workers’ Compensation Act (“Act”), employers are required to maintain workers’ compensation insurance coverage. Generally, the employer’s obligation extends only to maintaining coverage for its employees, as that term is defined by law. Independent contractors are not eligible for workers’ compensation benefits under the Act.

However, Section 302(a) of the Act provides that an entity may be deemed a “statutory employer” as to independent contractors of a subcontractor who fails to maintain workers’ compensation insurance. Specifically, an entity that engages a subcontractor to perform work regularly a part of the entity’s business is secondarily liable for the payment of workers’ compensation benefits to the subcontractor’s employees.

Earlier this year, the Pennsylvania Supreme Court issued an opinion expanding the scope of statutory employer liability under the Act. The case was Six L’s Packing Company v. Workers’ Compensation Appeal Board (Williamson) (opinion).

Continue Reading State Supreme Court Extends Workers’ Compensation Liability to Subcontractor’s Employees

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

As in most types of class-based litigation, plaintiffs in Fair Labor Standards Act (FLSA) collective actions typically seek certification of as broad a class as possible. As the number of potential class members grows, so does the size of the employer’s potential liability and the plaintiffs’ leverage to obtain a large and lucrative settlement. One way to broaden the class size is to include employees of the employer’s sister companies in the class, under the theory that the sister companies’ parent company qualifies as the plaintiffs’ "joint employer."

In the context of an FLSA collective action, the Third Circuit recently considered and established the test to be used to determine whether a parent company qualifies as the "joint employer" of its subsidiaries’ employees under the FLSA. In In re Enterprise Rent-a-Car Wage & Hour Employment Practices Litigation (pdf), plaintiff Nickolas Hickton, a former assistant branch manager employed by Enterprise-Rent-a-Car Company of Pittsburgh ("Enterprise Pittsburgh"), pursued a nationwide FLSA collective action claiming that he and other Enterprise assistant branch managers were misclassified as exempt and owed overtime wages under the FLSA. In support of his claim for a nationwide class, Hickton alleged that Enterprise Pittsburgh’s parent company, Enterprise Holdings, Inc. ("Enterprise Holdings"), was his and the other class members’ "joint employer." Enterprise Holdings is the sole shareholder of Enterprise Pittsburgh and 37 other domestic subsidiaries that rent and sell vehicles and conduct other business under the "Enterprise" brand name.

Enterprise Holdings does not rent or sell vehicles, but rather provides optional administrative services and support to its subsidiaries, including business guidelines, employee benefit plans, and insurance, technology, and legal services. Enterprise Holdings’ human resources department also provides job descriptions, best practice guidelines, training materials, a standard performance review form, and compensation guidelines to the 38 subsidiary companies. Each individual subsidiary can choose whether and to what extent it wishes to use any of these services. Each subsidiary has the same three board members, all of whom also served on Enterprise Holdings’ board. At a 2005 meeting attended by representatives of both Enterprise Holdings and its subsidiaries, Enterprise Holdings "recommended" that its subsidiaries not pay overtime wages to their assistant branch managers employed outside of California.

Enterprise Holdings moved for summary judgment, claiming that it was not a joint employer of the alleged class members and, thus, not liable for the FLSA overtime claims. The District Court granted the motion, and the Third Circuit affirmed the dismissal of the claims against Enterprise Holdings on appeal. After noting that it had not previously considered the standard for determining "joint employment" status under the FLSA, the Third Circuit reviewed the relevant statutory and regulatory language and decisions of other courts and confirmed that
 

Continue Reading Third Circuit Clarifies “Joint Employer” Test Under FLSA

On July 5, 2012, Pennsylvania Governor Tom Corbett signed into law the Public Works Employment Verification Act (“Act”), which requires state public works contractors and subcontractors to use the E-Verify program operated by the Department of Homeland Security. The E-Verify program is a free online system that compares information from an employee’s Form I-9, Employment Eligibility Verification, to government records to instantly confirm employment eligibility.

Under the Act, a contractor must, as a precondition of being awarded a contract for a public work, submit verification that it checked the status of all new employees with the E-Verify program and that, according to the program, such employees are legally permitted to work in the United States. Subcontractors who perform work for public works contractors must provide the same verification prior to starting subcontracting work. Material suppliers are not subject to the Act. 

