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Archive for the ‘Employment Law Blog – PA and NJ’ Category

Philadelphia’s “Salary History Ban Law” Gets Banned!

Posted on: May 7th, 2018

By: Jen Ward and John McAvoy

More than a half-century after President JFK signed the Equal Pay Act, the gender pay gap is still with us. Women earn 79 cents for every dollar men earn, according to the Census Bureau.  What will it take to bridge that stubborn pay gap? Well, some believe we can and will reduce the impact of previous discrimination by not asking new hires for their salary history. Several cities and states agree with this approach and have passed legislation that prohibits employers from asking questions about an applicant’s salary history. In the cities and states where such laws have been passed, they are not without controversy.

Philadelphia passed a similar law last year. In response, Philadelphia’s Chamber of Commerce, backed by some of Philadelphia’s biggest employers, including Comcast and Children’s Hospital of Philadelphia (CHOP), filed suit against the City of Philadelphia challenging the constitutionality of the salary history ban law, arguing the portion of the law that prevents companies from inquiring about an applicant’s wage history violated an employer’s free speech rights.

On Monday, April 30, 2018, the Eastern District of Pennsylvania made two rulings with respect to Philadelphia’s salary history ban law in the matter of Chamber of Commerce for Greater Philadelphia v. City of Philadelphia, docket no. 2:17-cv-01548-MSG (E.D. Pa. Apr. 30, 2018) (Goldberg, J.).

First, the court found that the law as written violated the First Amendment free speech rights of Philadelphia employers. In sum, the court’s ruling is that employers can ask salary history questions.

Second, the court upheld the ‘reliance provision’ of the salary history ban law, which makes it illegal to rely upon that wage history to set the employee’s compensation.  This means that Philadelphia employers can ask salary history but cannot use it as a basis to set salary.  The purpose of this is to encourage employers to offer potential candidates what the job is worth rather than based on prior salary which could have been set based on discriminatory factors.

There is a prevailing trend nationwide for salary history ban laws. To date, California, Delaware, Massachusetts, Oregon, Puerto Rico, New York’s Albany County, New York City, and San Francisco have enacted salary history ban laws, and at least 14 other states are considering following suit.  Although we anticipate future and continued legal challenges, it seems likely that laws banning salary history inquiries will continue to gain ground, particularly in more progressive states or areas where the pay disparity directly impacts a large segment of eligible voters. As such, prudent employers should prepare themselves to address this new workforce right through smart planning and proper training of employees, including managers, supervisors and HR personnel responsible for ensuring a lawful hiring process.

Want to learn more about what Philadelphia’s salary history ban law means for your business? Let us help you by analyzing your hiring practices. Please call or email the employment experts Jen Ward (267.758.6012 [email protected]) and John McAvoy (215.789.4919 [email protected]). Our firm motto and goal is “Your Problem Solved!”

PA Fed. Ct. Finds UberBLACK Limousine Drivers Maintain Independent Contractor Status

Posted on: April 30th, 2018

By: John P. McAvoy

On April 12, 2018, Uber Technologies, Inc. won its legal battle on the recurring issue of independent contractor misclassification when the Eastern District of Pennsylvania granted the company’s motion for summary judgment in Razak v. Uber Technologies, Inc., No. 16-cv-573 (E.D. Pa. Apr. 11, 2018) (Baylson, J.). In so holding, the court concluded that UberBLACK limousine drivers are not employees of Uber covered by state and federal wage laws.

Uber has been defending independent contractor misclassification cases in state and federal courts throughout the country since the company first opened its doors in 2009. Like several other ride-sharing companies, Uber has persistently maintained that its drivers are independent contractors and that, as such, the company is exempt from the state and federal wages laws of all jurisdictions in which it conducts business. Despite these salient arguments, the vast majority of courts have concluded that the workers were Uber employees subject to wage laws, indicating that a slightly different set of facts may have swayed the decision in the other direction. However, based on the Honorable Michael M. Baylson’s opinion in the Razak case, it appears this pattern has reached its natural end.

Unlike other federal and state courts that have addressed this issue, the Eastern District concluded that almost all of the factors the court considered weighed heavily in favor of classifying UberBLACK limousine drivers as independent contractors that do not enjoy the rights, benefits and securities provided by state and federal wage laws.

