Lancaster Law Blog : Lancaster PA Lawyer & Attorney : Russell Krafft & Gruber Law Firm : Pennsylvania : Lancaster's Legal Link

• Email This
• Print
• Comments
• Trackbacks

I received a call from a very irritated client who just hired a new book keeper only to find out the new hire had just been arrested for embezzling from the same prior employer who gave her a glowing reference. Ethics aside, what are the legal parameters for giving a reference?

Frankly, misleading references involve a developing area of the law that is based on negligence theories. To be liable for negligence, you must owe a duty to someone, breach that duty, and the breach must cause damage. The best way to avoid being sued for a reference is not to give one.

No state imposes a duty on an employer to provide a reference on behalf of an employee. However, if a business chooses to provide a reference, it must do so uniformly and may be liable to the employee, other businesses or third parties if the reference is negligent. Negligent references are either inaccurate, materially incomplete, or both.

Pennsylvania law gives employers some protection in lawsuits by employees; provided, the employer acts in "good faith" when it discloses information. Lack of good faith must be established by clear and convincing evidence that the employer disclosed information:

• Knowing it was false or should have known it was false
• Knowing it was materially misleading
• With reckless disregard of the truth or falsity.
• In violation of some other contract or legal right of the employee.

However, the employer's "opinions" about the quality of work are not generally considered to be slanderous or libelous, unless the opinion implies undisclosed defamatory facts as the basis for the opinion. For example, stating that someone is dishonest is an "opinion" which implies undisclosed and potentially defamatory facts. Stating that someone did "poor quality work" does not.

• Email This
• Print
• Comments
• Trackbacks

Until July 13, 2007, Pennsylvania was the only state that did not publish its state statutes on line.  Fortunately, the General Assembly put some of the Consolidated Statutes on line in a seachable in both text and PDF format.  Before you get too excited, Pennsylvania's labor laws (Title 43) are not yet on line.The Pennsylvania Regulations have been on line for some time.  Some news coverage was given to the on line publication.  The PAPower Port has not yet been modified to reflect the change.

• Email This
• Print
• Comments (1)
• Trackbacks (1)

A federal judge struck down the City of Hazelton's ordinance which was enacted to combat criminal and social service problems blamed on the influx of "illegal immigrants" into the area. The court's 206 page opinion ruled that the ordinance violates federal constitutional protections and was pre-empted by federal immigration laws.

The ordinance call the "Illegal Immigration Relief Act" prohibited employment and apartment rentals to illegal immigrants. It subjected anyone who hired an illegal immigrant or rented an apartment to loss of their business license and significant fines. The ordinance also required Hazleton landlords to present the  City with a passport, birth certificate or immigration documents or citizenship to show that he renter was in the country legally. The names were then checked against a federal data base to determine their immigration status.

The City of Hazelton's frustration is a microcosm for the national immigration debate. According to news reports, these types of ordinances are being adopted by localities out of frustration with the lack of Congressional action to address issues created by the estimated 10 million illegal immigrants now living in the U.S.  In late June, Congress rejected the controversial Immigration Reform legislation. Cited as reasons for the bill's failure were the grant of amnesty for current illegal immigrants and the resulting cost increases in government spending (estimated at $126 billion).

The public sentiments reflected in anti-immigrant legislation will be difficult to reconcile with the predicted labor shortage in the U.S. Many groups have already bemoaned worker shortages, particularly among skilled workers. One of the best resources for putting the whole problem in perspective is Ira Wolfe's book entitled the Perfect Labor Storm, an update of which is due out in October. It is a compilation of facts about demographic trends in the global and U.S. economies in the areas of worker shortages, aging, employee turnover, obesity, education, literacy and others. Some of the many facts can be found on his website.

Juxtaposing the lack of national immigration reform, the backlash of public sentiment against immigrants and the demographic analysis of the U.S. labor market leads to very troubling conclusions which cannot be addressed by one judge's opinion striking down a local ordinance.

• Email This
• Print
• Comments
• Trackbacks

The Governor's Office announced a reduction in the U.C. tax rate. Beginning Jan. 1, 2008, the average U.C. tax rate for businesses is projected to be 4.7 percent, down from 5 percent in this year and 5.4 percent in 2006.  The average employer cost for unemployment compensation per employee is projected to drop by $28. Benefit payments will continue without reduction for the second year in a row, and the tax rate on employee wages will drop from .09 percent to .06 percent.