For purposes of the new law, public works projects are those covered under the Pennsylvania Prevailing Wage Act—construction, reconstruction, demolition, alteration and/or repair work, other than maintenance work, done under contract, and paid for in whole or in part by state, municipal, or county funds where the estimated cost of the total project is in excess of $25,000.

Contractors and subcontractors who fail to verify the employment eligibility of their new employees through the E-Verify program will face sanctions, which range from a warning for a first offense to a ban from publicly funded projects for up to three years for willful violations. In addition, contractors and subcontractors who fail to submit the verification will face fines of up to $1,000. The Department of General Services is tasked with creating a verification form, enforcing the Act, investigating complaints, and conducting complaint-based and random audits of contractors and subcontractors. 

The Act goes in to effect on January 1, 2013; public works contracts executed after the effective date will be subject to the verification requirements. 

For state contractors and subcontractors, as well as other employers, who do not already use the E-Verify program, the Labor and Employment Group at McNees Wallace & Nurick is available to provide additional guidance concerning the process.

[Update: On July 5, 2012, Governor Corbett signed House Bill 1820 into law. The amendments to the PMWA permitting the use of the 8/80 method by health care institutions in the Commonwealth become effective immediately.]

The federal Fair Labor Standards Act (“FLSA”) imposes a general requirement that employers pay overtime to non-exempt employees for hours worked in excess of 40 hours per workweek. Section 7(j) of FLSA provides, however, that certain employers in the health care industry can rely on the “8/80” method of overtime calculation instead of the standard 40 hour workweek approach.

Under the 8/80 method, hospitals, nursing homes, and other medical institutions that provide residential care can pay non-exempt employees overtime for hours worked in excess of 8 hours per day or 80 hours per 14-day period. Prior to implementing the 8/80 arrangement, the health care institution must reach an agreement or understanding with its employees regarding application of the 8/80 rule.

Prior to 2010, health care institutions in Pennsylvania had a long history of relying on the FLSA’s 8/80 method. In March 2010, however, the Philadelphia Court of Common Pleas ruled that the FLSA’s 8/80 rule conflicted with the Pennsylvania Minimum Wage Act (“PMWA”). Specifically, in Turner v. Mercy Health System, the court held that because the PMWA does not explicitly provide for the 8/80 overtime payment method, the 8/80 rule is not valid under Pennsylvania’s wage and hour laws. According to the court, therefore, healthcare employers in Pennsylvania could not rely on the 8/80 method, but were required to comply with the PMWA’s strict 40 hours per workweek overtime requirement.

Continue Reading Proposed Legislation To Reverse Court Decision, Permit Pennsylvania Health Care Institutions to Rely on 8/80 Overtime Method

Last month, Pennsylvania Governor Tom Corbett signed into law an unemployment compensation ("UC") reform bill. The law, considered by many to be largely pro-employer, is designed to restore solvency to the state’s unemployment compensation trust fund by 2019. Several of the major provisions of the UC reform law are outlined below.

  • The law authorizes the Commonwealth of Pennsylvania to refinance the trust fund’s existing $3.9 billion debt by issuing bonds with a lower interest rate, which is expected to result in significant savings for employers. 
     
  • Employers’ UC tax rate will be adjusted by increasing the taxable wage base from $8,000 to $10,000 and decreasing the state adjustment factor from 1.5% to .75% incrementally by 2018. 
     
  • Last year, Act 6 of 2011 froze claimants’ weekly maximum benefit at $573 for 2012. The new law extends this maximum benefit freeze through 2019. From 2019 to 2023, this maximum weekly benefit may increase annually, but by no more than 8%.
     
  • Claimants’ partial benefit credit will be reduced from 40% to 30%; in other words, claimants who work part-time while receiving benefits will have their benefits off-set by their earnings where they earn 30% or more of their benefit.
     
  • Claimants must earn 49.5% of their base year earnings outside of their highest quarter in order to be financially eligible for UC benefits.

Employers should familiarize themselves with the UC reform law and with the changes that will go into effect over the next several years. We will continue to keep you updated on any additional developments in this area.

Earlier this morning, the United States Supreme Court issued its much-anticipated decision (pdf) on the constitutionality of the federal Patient Protection and Affordable Care Act (PPACA), the health care reform legislation signed into law by President Obama in 2010. The Supreme Court ruled that the PPACA, including the individual mandate requiring almost all Americans to buy health insurance, is constitutional.