The Eastern District reached its decision by applying the six factor test set forth in Donovan v. Dialamerica Marketing, Inc., 757 F.2d 1376 (3d Cir. 1985); namely, (1) the degree of Uber’s right to control the manner in which the work is performed (“Right to Control”); (2) the UberBLACK limousine drivers’ opportunity for profit or loss depending on their managerial skill (“Opportunity for Profit or Loss”); (3) the UberBLACK limousine drivers’ investment in equipment or materials required for their task, or their employment of helpers (“Employee Investment”); (4) whether the service rendered requires a special skill (“Special Skills”); (5) the degree of permanence of the working relationship (“Relationship Permanence”); and (6) whether the service rendered is an integral part of Uber’s business (“Integration”). The court found that all but two of the factors (i.e., Special Skills and Integration) strongly favored independent contractor status. Accordingly, the court concluded that the UberBLACK limousine drivers had not met their burden of showing that they are employees and that Uber is their employer.

If upheld on appeal to the Third Circuit, the Razak decision could finally put to rest the issue of whether Uber drivers and workers at companies that employ similar business models are being misclassified as independent contractors under the Fair Labor Standards Act and any state wage laws that test for independent contractor status in the same or similar fashion.

If you have any questions or would like more information about this case, please contact John P. McAvoy at [email protected].

New Jersey Passes New Pay Equity Bill

Posted on: April 13th, 2018

By: Jennifer L. Ward and John P. McAvoy

On March 26, 2018, the New Jersey Legislature passed Senate Bill 104, an all-encompassing pay equity bill. Senate Bill 104, entitled the “Diana B. Allen Equal Pay Act,” expands the New Jersey Law Against Discrimination (“LAD”) beyond gender and race/ethnicity pay equality and endeavors to promote equal pay for all protected classes under the LAD. Governor Phil Murphy is widely expected to sign the measure into law effective July 1, 2018.

Substantial Changes to Pay Equity Law

Senate Bill 104 makes four particularly noteworthy changes to the State’s pay equity law, all of which substantially affect New Jersey employers.

First, and most importantly, the bill prohibits pay disparities based upon any ‘protected characteristic’ protected by the LAD. ‘Protected characteristics’ under the LAD include, but are not necessarily limited to, gender, race, creed, color, national origin, nationality, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy or breastfeeding, sex, gender identity or expression, and disability.  Employers are prohibited from paying protected class employees a lower rate for wages, benefits, and/or other compensation than employees who are not members of the protected class “for substantially similar work, when viewed as a composite of skill, effort and responsibility.”

Second, it expands the LAD’s non-retaliation provision to protect employees who seek legal advice, share relevant information with legal counsel, or information with a governmental entity, for any reason, and not solely limited to pursuing legal action or an investigation regarding equal pay.

Third, the bill extends the statute of limitations for pay equity violations to six years.  It further provides that liability continues to accrue and back pay is available for the entire period during which the violation has been continuous, subject to the now six-year statute of limitations.  The statute of limitations may be tolled by the continuing violation doctrine and/or the discovery rule.

Fourth, it significantly increases the damages that are potentially recoverable for an unlawful employment practice. Under the new bill, an unlawful employment practice occurs each occasion that an individual is affected by a discriminatory compensation decision or other practice. This includes each occasion that wages, benefits, or other compensation are paid by virtue of the decision or practice, thereby increasing damages significantly. In addition to back pay and liquidated and common law tort damages which the LAD already provided, the bill provides that a jury or the New Jersey Civil Rights Commission must award treble damages (i.e., 3x damages) when an employer violates the equal pay or expanded non-retaliation provisions of this bill. As a result, employers deemed to have committed an unlawful employment practice will be required to pay a hefty amount.

Recommendations to Employers

Employers should take steps to justify any differential in the rate of compensation paid to similarly situated employees. Under the new bill, employers may justify a differential in the rate of compensation by implementing a seniority system, merit system, or a bona fide factor other than a protected characteristic. Such factors include education, experience, training, or the quantity or quality of production so long as it is job-related, and based on a legitimate business necessity, and if the employer demonstrates that the factor is not based on, and does not perpetuate, a differential in compensation based on any protected characteristic. Employers should document any justification that warrants a differential in the rate of compensation paid.

Employers should consider engaging in attorney-client privileged equal pay studies to ensure that compensation differentials can be explained based on legitimate, non-discriminatory reasons.  Such studies should also be considered at the time that bonuses, merit increases, and other benefits are being finalized to ensure that potentially violative salary differentials are not unwittingly triggered.

Want to learn more about equal pay studies? We can help you decide whether an equal pay study is right for your company.