Pennsylvania Unemployment tax rates apply to the first  $8,000 of wages. Rates depend on several factors. The "New Employer" rate applies to employers for up to the first 2 or three calendar years. The rate amount differs for nonconstruction and construction employers and ranges from  3.7520% to 10.3984%. The "Standard Rate" applies to employers with a sporadic contribution history so that they cannot get an Experienced Based Rate. The rate level depends on whether the employer has a positive or negative reserve account balance and ranges from 6.1888% to 10.2624%.

The Experienced Based Rate applies to all other employers. An employer's experience based contribution rate is comprised of six components. The Computation Rate components are:

• Reserve Ratio Factor
• Benefit Ratio Factor
• State Adjustment Factor
• Surcharge Adjustment
• Additional Contributions Factor
• Interest Tax Factor

• Email This
• Print
• Comments (2)
• Trackbacks

It won't surprise you that I read other Blogs. There is a posting on Evil HR Lady about a new website called eBoss Watch where you can anonymously rate your boss and search other employee's ratings. I think the sight is largely an effort to capitalize on wave of "bullying" articles that have appeared lately.

The Evil HR Lady doesn’t like the site and I agree. These anonymous ratings are purely cathartic and usually don't have enough structure to give meaningful feedback. I tried to take the eBoss survey, but it was blocked by the office firewall. Major marketing oversight.

There are a whole host of management assessment tools that include employee feedback. Whether its called 360 degree feedback or some other name, it sometimes finds its way to a lawyer's desk as evidence in a termination case.

The peer feedback and evaluation contained in a 360 feedback can be powerful evidence in employment discrimination cases arising from a performance termination or reduction in force. Although the opinions expressed are entirely subjective, the structure of a 360 evaluation makes it seem objective. In the cases that I have presented 360 evaluation evidence to a judge or jury, it has been a powerful persuader because 360 feedback:

• Demonstrates that the employer had a process that was designed to help the employee improve performance.
• Includes both a numeric rating and anecdotal comments.
• Usually isn't all negative.
• Bases its assessment on a broader group of people.
• Communicates clearly and in writing.

On the other hand, I can't imagine relying on anonymous website gossip to convince someone that my boss's performance was good or bad.

• Email This
• Print
• Comments
• Trackbacks

The Department of Labor closed America's Job Bank- a national online job board- effective July 1, 2007. The decision was somewhat controversial leaving some government contractors with no good alternative to comply with OFCCP regulations mandating job posting.

The Department of Labor has not published a final rule for compliance with Mandatory Job Postings Requirement under VEVRAA. Regulations for government contractors (41 CFR § 60-250.5) require contractors to list job openings with the appropriate local employment service office. Listing openings with America's Job Bank is expressly recognized as a method for satisfying the obligation.  As an alternative, OFCCP recommends that contractors take the following affirmative steps:

• Create partnership arrangements with local and national recruiting sources for referral of qualified covered veteran applicants;
• Establish a relationship with the Local Veterans' Employment Representative or his or her designee;
• Recruit covered student veterans at educational institutions;
• Create partnership arrangements with veterans' service organizations to employ qualified covered veterans;
• Establish relationships with the Veterans Administration Medical Center job placement programs;
• Advertise job openings and recruit qualified covered veterans during company career days and/or related activities in the local community;
• Encourage subcontractors to seek qualified covered veterans for employment opportunities; and
• Contact the Local Veterans' Employment Representative when new Federal contracts are obtained, or when significant hiring will occur.

There are other solutions mentioned in Kurt Ronn's Business Week article. An alternative for Pennsylvania employers is to post with Pennsylvania CareerLink. Pennsylvania's Comprehensive Workforce Development System (CWDS) is scheduled to launch in September of 2007. The CWDS will allow employers to post profiles and job orders on line.

• Email This
• Print
• Comments (1)
• Trackbacks (1)

The OFCCP reports coordination of EO Surveys with statistical analysis techniques to predict "systemic discrimination" in order to target its compliance audits. The result from using data from 3,723 establishments that responded to the EO Survey, together with the findings from 2,651 completed compliance evaluations was that 89 cases of systemic discrimination were found.  In 2006, the OFCCP recovered a record $51.5 million for over 15,000 workers. Of the recovery, 88% was collected for cases of systemic discrimination in the application process because of unlawful employment policy or practice.

