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

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The Central Penn Business Journal recently posted an interesting article regarding non-compete agreements - Recession Intensifies Non-Compete Enforcement:

The recession is deepening employers' interest in non-compete agreements, which curb employees from bolting to a rival company or starting their own, according to local attorneys.

The agreements have become increasingly common over the last few years, even as Pennsylvania courts have made them tougher to enforce, attorneys said.

A good non-compete agreement may be even more important during an economic downturn when the loss of a key employee could potentially impact your business beyond recession related losses.  However, a non-compete that is not enforceable will provide a false sense of security.  Last year I posted a popular article on our employment law blog that outlined some things to consider - Non-Competes: Pigs Get Fed, But Hogs Get Slaughtered.

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In his post on May 20, Matthew Grosh addressed the effect of the referendum lifting the alcohol sales ban in West Lampeter Township.  Yesterday morning an article in the Intelligencer Journal addressed some of the same issues. As there is a significant amount of local interest in this issue, I would like to provide some additional clarification regarding the process of obtaining a liquor license.

There are several types of liquor licenses available in Pennsylvania, including retail, specialty and hotel licenses. Many establishments that serve alcohol hold retail licenses, which are subject to Pennsylvania Liquor Code quota requirements. The Liquor Code limits the number of retail licenses to one per each 3,000 residents of a county. This quota often requires entities seeking to obtain a license to purchase an existing license and subsequently transfer it from the current owner. If the license is owned by an establishment in a different municipality, approval by the municipal governing body is required prior to approval by the PLCB. An inter-municipal transfer adds time and expense to the process of obtaining a liquor license.

Hotel liquor licenses are not subject to quota requirements. In order to obtain a hotel license, the licensee must meet criteria specific to hotels, including maintaining a certain number of guest rooms based on the population of the municipality. Representatives from Willow Valley have indicated that the resort will apply for a hotel liquor license. This allows Willow Valley to apply directly to the PLCB for the license, rather than having to purchase an existing license and request approval from the Township Board of Supervisors for the transfer of the license from a neighboring municipality. 

If Willow Valley begins the application process in the near future, it is very possible that it will be serving alcoholic beverages by this fall.

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On May 19, 2009, voters in West Lampeter Township overturned a ban on alcohol sales that had been in effect for 74 years. While the referendum had primarily been sought by the owners of the Willow Valley Resort, alcohol sales will now be allowed in the entire Township. Does this mean that bars and beer distributors will start popping up all over the Township? Based on our experience in representing restaurants and other liquor license holders, we do not believe such a result will occur.

In Pennsylvania, in order for anyone to open a business that sells alcohol, they must obtain a liquor license from the Pennsylvania Liquor Control Board (PA LCB). The process involves a detailed analysis of not only the owners and managers of the business in question, but also of the property in which sales are to take place. If those persons or premises do not meet the PA LCB standards, the license will not be approved.

Additionally, section 4-461 of the Pennsylvania Liquor Code generally puts a cap on the number of licenses issued in a particular county that is based on population, although there are exceptions for golf courses, bona fide hotels and other public venues. Because Lancaster County is usually at or near its cap, licenses will likely have to be purchased from another license holder, usually for a significant price. The license will then have to be transferred into the Township, which will be subject to the PA LCB's approval and the Township's zoning ordinances.

There are also protections for people who live near a proposed location for alcohol sales. For example, certain eligible individuals and institutions within a certain proximity to the location of the intended bar or restaurant can file a protest with the PA LCB. 

Realistically, it is likely that a limited number of restaurants, either existing or new, will be able to meet the standards and afford the costs described above and obtain licenses. There may even be a new beer distributor or two. However, for the reasons discussed above, a flood of bars is unlikely.

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Julie Miller will be on the faculty for the Sterling Education seminar, Landlord & Tenant Law: Beyond the Basics on June 2, 2009. This seminar is an opportunity for property managers, developers, building owners, leasing agents, landlords & tenants and other real estate professionals to continue their education.

Program Summary

"This landlord-tenant law seminar covers the rights and responsibilities of both parties in rental agreements. Our presenters, experts in the successful management of rental property, will share their experience and judgment on handling the more difficult legal and practical aspects of landlord-tenant law and provide workable answers to your questions. You will benefit from this seminar if you are involved in any aspect of property rentals."

If you are interested in attending you can register at the Sterling Education website.