While the Supreme Court’s decision eliminates one of the major sources of uncertainty facing employers around the country, employers must now take significant steps to comply with the PPACA’s many requirements, or face penalties. And while the individual mandate does not become effective until 2014, some of the PPACA’s requirements take effect as early as September 2012. For example, employers must be prepared to provide summaries of benefits and coverages to their employees during open enrollment. Employers will also be required to report the value of employer health coverage on IRS Form W-2 for 2012.

To help employers determine how the Supreme Court’s decision affects their businesses and benefits plans, the Employee Benefits Group of McNees Wallace & Nurick LLC will be offering two presentations in July 2012 entitled “What the Supreme Court’s Decision on Health Care Reform Means to Your Business.” These presentations will provide a practical guide to employers and other professionals who need to understand the decision and their obligations under the PPACA going forward.

Presentations will be held in Lancaster, PA, on July 13, 2012, and in Grantville, PA, on July 20, 2012. Information, including how to register, is available here (July 13, 2012) and here (July 20, 2012).

We will continue to keep you updated on any additional developments in this area.

This post was contributed by Adam R. Long, a Member in McNees Wallace and Nurick LLC’s Labor and Employment Group and Osazee Imadojemu, a summer associate with McNees. Mr. Imadojemu will begin his third year of law school at George Washington School of Law in the fall, and he expects to earn his J.D. in May 2013.

Prior to a 2006 amendment to the Pennsylvania Child Protective Services Law ("CPSL"), employers covered by the CPSL’s mandatory pre-hire criminal background and child abuse history record check requirements were limited and well defined. Specifically, the statute applied to "all prospective employees of child-care services, prospective foster parents, prospective adoptive parents, prospective self-employed family day-care providers and other persons seeking to provide child-care services under contract with a child-care facility or program." Covered employers knew that before an employee was hired, that applicant needed to obtain these background checks.

With the 2006 amendment, the prospective employees covered under the statute expanded considerably. Section 6344.2 was added to the CPSL, and it required any employee hired into a position with a "significant likelihood of regular contact with children, in the form of care, guidance, supervision or training" to obtain a Pennsylvania Criminal History Check, a fingerprint-based national criminal history record check processed by the FBI, and a Pennsylvania Child Abuse History Record Check. This includes occupations such as such social service workers, hospital personnel, mental health professionals, members of the clergy, counselors, librarians and doctors.

Pennsylvania employers with positions covered by the 2006 amendment should ensure that they identify those positions within their organizations subject to the mandatory background check requirements and that they obtain the mandatory pre-hire background checks. Many employers currently are considering whether and to what extent to conduct pre-hire criminal background checks, and Pennsylvania employers should be aware of this little-known requirement.
 

This post was contributed with the assistance of Lee E. Tankle, a summer associate with McNees Wallace & Nurick LLC.  Mr. Tankle will begin his third year of law school at William & Mary School of Law in the fall, and he expects to earn his J.D. in May 2013.

The National Labor Relations Board’s ("NLRB") Acting General Counsel ("AGC") released yet another social media report recently (pdf), the third report in the last nine months. The report summarizes the AGC’s view on seven social media policies’ compliance with Sections 7 and 8 of the National Labor Relations Act ("NLRA").  This latest report, unlike the last two reports, does provide some guidance to employers on how to craft a social media policy that the AGC would deem lawful under the NLRA. 

Importantly, Section 7 applies to all employers covered by the NLRA, regardless of whether an employers’ employees are represented by a union. Section 7 provides employees the right to collectively bargain, self-organize, form, join, and assist labor organizations as well as refrain from participation in any of these activities. Section 8 prohibits employer interference with the exercise of Section 7 rights and is violated if employer activity would reasonably tend to chill employees in the exercise of their Section 7 rights.

The AGC makes clear in the report that policies that are ambiguous as to their application to Section 7 activity, and policies that contain no limiting language or context to clarify that the policy will not interfere with Section 7 rights, will be deemed unlawful. According to the AGC, the following social media policy provisions could "chill" employee rights and are unlawful under the NLRA:

Continue Reading Three’s Company: NLRB Issues Third Social Media Policy Report