Please call or email Jennifer Ward (267.758.6012 [email protected]) and John McAvoy (215.789.4919 [email protected]). Our motto and goal is “Your Problem Solved!”.

Guns in Workplace: Primer for Employers in PA & NJ

Posted on: April 12th, 2018

By: John P. McAvoy

Presently and tentatively, Pennsylvania and New Jersey do not have guns-at-work laws. There are, however, gun laws in place in both states that similarly impede an employer’s ability to control the workplace; namely, the states’ right-to-carry laws.

New Jersey has some of the most restrictive right-to-carry laws in the country. For starters, the state does not allow individuals to open carry handguns. The state is also known as a “may issue” state, which means the chief police officer of a city or county, or the superintendent of the state police, has discretion in determining whether to issue a concealed weapons permit to an applicant. New Jersey law generally forbids any person to “ha[ve] in his possession any handgun …, without first obtaining a permit to carry the same.” N.J.S.A. § 2C:39-5(b). While state law provides certain exceptions to this general ban—including one for “keeping or carrying [a firearm] about [one’s] place of business, residence, premises or other land owned or possessed by him,” id. at § 2C:39-6(e), these exceptions do not allow the concealed carrying of a handgun in public without first obtaining a permit, and it is nearly impossible for an individual to obtain a handgun carry permit in New Jersey. See generally id. at §§ 2C: 58-3; 58-4; and N.J.A.C. 13:54-2.4(b) (outlining numerous screening and training requirements an applicant must satisfy in order to be eligible for a handgun carry permit, including a ‘justifiable need’ to carry a handgun). New Jersey’s right-to-carry laws are so restrictive that the state does not have or need separate laws governing firearms on private property, including parking lots, much less in the workplace. On their face, these laws make it unlawful for almost all employees to possess concealed firearms in the workplace.

Pennsylvania’s right-to-carry laws are far less exacting than their New Jersey counterparts. Unlike New Jersey, Pennsylvania law is silent on the legality of openly carrying a firearm, making it de facto to do so in all places except Philadelphia. It is also a “shall issue” state. This means that while a person needs to obtain a license to carry a handgun, the granting authority (i.e., the sheriff or police chief) has no discretion to deny an applicant provided he or she meets the necessary character and fitness requirements. See 18 Pa. C.S. § 6109. Unlike New Jersey, there is no requirement that an applicant demonstrate “good cause” for the weapon. Instead, law enforcement has 45 days to investigate an applicant’s background to determine eligibility. See id. Moreover, and with the limited exception of commonsense places designated by statute as off-limits, including schools, correctional facilities, and courts, id. at §§ 912-913, 5122; 50 P.S. § 4605; et al., any employee with a license to carry may come to work with a gun concealed on his or her person.

While Pennsylvania’s right-to-carry laws are relatively liberal, there are no state laws that force an employer or business to allow or prohibit guns on its property. While 20 states have laws that regulate whether employees have the right to transport and store licensed, concealed weapons in their locked vehicles in an employer’s parking lot, the majority of states – including Pennsylvania – do not.  Without an express statute on point, courts generally give employers the right to control the workplace. As such, employers are free to impose policies allowing or restricting the possession of weapons in vehicles parked on company property and/or in the workplace.

In 2015, the Superior Court of Pennsylvania addressed an employer’s efforts to control the workplace by enforcing its weapons restrictions policy. In Stewart v. FedEx Express, 114 A.3d 424 (Pa. Super. 2015), the Superior Court upheld the right of FedEx to terminate the plaintiff for carrying a handgun in the glove compartment of his personal vehicle while performing work for FedEx. Id. at 424. FedEx’s policy prohibits employees from having firearms or weapons on company property, in company vehicles or in company buildings, unless authorized by FedEx security. Id. at 426. In so holding, the Superior Court noted that Pennsylvania is an at-will state and rejected the plaintiff’s constitutional claim that he had an unrestricted “right to bear arms,” even at work, and reasoned that “neither the Second Amendment to the United States Constitution, nor the Pennsylvania Constitution, bestows on any person the right to carry a concealed firearm or transport a loaded firearm in a vehicle.” Id. at 428-29. Moreover, the Court noted that Pennsylvania has no right-to-carry law that restricts employers from prohibiting firearms on their property or while performing work duties. Id. at 429.