Government contractors are selected for audit in several ways including the use of a mathematical model that predicts the likelihood of a finding of systemic discrimination. The model analyzes data from five years of OFCCP compliance evaluations to formally identify and characterize relationships between reported EEO-1 workforce profiles and findings of discrimination.

I have been involved is several of these style OFCCP audits and the approach is the same. The audit is triggered by an anomaly in a business' EO Survey which shows a statistical disparity in either hires or terminations. For example, the percentage of minority applicants differs by more than 80% from the percentage of minorities hired (the four-fifths rule). The investigation into the disparity in the hiring process follows the road map set out in the OFCCP's Compliance Manual as follows:

• Email This
• Print
• Comments
• Trackbacks

Under Pennsylvania law (43 P.S. §§ 1481-1485), an employer may not discipline or discharge an employee who fails to report to work due to the closure of the roads in the county of the employer's place of business or the county of the employee's residency, if the road closure is the result of a state of emergency declared by the Governor.  The most obvious and likely scenario is a snow storm or other inclement weather.

Employers are not required to pay an employee who is a no show based on road closures. An employee who can prove the employers "knowing and intentional" violation of the law may recover lost pay, be reinstated or have discipline revoked, and may collect attorneys fees and costs.

• Email This
• Print
• Comments
• Trackbacks

The Uniform Trade Secrets Act (12 Pa.C.S.A. §§ 5301-5308) protects businesses form misappropriation of trade secrets by allowing injunctive relief for actual or threatened disclosures or recovery of monetary damages. In the case of a willful and malicious misappropriation, punitive damages may be awarded.

Trade Secrets include information, including formula, drawing, pattern, compilation, including a customer list program, devise, method, technique or process that:

• Derives independent economic value from not being generally known to, and not being readily ascertainable by a lawful means by, other persons who can obtain economic value from its disclosure.
• Is the subject of efforts that are reasonable under the circumstance to maintain its secrecy.

• Email This
• Print
• Comments
• Trackbacks (1)

The EEOC announced a $20 million settlement with Walgreens based upon "systemic discrimination" against African American retail management and pharmacy employees in promotion, compensation and assignment. In addition to the monetary relief for an estimated 10,000 class members, the consent decree prohibits store assignments based on race.

The EEOC's lawsuit is part of its Systemic Initiative launched in April of 2006 based on a Systemic Task Force Report. The Report recommends, among other things, that the agency make a "top priority" the following:

• Developing of systemic investigation plans for each District Office.                                  
• Staffing systemic investigations and litigation with agency members with specialized training.
• Creating "incentives" through performance plans to encourage investigators to "successfully identify, investigate, and litigate systemic cases."
• Linking agency charge data with EEO-1 Survey and using technology to trigger investigatory efforts and litigate cases.

According to the OFCCP Blog Spot, both the OFCCP and EEOC have made systemic discrimination and testing top enforcement priorities. However, the EEOC doesn't have a formal definition of "systemic discrimination" but enforces it as a hybrid of traditional "pattern and practice" discrimination and disparate impact. 

No matter how the EEOC tries to repackage it, pattern and practice or disparate impact discrimination cases are not new. Most cases involve a single employee or a class of employees claiming that a facially neutral employment practice had a significant discriminatory impact on a protected class of individuals. In these situations, the Supreme Court has stated that the employee must point to some specific aspect of the employment process and then must prove that the processes caused disparate impact on the protected group.

What is new is the method that the EEOC and OFCCP are going about pursuing the claims. A rudimentary statistical review of employment data provided in the EEO-1 Report or EO Survey can now lead to a government investigation and a potential class action for systemic discrimination. Some, like Mary Swanton in her article "Offensive Measures" theorize that the EEOC (not unlike the plaintiff's employment bar) is trying to get more bang for its buck by taking on larger class action type suites. When you combine this trend with the audit tactics that I will outline in my next posts, it looks ominous for employers.

• Email This
• Print
• Comments
• Trackbacks (1)

A recent government survey revealed that 8.2 percent of full-time workers admit illegal drug use during the preceding month. Use rates are even higher for some industries: restaurant workers, 17.4 percent, and construction workers, 15.1 percent.

