Employment - Pennsylvania Law Monitor

Pennsylvania Senate Amends Procurement Code to Provide for Verification of Legal Employment Status

Henry E. Van Blunk — Thu, 26 May 2011 08:43:23 -0500

The Pennsylvania Senate approved legislation on Tuesday, May 24, 2011 that would require contractors and subcontractors to verify legal employment status for all employees working on public building projects.

Senate Bill 637, which passed 47-7, makes use of the federal E-Verify system, operated by the Department of Homeland Security, mandatory to confirm that all employees are eligible to work in the U.S.

Employers would be required to submit employment verification statements to the Pennsylvania Department of Labor and Industry prior to beginning work on any public contract. The Secretary of Labor and Industry will provide the form of the verification. Additionally, Contractors will be required to provide to the public entity with the verification statement before it can commence work for the public entity. Any subcontractor will be required to provide a verification statement to the Contractor prior to commencing work on a public building project and the Contractor will provide a verification statement to the public entity for all subcontractors it uses or intends to use on the public building project. The verification statements will contain a certification signed by the Contractor or Subcontractor, as the case may be, that the information in the verification is true and correct and that submission of false or misleading information shall subjection the person signing the verification to sanctions.

The following constitutes a violation of this provision:

Employment of an employee on a public works project whose eligibility has not been verified through the federal E-Verify system.
Use by a Contractor of a Subcontractor on a public works project prior to the submission by the Subcontractor of a verification statement.
Commencement of work by a Subcontractor on a public works project prior to the submission by the subcontractor of the verification statement.
Making a false statement or misrepresentation in a verification statement.

Penalties for violation of this provision can be a fine, cancellation of the contract and possible debarment or suspension for one year. A Contractor will be immune from sanctions if it in good faith relies upon the federal E-Verify system and was provided with incorrect information.

We will follow this legislation and advise of any amendments and if the Governor signs this legislation into law.

Avoiding Unemployment Compensation Claims When Considering Reduction In At-Will Employee Compensation

Kenneth Ferris — Mon, 13 Apr 2009 08:05:53 -0500

A downturn in an industry can often highlight the least productive of a company’s employees at a time when it also becomes necessary to run a much leaner operation in order to remain in business. As an employer, you may be tempted to reduce the compensation of particular employees in order to maintain overall financial viability. At the same time, you should also be mindful that a reduction in compensation that constitutes a “substantial reduction” can give an employee a “necessitous and compelling” cause to voluntarily terminate employment without waiving the employee’s eligibility for unemployment compensation.

There is no bright line in Pennsylvania that gives an employer clear guidance as to what constitutes a “substantial reduction” in pay – in fact, cases applying the “substantial” reduction test have been clear in stating and restating only that there is no numerical test defining what constitutes “substantial,” and that each and every Unemployment Compensation Claim asserting a necessitous and compelling cause for voluntary separation in response to a reduction in compensation will be measured by its own facts and circumstances. What is clear is that the Courts do not want to give employers a hard numerical “safe harbor,” which would likely encourage employers to reduce employee compensation by the full allowable amount regardless of the facts and circumstances of each case, advantaging management over employees in the ongoing battle over compensation.

Ultimately, the overwhelming majority of Unemployment Compensation Claims cases are won or lost at the Unemployment Compensation Board of Review level. This means that it is vital that an employer meticulously and regularly document position-specific employee duties, individual employee performance and compensation arrangements in order to establish a factual record supportive of the employee’s position at a Review Hearing. Although the law in Pennsylvania regarding “substantial reduction” in employee compensation is unclear, when it becomes necessary to reduce employee compensation, an employer can take preemptive countermeasures to put a company in the most favorable position to avoid the negative aspects of a successful Unemployment Compensation claim against the company.

Significant Changes to Family Medical Leave Act Took Effect January 16, 2009

Matthew P. Jacobs — Sun, 15 Mar 2009 08:47:39 -0500

On November 17, 2008, the United States Department of Labor issued final regulations that made significant changes to the Family Medical Leave Act (“FMLA”). Employees are covered by FMLA if they have worked for their employer for at least 12 months, have worked for at least 1,250 hours over the previous 12 months, and work at a location where at least 50 employees are employed by the employer within a 75 mile radius. What follows is a summary of new regulations that took effect January 16, 2009.

Notice Provisions
Employers covered by FMLA are required to notify employees that they are a FMLA covered employer. This can be done by providing a notice to the employee upon hiring the employee or by providing some other form of written notice.

When an employee requests leave under FMLA or the employer has reason to believe that the nature of employee’s leave may qualify under FMLA, the employer must provide the employee with an eligibility notice, a rights and responsibility notice and a designation notice. Sample forms are provided in the final regulations. The final regulations state that the eligibility and designation notices must be provided within 5 days of the request of the employee or when the employer had reason to believe that the employee’s leave may qualify under FMLA.

The final regulations also make some changes to the time frame by which employees must give notice to their employer. Employees must still provide 30 days’ advance notice of the need for leave, however, if 30 days is not possible, the employee must give the employer notice as soon as possible, which is defined as the same day or the next business day after the need for leave becomes known to the employee.

