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

PA Supreme Court Elevates State Pay Standards Above the FLSA on Fluctuating Work Week

Posted on: February 12th, 2020

By: Justin Boron

Going forward, Pennsylvania employers should be wary of relying on federal rules for their pay policies.

As a general principle, courts and regulators interpret Pennsylvania’s wage and hour laws consistently with the Fair Labor Standards Act.  But the Pennsylvania Supreme Court called this principle into question when it held that the fluctuating workweek method of calculating pay—which federal regulations expressly authorize—is not permitted under the Pennsylvania Minimum Wage Act.  See Chevalier v. Gen. Nutrition Ctrs., Inc., 220 A.3d 1038 (Pa. 2019).

The fluctuating workweek allows employers to meet their overtime obligations to nonexempt employees—under certain conditions—by paying the employee a fixed salary for fluctuating hours and paying a rate of at least one-half of the regular rate of pay for the hours worked each workweek in excess of 40.  See 29 C.F.R. 778.114(a).  But because the Pennsylvania wage law is silent on this issue, the Pennsylvania Supreme Court concluded that this method of pay calculation was not available.

The ruling itself is not breaking new ground.  Several Pennsylvania federal courts had previously held that the fluctuating workweek was not available under Pennsylvania law.  But it sounds a note of caution to Pennsylvania employers and their advisors about assuming that Pennsylvania wage law will agree with the FLSA and the regulations interpreting it.

It also could be a harbinger for shifts in interpretation of state wage laws in light of the DOL’s new proposed wage rules or rollbacks.  In fact, the Chevalier ruling came just weeks after the DOL proposed a revised version of the fluctuating workweek aimed at clarifying its application and potentially expanding its use under federal law.[1]

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

[1] https://www.dol.gov/agencies/whd/overtime/fww .

Pay History is out for New Jersey Employers, Mostly…

Posted on: February 10th, 2020

By: Justin Boron

As of 2020, New Jersey employers, in general, may no longer ask applicants past salary information.  If they do, it constitutes an unlawful employment practice.  See N.J. Stat. § 34:6B-20.  New Jersey joins more than a dozen other states, the District of Columbia, Puerto Rico, and multiple local governments that have enacted similar provisions.

But there are several exemptions, such as voluntary disclosure, internal transfers, federal law or regulation requiring disclosure.   If an employer does not fit into one of the exemptions, the employer should review and revise its applications and policies immediately.

The law imposes a civil penalty in an amount not to exceed $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each subsequent violation collectible by the Commissioner of Labor and Workforce Development.

The legislation also amended the New Jersey Law Against Discrimination to create a cause of action for violations that affect a member of a protected class, such as race or sex, so in addition to fines, violations could result in civil litigation as well.

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

The Ban is Back – New Life Given to Philadelphia’s Salary History Ban

Posted on: February 10th, 2020

By: Courtney Mazzio

Back in 2017, Philadelphia was among the early adapters of the salary history ban that we see starting to trend nationwide. However, prior to the enactment of the Philadelphia wage equity ordinance, the Chamber of Commerce for Greater Philadelphia initiated an action against the City of Philadelphia, challenging the constitutionality of the salary history ban law, arguing the portion of the law that prevents employers from inquiring about an applicant’s wage history violated an employer’s free speech rights. The Eastern District of Pennsylvania did block that inquiry rule, finding that the law as written violated the First Amendment free speech rights of Philadelphia employers.[1] However, the court upheld the reliance provision of the law, which makes it illegal to rely upon wage history to set the employee’s compensation.

On February 6, 2020, the Third Circuit Court of Appeals overturned the decision on the inquiry rule, and the wage equity ordinance will now prohibit Philadelphia employers from doing the following: (1) inquiring about a prospective employee’s wage history; (2) requiring disclosure of wage history; (3) conditioning employment or consideration for an interview on disclosure of wage history; (4) retaliating against a prospective employee for failing to comply with any wage history inquiry; and (5) relying on the wage history of a prospective employee in determining their wages unless they “knowingly and willingly” disclosed their wage history to the employer.[2]

The court reasoned that though new law does act to limit employers’ speech, it is “only because that limitation prevents the tentacles of any past wage discrimination from attaching to an employee’s subsequent salary.” Therefore, the court concluded that the goal of pay equity outweighed any limitations on free speech rights now placed on employers. Although this suit is not yet over and future legal challenges could ensue, we may start to see enforcement of this new law, so it is important for employers to think about revising their hiring practices to insure that potential employee interviews and applications do not impermissibly inquire into, or rely upon, prior compensation information. Moreover, employers should continue to remember that they may only use compensation information if the potential employee knowingly and willingly discloses the information, meaning, if the employer comes across the pay history information by another means, the employer cannot use the pay history information to inform its compensation decisions with regards to the potential employee.

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

[1] The Chamber of Commerce for Greater Philadelphia v. City of Philadelphia et al., No. 17-1548 (Apr. 30, 2018).
[2] The Chamber of Commerce for Greater Philadelphia v. City of Philadelphia et al., Nos. 18-2175 & 18-2176 (Feb. 6, 2020).