Estimates vary on the percentage of employers that conduct drug testing. The Society for Human Resource Management said in a 2006 report that 84 percent of private employers conduct pre-employment testing, 39 percent conduct random screening of employees, 73 percent conduct for-cause testing, and 58 percent require drug tests after on-the-job accidents. On the other hand, a recent article entitled "Whatever Happened to Drug Testing" states that "Despite the growing demand for drug tests in sports and other fields, the percentage of employers with testing programs has dropped steadily since 1996, from 81% to 62% in 2004, according to the American Management Association, which sees the trend continuing."

Other commentators question the drug testing return on investment (ROI) given multiple factors like a tight labor market, the cost of testing and the pervasiveness of test beating tactics. On balance, I still recommend that employers strongly consider pre-employment drug testing for the following reasons:

• The deterrent effect that testing has on applicants; particularly, if you advertise that drug testing is a part of the application process.
• The statement it makes about your company culture: Drug Free Workplace.
• The safety, wellness and attendance benefits (although the ACLU argues that this is illusory).

Implementing a drug testing program involves a careful balance of legal and employee relations considerations. I will be developing a series of white papers for downloading from this site which outlines considerations for this and other employment issues.

• Email This
• Print
• Comments (1)
• Trackbacks

Obtaining a release from an employee that waives the myriad of federal and state employment law claims is an art and not a science. It requires balancing contradictory government regulations, harmonizing competing employee relations goals, and cajoling, a more than likely, disgruntled employee.

When a business pays money to a departing employee, it wants the matter over. However, the patchwork of government regulations and varying court decisions interpreting them make it difficult to obtain that degree of certainty. Sometimes employees challenge the validity of a release and try to pursue their claims. In some cases, regulations even allow an employee to keep the money while suing the employer.

The legal standard for obtaining a valid release generally involves assessing whether the employee's waiver of claims was "knowing and voluntary". In the case of claims under the Age Discrimination in Employment Act (ADEA), the U.S. Department of Labor used 9 pages of regulations to define when a waiver is knowing and voluntary. In other cases, Pennsylvania courts assess the knowing and voluntary release of discrimination claims based on the following factors:

• The clarity and specificity of the release language
• The employee's educational and business experience
• The time given the employee to deliberate before signing the release
• Whether the employee knew or should have known what rights he or she was giving up
• Whether the employee was encouraged to seek or sought legal counsel
• Whether there was an opportunity to negotiate over the terms
• Whether the employee was given consideration exceeding the benefits he was already entitled to receive.

• Email This
• Print
• Comments
• Trackbacks

Pennsylvania and Federal Minimum wage posters may be downloaded at the website locations listed below.  Posters must be placed in a conspicuous place in the work site where they can be seen by employees at all work site and business locations.  The DOL has a "Poster Advisor" that helps employer's identify which posters it may be required to post.  The Pennsylvania Department of Labor and Industry also has a webpage with "Mandatory Postings for Pennsylvania Employers".

Fair Labor Standards Act (FLSA) Minimum Wage Poster effective July 24, 2007

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

The immigration reform battle on Capital Hill turned into a skirmish over the EEOC's enforcement of to English-Only rules in the workplace. By a narrow 15-14 margin, a Senate Appropriations Committee voted June 28 to approve an amendment designed to prevent the EEOC from bringing new lawsuits against companies that adopt English-Only workplace rules. As is often the case, Congressional policy disputes find their way into agency funding bills.

The EEOC views English-Only Rules as potential national origin discrimination and has adopted regulations prohibiting them unless the employer can show that the rule is justified by business necessity.   According to the EEOC's COMPLIANCE MANUAL, an English-only rule is justified by "business necessity" if it is needed for an employer to operate safely or efficiently. The following are some situations in which business necessity would justify an English-only rule under the EEOC's view:

• For communications with customers, coworkers, or supervisors who only speak English
• In emergencies or other situations in which workers must speak a common language to promote safety
• For cooperative work assignments in which the English-only rule is needed to promote efficiency
• To enable a supervisor who only speaks English to monitor the performance of an employee whose job duties require communication with coworkers or customers

• Email This
• Print
• Comments
• Trackbacks

The U.S. Equal Employment Opportunity Commission (EEOC) today issued revised regulations on age discrimination in the workplace in accordance with a 2004 Supreme Court decision, General Dynamics Land Systems, Inc. v. Cline. The updated regulations, published in the July 10, 2007 Federal Register, are available on www.eeoc.gov.

• Email This
• Print
• Comments
• Trackbacks

The Pennsylvania Employment Law Blog has added another new section which spotlights a Pennsylvania business and how it confronted a workplace issue commonly faced by human resource professionals. Click on the link titled "HR Navigators: How We Did it!" on the upper right side of the page. 

