CLOSE X
RSS Feed LinkedIn Instagram Twitter Facebook
Search:
FMG Law Blog Line

Posts Tagged ‘Pennsylvania’

Coffee, Water, Less Than 20 Minutes

Posted on: June 19th, 2018

SCOTUS KICKS THE CAN ON SHORT BREAKS COMPENSATION

By: John McAvoy

On June 11, 2018, the U.S. Supreme Court refused to entertain the appeal of a Pennsylvania employer that could have resolved the emerging split of authority between the federal appellate courts and the U.S. Department of Labor (DOL) as to the compensability of employees’ short rest breaks.

In American Future Systems, Inc. d/b/a Progressive Business Publications v. R. Alexander Acosta, Secretary, U.S. Department of Labor, the Secretary of Labor filed suit against Progressive Business Publications, a company that publishes and distributes business publications and sells them through its sales representatives, as well as the company’s owner, alleging they violated the Fair Labor Standards Act (FLSA) by paying their salespeople an hourly wage and bonuses based on their number of sales per hour while they were logged onto the computer at their workstations, and by not paying them if they were logged off for more than 90 seconds.

The U.S. District Court for the Eastern District of Pennsylvania previously found that the employer’s policy had violated the FLSA, relying on a DOL regulation which states that “[r]est periods of short duration, running from 5 minutes to about 20 minutes, are common in industry.  They promote the efficiency of the employee and are customarily paid for as working time.  They must be counted as hours worked.”  In so holding, the District Court found that the employer was liable for at least $1.75 million in back wages and damages.

On appeal to the Third Circuit Court of Appeals, the employer argued that that it provided “flex time” rather than “breaks,” which allowed workers to clock out whenever they wanted, for any reason.  In other words, that the employees were not “working” after they logged off of their computers since they could do anything they wanted, including leaving the office.  The appellate court rejected this argument, reasoning that to dock the pay of employees who can’t manage a bathroom sprint is “absolutely contrary to the FLSA,” and affirmed the lower court’s decision.

The Third Circuit’s reliance on DOL regulation was contrary to the holdings of some of the other circuit courts which opted to assess the circumstances of the break in lieu of interpreting the DOL regulation as a bright-line rule that fails to take into consideration the facts of a particular situation.

The employer asked the U.S. Supreme Court to clarify how compensability for breaks should be determined.  Citing the circuit split, the employer posited that the question of break pay should be determined by assessing the circumstances of the break, rather than adopting the DOL regulation as a bright-line rule.  In its reply brief, the DOL fervently defended its regulations and denied the existence of the alleged circuit split, arguing that “hours worked [are] not limited to the time an employee actually performs his or her job duties.”  Unfortunately, this remains an issue for another day as the Supreme Court refused to hear the case and/or resolve the alleged split.

Absent a decision from the Supreme Court to the contrary, employers in Pennsylvania, New Jersey, and Delaware are bound by the Third Circuit’s decision. As such, employers in these states must continue to comply with DOL regulations with respect to the compensability of short breaks.

Fortunately, the applicable DOL regulations are designed to protect employers’ rights. For starters, the regulations recognize that meal periods serve a different purpose than coffee or snack breaks and, as such, are not compensable.  Second, an employer need not count an employee’s unauthorized extensions of authorized work breaks as hours worked when the employer has expressly and unambiguously communicated to the employee that the authorized break may only last for a specific length of time, that any extension of the break is contrary to the employer’s rules, and any extension of the break will be punished.

Although an employer will have to compensate an employee who repeatedly takes unauthorized breaks lasting less than 20 minutes in order to comply with the Third Circuit’s ruling and the applicable DOL regulations, the employer is nevertheless free to discipline the employee for such indiscretions by whatever means the employer deems appropriate, including termination.

Prudent employers should prepare themselves to address such issues through smart planning and proper training of employees, including managers, supervisors and HR personnel to ensure the employer’s break, discipline, and termination policies and procedures comply with all applicable DOL regulations.

Want to know whether your company’s break, discipline, and termination policies and procedures comply with DOL regulations? Let me help. Please call or email me (215.789.4919; [email protected]).

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].

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].

When Appealing to the Environmentally-Friendly Consumer Results in RICO Litigation

Posted on: April 6th, 2018

By: Justine A. Baakman

With the push toward production of environmentally friendly motor vehicles driven primarily by consumer demand, vehicle manufacturers have been forced to rapidly adapt vehicle design and marketing strategies.  Appeals to the environmentally conscious consumer often involve touts of vehicle emissions test results with the goal of elevating one’s vehicle above the competition through achieving a lower result than any vehicle on the market.  The necessity to meet consumer demand in this respect has left vehicle manufactures open to suit by consumers unsatisfied with the emissions performance of their vehicles as compared to those advertised by vehicle manufactures.

BMW North America is the latest vehicle manufacturer facing such litigation.  In a class action federal suit filed by consumers residing in Pennsylvania, Maryland, and Colorado, BMW faces allegations of fraud, misrepresentation, and violation of consumer protection and unfair trade practices laws in relation to its emissions test results advertising of its 2009-2013 X5 xDrive 35d models and its 2009-2011 330d models.  BMW faces allegations that the subject models emit significantly higher levels than those advertised to consumers.

BMW has also been accused of violating the Racketeer Influenced and Corrupt Organizations Act (RICO) arising from allegations that it installed emissions cheat devices on the models at issue to render lower emissions test results, and in turn, appeal and attract environmentally conscious consumers to its vehicles.  Additional allegations include that the models at issue emit emissions at 27 times higher than the maximum level allowed by the Environmental Protection Agency, and that BMW colluded with a vehicle parts maker to attain the results advertised to consumers.

For further information or for further inquiries involving commercial liability, you may contact Justine Baakman of Freeman Mathis & Gary, LLP, at [email protected].