Arbitration and Class Action Waivers Upheld in ERISA Plans, but an Industry Shift Toward Arbitration Remains to be Seen

Posted on: September 26th, 2019

By: Justin Boron

The judicial trend in favor of arbitration and class action waivers continues—this time in employee benefit plans.

Last month, a Ninth Circuit Court of Appeals panel validated an arbitration and class action waiver agreement contained in an employee retirement plan, and in doing so, it overturned a 1984 precedent holding that fiduciary claims under the Employee Retirement Income Security Act (“ERISA”) could not be arbitrated.

In a pair of opinions issued in Dorman v. Charles Schwab Corp.,[1] the panel found that the reasoning in Amaro v. Continental Can Company,[2] was irreconcilable with recent opinions from the U.S. Supreme Court, including American Express Co. v. Italian Colors Rest., which had endorsed an arbitrator’s competence to interpret and apply federal statutes.[3]

The Dorman decision arose from a plan participant’s class action alleging a breach of fiduciary duty that resulted from the inclusion of Schwab affiliated investment funds in the 401k plan.  As yet another affirmation of arbitration and class action waiver agreements, it is sure to attract the attention of plan sponsors and plan fiduciaries.

But it might not necessarily be the game changer that previous class action waiver decisions have proven to be in the consumer and employment context, where companies have rushed to fold class action waivers into sales and employment agreements.

For one, several other circuit courts of appeal had already upheld arbitration agreements in plan documents.[4]  So at least in these circuits, plan sponsors have already been free to include arbitration agreements in employee benefit and retirement plans like the 401k plan at issue in Dorman.  Plaintiff also requested en banc rehearing earlier this month, so Amaro could still be revived.

Other reasons are more practical.  Including class action waivers in arbitration agreements might stave off a class action asserted in federal court.  But in contrast to their effect on wage-and-hour and consumer-protection class actions, class action waivers might not necessarily limit exposure on fiduciary claims under ERISA, which are themselves a kind of representative action brought on behalf of the plan for monetary relief.[5]  The Dorman and other appellate decisions have not expressly addressed whether a plan’s arbitration agreement could confine the action to individual monetary relief as opposed to plan-wide relief.  As a result, any judgment might benefit the plan and plan participants as a whole regardless of whether the action is styled as a class action.

Additionally, the cost savings attributed to arbitration of employment and consumer claims might not be present in ERISA claims, which are often decided on the papers in federal court. In contrast, arbitration likely requires the same amount of attorney time as in federal court, with the added costs of the arbitrator(s) and an arbitration hearing.  Combine the added costs with a limited standard of review, and it might not net a more favorable result than proceeding in federal court in a class action.

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

[1] Dorman v. Charles Schwab Corp., No. 18-cv-15281, 2019 U.S. App. LEXIS 24735 (9th Cir. Aug. 20, 2019), No. 18-cv-15281, 2019 U.S. App. LEXIS 24791 (9th Cir. Aug. 20, 2019).
[2] 724 F.2d 747 (9th Cir. 1984).
[3] 570 U.S. 228, 233 (2013).
[4] See, e.g., Williams v. Imhoff, 203 F.3d 758 (10th Cir. 2000); Kramer v. Smith Barney, 80 F.3d 1080 (5th Cir. 1996); Pritzker v. Merrill Lynch, Pierce, Fenner & Smith, 7 F.3d 1110 (3d Cir. 1993); Bird v. Shearson Lehman/American Express, 926 F.2d 116 (2d Cir. 1991); Arnulfo P. Sulit, Inc. v. Dean Witter Reynolds, Inc., 847 F.2d 475 (8th Cir. 1988).
[5] 29 U.S.C. § 1132(a)(2); 29 U.S.C. § 1109.

Interviewing on a Clean Slate: Employers’ Obligations Under Pennsylvania’s Newly Enacted Clean Slate Law

Posted on: August 26th, 2019

By: Sean Riley

Pennsylvania recently became the first state in the country to enact clean slate legislation, which provides for the automatic sealing of non-violent misdemeanor criminal records for those who qualify after a set period of time. The law is expected to seal approximately 30 million cases by June 2020 which corresponds to roughly half of the courts’ entire database. The Clean Slate Law prohibits employers from requesting an individual’s criminal history records that have been expunged or sealed pursuant to the new law and expressly authorizes an applicant to respond to an inquiry as if the offense did not occur. However, the law also provides immunity from liability for employers who hire an individual with an expunged or sealed criminal record in a civil action based upon damages suffered as a result of the employee’s criminal or unlawful actions and the individual’s suitability for employment. Accordingly, employers utilizing form applications requesting the disclosure of an applicant’s criminal history should now include a disclaimer on their applications that the candidate should not provide information about criminal conviction that has been expunged or sealed pursuant to law. While Pennsylvania is the first state to enact clean slate legislation, similar measures are catching on in other states such as Michigan and Colorado and similar legislation aiming to automatically clear certain federal records was introduced in Congress last year.

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