Tuesday, May 22, 2018

New Whitepaper: Supreme Court Okays Class Action Waivers in Arbitration Agreements

Yesterday, the Supreme Court issued an important decision regarding arbitration agreements (specifically, agreements requiring one-on-one arbitration as opposed to class or collective actions). Read all about it in my new whitepaper: Supreme Court Okays Class Action Waivers in Arbitration Agreements.

Monday, May 21, 2018

Can employers pay exempt employees an hourly wage for extra hours?

The federal Fair Labor Standards Act (FLSA) requires employers to pay employees an overtime premium (time-and-a-half) for hours over 40 worked in a workweek. Of course, there are a ton of exemptions. Generally, the exemptions depend on the employee's primary duties and require that (s)he get paid on a salary basis.

Not official use.
Can employers ask salaried exempt employees to work extra hours in exchange for extra pay (without losing the exemption)? This always seemed a little counterintuitive to me . . . after all, the point of the salary basis test is that employees get paid a set amount regardless of how many hours they work. However, it turns out the DOL regs expressly provide for this kind of dual-payment scenario:
An employer may provide an exempt employee with additional compensation without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly-required amount paid on a salary basis . . . Such additional compensation may be paid on any basis [including a] straight-time hourly amount.
29 CFR § 541.604 Minimum guarantee plus extras (emphasis added).

There you have it. Employers can actually pay exempt employees on an hourly basis and not lose the exemption (so long as the employee is also paid the minimum required salary, currently $455/week).

The reg also expressly identifie
s other "extra" payments:

  • Commissions on sales;
  • Flat sum;
  • Bonus payment;
  • Time and one-half; and
  • Paid Time Off (PTO).
Don't forget to check state laws though!

Friday, May 18, 2018

Liquidated Damages in Pennsylvania Wage Cases

The Pennsylvania Wage Payment and Collection Law (WPCL) provides some nice perks for employees who successfully sue for unpaid wages. For example, successful plaintiffs receive mandatory attorneys fees.

The WPCL also has a liquidated damages provision. Employees are entitled to their wages, plus an additional 25% of the wages due. 43 P.S. § 260.10. Employers can avoid liquidated damages where there is a "good faith contest or dispute."

The Legal Intelligencer has an interesting case summary for Yablonski v. Keevican Weiss Bauerle & Hirsch, LLC (subscription). The employer paid back some of the money it allegedly owed prior to trial (where they lost), and then argued that the repaid money should be excluded from the liquidated damages calculation. The Allegheny County Court of Common Pleas apparently disagreed:
Relying on 43 P.S. §260.10, the court concluded that plaintiff's wages remained unpaid for 30 days beyond the regularly scheduled payday. The plain meaning of the language in the statute called for calculating liquidated damages utilizing the total wages due 30 days beyond the payday, and not at the time of trial.
It's helpful for employers to understand the potential penalties under the WPCL, although this decision is not binding on other trial courts.

Wednesday, May 2, 2018

PA Commonwealth Court: Security consultant was employee, not independent contractor

As longtime readers know, independent contractor versus employee classification is one of my favorite issues. The Pennsylvania Commonwealth Court recently added a new unemployment compensation case to the mix: HPM Consulting v. UCBR.

These cases are often convoluted, and very fact-intensive. This case involved a safety consultant, who signed multiple contracts with HPM Consulting to go to other states and work. The contracts specifically referred to him as a "1099 contractor" (1099 refers to the tax form, and is issued to independent contractors as opposed to employees, who receive W-2s).

Of course, labels on a contract are not controlling on the courts. The majority opinion still concluded that the consultant was an employee. The worker did not solicit his own work, did not pay for his certifications, and HPM set his rate of pay.

Two points worth noting: (1) in unemployment compensation cases, we start with a strong presumption that someone working in exchange for compensation is an employee; and (2) in unemployment compensation cases, the UCBR is the ultimate fact-finder (if it has evidence to support its conclusion).

Tuesday, April 17, 2018

When does an attorney-client relationship exist?

This issue has popped up in my social media feeds a lot over the past day or so. Apparently, it has something to do with President Trump, a porn star, the president's attorney, and Sean Hannity . . . I'm a little behind on, well, everything, but I can provide some info on the law in Pennsylvania.