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In a previous post, I described the new Pennsylvania Home Improvement Consumer Protection Act (the "Act"), which takes effect on July 1, 2009, and identified which types of contractors are required to register. If the Act applies to you, it is important that the contracts you enter into for home improvement work conform with the Act's requirements. A failure to do so will generally prevent you from being able to enforce the contract if your client fails to pay.

In order to comply with the Act, contracts must:

• be legibly written and contain the registration number of the contractor along with the Bureau of Consumer Protection's toll free number, which currently is (888) 520-6680;
• be signed by the contractor and the homeowner or their respective agents;
• lay out the entire agreement related to the work to be performed and include copies of all required notices and special clauses;
• include the date the contract is entered into and the approximate starting and completion dates;
• contain the name, address (no PO boxes) and telephone number of the contractor and any subcontractors known at the date of signing the contract;
• describe the work to be performed, the materials to be used, and provide specifications that cannot be changed without a written change order signed by the parties;
• include the total sales price due under the contract, along with any down payments and amounts advanced for the purchase of special order materials;
•  identify the current amount of insurance coverage maintained by contractor with minimum amounts of $50,000 each for personal injury liability and property damage; and
• provide owner with a "right of rescission" which allows the homeowner to rescind the contract within three business days of signing without penalty.

However, even if all of the above conditions are met, a contract will be generally voidable under the Act if it contains any of the following clauses:

• hold contractor or subcontractors harmless in matters of liability;
• waivers of government health, life, safety or building code requirements;
• confession of judgment;
•  waiver of right to jury trial or any rights under the Act by homeowner;
•  an assignment of or order for the payment of wages or other compensation for services;
•  any clause prohibiting homeowners from asserting any claim or defense they would otherwise have under the contracts;
• any award of attorney fees or legal costs to contractor;
• any provisions relieving contractor of liability connected to contractor's collection of payments or repossession of goods;

Also, a contract cannot contain an automatic or recurring renewal provision unless the contract clearly and conspicuously states a procedure through which a homeowner can cancel the renewal through written notice to contractor via first class mail that is postmarked at least three business days before the renewal is to occur. In addition, the contractor must notify, via mail, the homeowner of such right to cancel the renewal no earlier than 20 days nor late than 10 days before the renewal.

Further, an arbitration clause may be attached as an addendum, but it must strictly adhere to the form required under the Act. Finally, a fully executed copy of the contract must be provided to the homeowner on the day of signing. Please let us know if we can help if you have any questions regarding your contracts or the Act in general. Also, for more information, please see the PA Attorney General's list of related FAQs or the Building Industry Association of Lancaster County's information page.

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I recently received a question from a reader that may be of interest to others. Following is a portion of the question and my response:

I read your article on COBRA it was very informative, Could you please tell me where I can get an answer to this question. I was laid off from my job in February. I am getting COBRA under the ARRA where my former employer pays 65% of my health benefits. I also am collecting unemployment.

My former company wants me to work a few weekend for them, will I loose my COBRA benefits if I do this.

The American Recovery and Reinvestment Act (ARRA) premium assistance subsidy ends not when you become employed but only when you become eligible for Medicare or another group health plan (such as a plan sponsored by a new employer or a spouse's employer). In fact the law imposes a duty on the recipient to notify the plan if they become eligible for coverage under another group health plan or Medicare, and failure to do so can result in a tax penalty. The subsidy will also end 9 months after the first day of the first month to which the subsidy applies or when COBRA benefits are no longer available to you. 

Generally, COBRA coverage is available for 18 months after termination of employment and may end earlier if: 

• Premiums are not paid on a timely basis

• The employer ceases to maintain any group health plan

• After the COBRA election, coverage is obtained with another employer group health plan that does not contain any exclusion or limitation with respect to any pre-existing condition of such beneficiary. However, if other group health coverage is obtained prior to the COBRA election, COBRA coverage may not be discontinued, even if the other coverage continues after the COBRA election.

• After the COBRA election, a beneficiary becomes entitled to Medicare benefits. However, if Medicare is obtained prior to COBRA election, COBRA coverage may not be discontinued, even if the other coverage continues after the COBRA election.

The COBRA statute provides that eligibility for coverage ends on the date that the individual first becomes covered under any other group health plan (as an employee or otherwise) which does not contain any exclusion or limitation with respect to any preexisting condition of such beneficiary. However, this year's ARRA provides that eligibility for subsidy ends the first date that the individual is eligible for coverage under any other group plan, coverage under a flexible spending arrangement or coverage of treatment furnished by the employer, without mention of any exclusion or limitation with respect to any pre-existing condition.

I hope this answers your question, which we thought was an interesting one.