Pennsylvania and New Jersey are ‘employment at-will’ states; meaning, employers may generally terminate an employment relationship at any time and for any reason. Therefore, employers in both states are free to terminate an employee for any reason regardless of whether there is a specific policy on point. Nevertheless, it is a good idea for employers in Pennsylvania and New Jersey to follow FedEx’s example and take similar steps to control the workplace.

Pennsylvania employers in favor of guns in the workplace may impose policies relative to same. These policies should detail the type of weapons permitted in the workplace and in vehicles parked on company property, and state that the company policy is subject to the licensing requirements of state law. These policies should also set forth the employer’s expectations with respect to the handling and storage of weapons on company property and in the workplace. To limit any potential confusion with respect to the company’s expectations and what is and is not permissible, it is recommended that employers make their policies as detailed as possible.

New Jersey’s right-to-carry laws are so restrictive that is almost always unlawful for an employee to possess a firearm in the workplace. As such, most New Jersey employers cannot authorize their employees to possess a firearm in the workplace without violating state law. However, to avoid any ambiguity and as an added layer of protection from liability, New Jersey employers may also adopt policies to better control the workplace.

It is important for Pennsylvania employers opposed to the idea of guns and other weapons in the workplace take steps to further their interests. To that end, Pennsylvania employers may implement policies that prohibit employees from having firearms or weapons on company property, in company vehicles or in company buildings. Absent such policies, there is nothing prohibiting a properly licensed Pennsylvania employee from bringing his or her concealed gun to the workplace.

It is recommended that the policies adopted and implemented by employers opposed to guns and weapons in the workplace in both states clearly explain that all employees, including those with licenses to carry, are forbidden from having firearms or weapons on company property, in company vehicles, or in company buildings, unless expressly authorized by the employer. It is also a good idea for these policies to provide that violation of the company’s weapons policies is grounds for immediate termination, as it would make the process of terminating an employee for-cause much cleaner and could allow the employer to save on future litigation and unemployment benefits costs associated with the termination. This is because employees that are terminated for-cause are generally ineligible to receive unemployment benefits and will have a harder time asserting a meritorious wrongful termination lawsuit against their former employers.

Given this is a rapidly changing and developing area of the law, it is also suggested that employers charge someone in their human resources and/or compliance departments with staying current on the gun control regulations. Absent immunity, complying with a law that allows employees to bring concealed firearms to the employer’s property can increase legal risk. In contrast, noncompliance with a gun law can lead to civil liability or criminal penalties in some states. Therefore, it is important that employers stay apprised of the rapidly changing gun laws of each state in which they conduct business. The person charged with this responsibility should understand the impact the new gun control law might have on the business and recognize what, if any, changes in the law require an amendment to company policies.

If you have any questions or would like more information, please contact John McAvoy at [email protected].

Governor Wolf Proposes New Overtime Rules for Pennsylvania

Posted on: February 20th, 2018

By: Christopher M. Curci

Employers may recall the Obama administration’s efforts in 2016 to increase the overtime rule salary exemption from $23,600 annually to $47,476 annually.  By way of background, employers are required to pay overtime to employees who work over 40 hours in a given workweek.  However, many “white collar” employees are exempt from the overtime rules if their salary is above the $23,600 annual threshold.

The Obama administration’s proposed changes in 2016 caused quite a hubbub, finding strong support from pro-employee groups and strong opposition from pro-business groups.  Ultimately, the proposed changes were struck down by a federal court and the Presidential administration turned over to President Trump, largely mooting the issue.

However, Pennsylvania employers should be aware that Governor Wolf recently announced a similar change to Pennsylvania’s wage and hour laws as part of his “Jobs That Pay” initiative.  Governor Wolf’s proposal calls for increasing the salary exemption to $31,720 annually in 2020, $39,832 annually in 2021, and $47,892 annually in 2022.  Thereafter, the salary threshold will continue to increase every three years.

The Governor’s office estimates the proposed changes will increase the wages of 460,000 workers in Pennsylvania.  While the proposed changes have not yet been passed and would not take place for some time, employers should always be aware of the potential for significant change in wage and hour laws.  It is important that employers plan well in advance for such significant change to manage their own business finances and avoid costly wage and hour violations.

Christopher M. Curci, Esq., is a Pennsylvania and New Jersey Labor and Employment Attorney and member of Freeman Mathis & Gary’s Labor and Employment Law National Practice Section.  He represents employers in litigation and advises clients on all aspects of employment law.  If you need help with this or any other employment issue, he can be reached at [email protected].