Beginning July 11, 2007, we will publish a semi-monthly article authored by a human resource practitioner. The posting will discuss business solutions to common HR problems, innovative approaches to managing workplace issues, or topics of general interest. We hope to generate a discussion where ideas can be exchanged and questions answered. 

• Email This
• Print
• Comments (3)
• Trackbacks

Most HR professionals abhor their role as "fashion police" and arbiter of seemingly childish workplace skirmishes over perceived wardrobe malfunctions, odoriferous perfumes/colognes and other personal hygiene gaffs. However, ignoring these matters can land an employer in court for an alleged violation of the American's with Disabilities Act ("ADA").

A recent AP article entitled "Eau de Lawsuit: Woman sues over scent" describes an employee in the Detroit planning department who claims she is severely sensitive to perfumes and other cosmetics. She has sued the city, saying a co-worker's strong fragrance prohibits her from working. Her lawsuit under the ADA claims that her employer failed to accommodate her disability by banning perfumes in the workplace.

Seem odd? A quick review of the ADA case law shows no less that 18 reported court decisions with similar facts. In Davis v. Utah State Tax Commission, the employer was held liable for an ADA violation because it failed to engage in the interactive process to evaluate possible accommodations. In Kaufmann v. GMAC Mortgage Corp., the employer prevailed because it took steps to accommodate and the court recognized that providing a completely scent-free environment was unreasonable.

The difficult employee relations issue presented is the balancing of one employee's ADA rights with other employees' personal rights. As many employer's have learned, the ADA rights trump personal rights in the workplace. Nonetheless, employer's must avoid disclosing too much confidential medical information or allowing the disabled employee to be ridiculed or harassed for the requested accommodations.

• Email This
• Print
• Comments
• Trackbacks

The sole owner of an LLC was individually liable to the IRS for unpaid payroll taxes under a recent federal appeals court ruling in S.P. McNamee, CA-2 Docket 05-6251-cv, May 23, 2007. The owner, a sole proprietor of an LLC, failed to remit payroll taxes to the IRS. The IRS ignored the LLC status and assessed the unpaid taxes personally against the LLC's sole owner by placing a lien against his property.

The appeals court held that a single owner LLC's can elect to be treated for tax purposes as corporation or as a sole proprietor. If the LLC elects sole proprietor tax treatment than its owner is liable for unpaid taxes. If corporate tax treatment were elected by the LLC, then the owner avoids personal liability.

• Email This
• Print
• Comments
• Trackbacks

The incidents of corporate raiding and mass employee defections to competitors are on the rise as businesses scramble to find and retain high quality employees. Under any business model, it is far easier to recruit away a group of experienced employees with a "book of business" than it is for an employer to start from scratch.   Whether or not these actions are "illegal" or just aggressive competition primarily turns upon the existence of any contracts limiting competitive activities by employees and former employees.

Corporate raiding isn't just a Wall Street phenomenon. It was recently reported that Resource Bank, a Virginia based subsidiary of Fulton Financial Corporation, was hit with a defection of nearly its entire mortgage company staff to a rival lender. The employees allegedly followed two executives who are now accused of orchestrating an employee raid. The former Resource Bank executives signed employment agreements containing restrictions on soliciting employees on behalf of a rival business. This good business practice will undoubtedly form the primary basis for legal claims by Resource Bank against its competitor.

Noncompetition Agreements are invaluable in protecting legitimate business interests provided they are carefully drafted and properly executed. Such agreement typically contain some or all of the following clauses:

• Prohibitions on a former employee's competition by working for or starting a competitive business.
• Restrictions on soliciting, selling to, or providing services to customers and prospective customers of the former employer.
• Restrictions on soliciting employees of the former employer.
• Prohibitions on using or disclosing confidential business information of the former employer.

There are special legal requirements for noncompetition agreements under Pennsylvania law. As restrictions on free trade, these agreements must be:

• Necessary to protect an employer's legitimate business interest
• Entered into at the commencement of the employment relationship or supported by "additional consideration" in the form of a promotion or payment
• Reasonably limited in duration and geographic scope

On the other hand, prohibitions on disclosure of confidential information need not be supported by consideration or limited in duration. However, it is essential for an employer to define the scope of what is confidential by delineating the specific categories of material and taking steps to keep it from entering the public domain.