Breaks in Service by Employee
In determining whether or not the employee meets the 12 month employment requirement set forth above to be eligible for FMLA leave, employment periods preceding a break in service of more than seven years are not counted, unless the employee’s break in service was because of a required military service obligation, or because an agreement by and between the employer and the employee guarantees the employer will rehire after the employee experiences a break in service.

Defining the Twelve Month Period in Which an Eligible Employee Can Take the Twelve Weeks of FMLA Leave
The employer can use one of the following four methods for defining the 12-month period for FMLA leave:

The calendar year;
Any fixed 12-month period;
A 12-month forward period measured forward from the date of an employee’s first day of FMLA leave; or
A rolling 12-month period measured backward from the date of an employee’s first day of FMLA leave.

Military Leave Regulations
The final regulations define what constitutes “qualified exigency” and “military caregiver” leave.

Qualified Exigency Leave
This leave allows an employee to take up to 12 work weeks of leave arising out of the employee’s spouse, son, daughter or parent being on active duty or having been notified of an impending call or order to active duty in the armed forces. The regulations define the term “qualifying exigency” to include eight specific activities: short notice deployment, military events and related activities, childcare and school activities, financial and legal arrangements, counseling, rest and recuperation, post-deployment activities, and additional activities where the employer and employee agree to the leave.

Military Caregiver Leave
Eligible employees are entitled to take up to 26 work weeks of leave in any 12-month period to care for a spouse, child, parent or next of kin who is a covered service member with a serious injury or illness incurred in the line of duty on active duty. A “next of kin” is a service member’s nearest blood relative (other than the individual’s spouse, parent, son or daughter) in the following order of priority: blood relatives who have been granted legal custody of the service member, brothers, sisters, grandparents, aunt, uncles and first cousins.

Conclusion
Employers should immediately incorporate the changes for nonmilitary and military leave into their existing FMLA policies, adopt the new certification forms and general, eligibility, rights and responsibilities, and designation notices, and ensure that key personnel understand the changes to FMLA to ensure company compliance in the future.

An Introduction To Restrictive Covenants In Pennsylvania

Matthew P. Jacobs — Wed, 10 Dec 2008 08:41:41 -0500

In today's uncertain economic climate, it has never been more vital to protect your company and your customer base. With that said, it is critical to the success of your company to have properly drafted and appropriate restrictive covenant agreements with your employees which will adequately protect your company's customer relationships. Without having appropriate restrictive covenant agreements, your business risks the unfortunate consequence of losing customer relationships to departing employees. What follows is a brief explanation of the common types of restrictive covenants.

Non-Competition —This is an agreement whereby the company generally seeks to prohibit the employee from accepting employment in the company's industry for a certain period of time. It is common to have a non-competition agreement that is limited by geography (e.g., the employee cannot accept employment at a competing company for a period of two years in a particular state or geographic region, such as within a hundred-mile radius of the company's offices, etc.). Non-competition agreements are disfavored in Pennsylvania. Therefore, non-competition agreements must be narrowly drafted to only protect legitimate business interests of the company. Pennsylvania Courts are unlikely to enforce a non-competition agreement that the Court deems purpose is to eliminate or repress competition or to keep the employee from competing against the company so that the company can gain an economic advantage. Hess v. Gebhard & Co., 570 Pa. 148, 808 A.2d 912 (2002).
Non-solicitation —This is an agreement whereby the company does not seek to prohibit the employee from accepting employment in the same or similar industry, but rather generally seeks to prohibit the employee for a certain period of time from soliciting to render or rendering services to company customers, wherever located. The non-solicitation covenant can be modified to limit or expand the customer prohibition to past and current customers, and prospective customers reasonably identified by the company prior to the employee's termination. Like non-competition agreements, non-solicitation agreements must also be reasonable. Pennsylvania Courts will look to limit or will not enforce non-solicitation agreements it deems unreasonable. Pennsylvania Courts have held that a covenant that an ex-employee may not "solicit, divert or take away" customers of a company allows the employee to accept business from the customers of the company, as long as the customers seek out the ex-employee. Merrill, Lynch, Pierce, Fenner and Smith, Inc. v. Moose, 365 Pa.Super.40, 528 A.2d 135 (1987). Both non-competition and non-solicitation agreements are intended to protect the company's legitimate business interests, most important among them being its customer relationships. The primary difference is whether the employee will be prohibited from seeking or accepting gainful employment in the same industry as that of the company (i.e., non-competition), or the employee will be permitted to become employed in the same industry, but not with the benefit of the company's customers or employees (i.e., non-solicitation).
Non-disclosure—This is an agreement that protects information that the company finds important to its business. Non-disclosure agreements prohibit the employee from disclosing or using information of the company, other than for purposes that benefit the company. Often non-disclosure agreements require that the employee return all property of the company upon termination of employment. While often used to define the scope of "confidential information", all states have laws that prohibit an employee or former employee from disclosing confidential information of the company, regardless of whether or not there is an agreement between the company and employee covering the confidential information.