First, even if no attorney-client relationship exists, attorneys also owe some duties to prospective clients (See, Rule 1.18). An official comment to the rule explains:
Sean Hannity by Gage Skidmore
A person becomes a prospective client by consulting with a lawyer about the possibility of forming a client-lawyer relationship with respect to a matter. Whether communications, including written, oral, or electronic communications, constitute a consultation depends on the circumstances. For example, a consultation is likely to have occurred if a lawyer, either in person or through the lawyer’s advertising in any medium, specifically requests or invites the submission of information about a potential representation without clear and reasonably understandable warnings and cautionary statements that limit the lawyer’s obligations, and a person provides information in response.  . . . . In contrast, a consultation does not occur if a person provides information to a lawyer, such as in an unsolicited e-mail or other communication, in response to advertising that merely describes the lawyer’s education, experience, areas of practice, and contact information, or provides legal information of general interest. Such a person communicates information unilaterally to a lawyer without any reasonable expectation that a client-lawyer relationship will be established, and is thus not a ‘‘prospective client.’’
But what about an actual attorney-client relationship? Obviously, an attorney and client can enter into an express representation agreement. However, there can also be an implied attorney-client relationship. The Pennsylvania Superior Court has held:
Absent an express contract, an implied attorney/client relationship will be found if 
1) the purported client sought advice or assistance from the attorney; 
2) the advice sought was within the attorney's professional competence; 
3) the attorney expressly or impliedly agreed to render such assistance; and 
4) it is reasonable for the putative client to believe the attorney was representing him. 
Atkinson v. Haug, 622 A.2d 983, 986 (Pa. Super. Ct. 1993) (citing Sheinkopf v. Stone, 927 F.2d 1259 (1st Cir. 1999)).

In Atkinson, the Court concluded that no implied attorney-client relationship occurred, noting that no fee arrangement was entered into; no retainer or fees were paid; and there was no discussion of the legal implications of the issue at hand.

That's more complicated than you hoped, isn't it?

Wednesday, April 11, 2018

9th Cir.: Prior salary is no defense to an Equal Pay Act claim

Earlier this week, the Ninth Circuit issued its opinion in Rizo v. Yovino.

The Equal Pay Act generally requires men and women to receive equal pay for equal work. Defining "equal work" can be tricky, but the statute directs us to look to whether the work requires "equal skill, effort, and responsibility, and which [is] performed under similar working conditions." Sounds simple enough, but there are a million (rough estimate) legitimate reasons why employer may pay two people who do substantially equal work different wages.

Not official use.
That's where the EPA's exceptions come in. The statute specifically names three:
(i) a seniority system; 
(ii) a merit system; [and] 
(iii) a system which measures earnings by quantity or quality of production.
But wait! There's one more . . . "(iv) a differential based on any other factor other than sex." We call this last one the "catchall." However, the "catchall" does not in fact catch *all*, and "any factor other than sex" does not really include *any* factor other than sex.

The Ninth Circuit held:
[W]e now hold that prior salary alone or in combination with other factors cannot justify a wage differential. To hold otherwise—to allow employers to capitalize on the persistence of the wage gap and perpetuate that gap ad infinitum—would be contrary to the text and history of the Equal Pay Act, and would vitiate the very purpose for which the Act stands.
That is an extraordinarily broad holding. As a concurring opinion points out:
[T]he majority unnecessarily, incorrectly, and contrary to Supreme Court precedent, insists that prior salary can never be a factor in a pay system that falls within the fourth exception to the Equal Pay Act. Accordingly, I concur separately because following the Supreme Court’s guidance, I agree with the Tenth and Eleventh Circuits, as well as the EEOC, the agency charged with enforcing the EPA, that prior pay may be a component of a pay system that comes within the fourth exception recognized in 29 U.S.C. § 206(d)(1). A defense to a pay discrimination claim will lie if the employer meets its burden of showing that its system does not perpetuate or create a pay differential based on sex. We should not have reached out to hold otherwise, particularly as there was no need to do so.
We will see whether the breadth of the holding catches the eye of the Supreme Court. 

Thursday, April 5, 2018

Trump flipper-offer files secondhand First Amendment claim

Yeah, that's not a title I thought I'd ever type here. I think it's pretty accurate though. Remember that lady who got fired for giving President Trump's motorcade the middle finger. Of course you do, but just in case, here ya go:


That's not a hand signal.

Welp, now she has filed a lawsuit (Complaint included). On what basis? Well, two really. One is pretty dull . . . she claims she was promised four weeks of severance but only received two. A basic breach of contract claim. This could be important if it nullifies a separation agreement that waived all claims.

The second claim is the big one. She claims "wrongful termination" in violation of public policy. In other words, no law specifically prohibits her termination . . . but she wants the Court to make a special exception to the general rule of "at will" employment (the employer or the employee can terminate the employment relationship for any reason or no reason).

Obviously there are statutory exceptions to "at will" employment; as one example, Title VII says you can't fire someone because of their race. However, courts rarely create exceptions (under the common law, or judge-made law). Here, the plaintiff asserts a sort of secondhand First Amendment claim.

Public employers cannot retaliate against employees when they speak as private citizens on matters of public concern. I guess that's arguably what the plaintiff here did . . . but she's not a public employee. So, she claims that her government contractor employer fired her because it was afraid of retaliation from the government (and *that* retaliation would be prohibited by the First Amendment).

It's clever. I don't know enough about Virginia common law to weigh in on its viability. I can say that the Pennsylvania Supreme Court interprets the public policy exception to at will employment *very* narrowly. I guess we'll see. It sounds a little like a long shot to me.

Fun fact: While I was in law school, I interned for a judge at the Fairfax County Circuit Court where this suit was filed.