Wednesday, December 11, 2019

SCOPA: Fluctuating Work Week method of overtime pay does not comply with PA Minimum Wage Act

How do simple concepts get so complicated? Both the federal Fair Labor Standards Act (FLSA) and the Pennsylvania Minimum Wage Act (PMWA) require employers to pay non-exempt employees time-and-a-half for hours over 40 worked in a workweek. So, if an employee makes $10/hour and works 50 hours, they get $550: $400 ($10 * 40 hours) + $150 ($15 * 10 hours). Easy, right?

But, wait! What about non-exempt employees who earn a salary? First, you need to calculate their regular rate, by taking their weekly salary and dividing it by the number of hours worked. For salaried employees, the regular rate will therefore vary depending on how many hours they worked that week. Now, the big question - how much do they get for overtime?

Under the FLSA, it is very clear that the employee's salary covers the base amount of regular pay for all hours worked. The employer must only pay the employer the extra 50% of the regular rate for hours over 40. There's a regula29 CFR § 778.114:
tion directly on point,
If during the course of 4 weeks this employee works 40, 37.5, 50, and 48 hours, the regular hourly rate of pay in each of these weeks is $15.00, $16.00, $12.00, and $12.50, respectively. Since the employee has already received straight-time compensation on a salary basis for all hours worked, only additional half-time pay is due. For the first week the employee is entitled to be paid $600; for the second week $600.00; for the third week $660 ($600 plus 10 hours at $6.00 or 40 hours at $12.00 plus 10 hours at $18.00); for the fourth week $650 ($600 plus 8 hours at $6.25, or 40 hours at $12.50 plus 8 hours at $18.75).
In other words, the employer must pay the regular salary and then add the regular rate, times a multiplier of 0.5, times the number of hours over 40 worked in the workweek. We call this the "Fluctuating Work Week (FWW)" method. 

Unfortunately, Pennsylvania has no such regulation addressing the FWW. In Chevalier v. General Nutrition Centers, Inc., the Pennsylvania Supreme Court held that the FWW method does not comply with the PMWA. Instead, employers must use a multiplier of 1.5. 

Monday, December 9, 2019

Pennsylvania compromise minimum wage and overtime legislation pending

The past couple of months have been very hectic on the wage and hour front in Pennsylvania:

I will continue to monitor this issue. 

Tuesday, December 3, 2019

PA court recognizes private cause of action under Medical Marijuana Act

Under Pennsylvania's Medical Marijuana Act (MMA):
No employer may discharge . . . an employee . . . solely on the basis of such employee's status as an individual who is certified to use medical marijuana. 
35 P.S. §  10231.2103(b)(1). But, can a fired employee sue their employer? According to the Lackawanna Court of Common Pleas in Palmiter v. Commonwealth Health Systems, Inc., the answer is YES!

This is apparently the first decision (state or federal) to address this issue. The Court held that the MMA grants employees an implied right of action against their employers. The MMA's "anti-discrimination provisions would be rendered meaningless if an aggrieved employee could not pursue a private cause of action and seek to recover compensatory damages from an employer that violates Section 2103(b)."

It's still possible that appellate courts (or other jurisdictions within PA) will see this differently. For now, employers should proceed with caution in this area while we get some of these legal issues sorted out.

HT: Tort Talk, Case of First Impression Decided by Judge Nealon on Medical Marijuana Issue in Civil Litigation Context.

Thursday, November 21, 2019

New DOL overtime regulations: Non-discretionary bonuses and commissions

One area of the new U.S. DOL overtime regulations that has not received a lot of attention is the new rule regarding non-discretionary bonuses and commission payments. Like the proposed Obama-era rule, the new rule likewise allows employers to cover up to 10% of the minimum salary threshold for exempt employees.

The new threshold is $684/week. Employers may pay as little as 90% of that ($615.50), so long as they cover the difference with non-discretionary bonuses or commissions. What happens if the employee does not earn enough to make up the 10%?
Not official use.
The final rule permits employers to meet the salary level requirement by making a catch-up payment within one pay period of the end of the 52-week period. In plain terms, each pay period an employer must pay the [exempt] employee on a salary basis at least 90 percent of the standard salary level and, if at the end of the 52-week period the sum of the salary paid plus the nondiscretionary bonuses and incentive payments (including commissions) paid does not equal the standard salary level for the 52-week period, the employer has one pay period to make up for the shortfall (up to 10 percent of the required salary level). Any such catch-up payment will count only toward the previous 52-week period's salary amount and not toward the salary amount in the 52-week period in which it was paid.
This is different from the Obama-era rule, which required employers to catch up or pay the bonuses at least quarterly.

Friday, November 8, 2019

How to lose an ADA "regarded as" disability reasonable accommodation case

Once upon a time, waaaay back before 2008, there was a circuit split on the issue of whether the ADA required employers to reasonably accommodate an employee who was "regarded as" having a disability (but, did not meet either of the other two covered definitions of "disability" - actually having a disability, or having a record of a disability). Here in the Third Circuit, we did allow employees to proceed on a "regarded as" disability reasonable accommodation claim.

Not official use.
Then, in 2008, the ADA was amended by the ADAAA. The ADAAA makes very clear that employers “need not provide a reasonable accommodation . . . to an individual who meets the definition of disability in [Section 12102(1)(C) - the subsection defining "disability" to include an individual "regarded as" having a disability].” 42 U.S.C. § 12201(h).

Welp, that's the background for a Third Circuit opinion from earlier this year, Robinson v. First State Community Action Agency. The jury ruled in favor of the employee on her reasonable accommodation claim. The jury instructions included an instruction that the Plaintiff could prove her case by establishing only that the employer "regarded [her] as dyslexic." Well, clearly she should have lost this claim because the ADAAA does not require an employer to accommodate an employee who is merely regarded as having a disability.

The employer, however, proceeded under this theory of the case throughout litigation, trial, and post-trial briefing. The objection to the jury instruction (or this theory of the case, generally) came only on appeal to the Third Circuit. Per this opinion, that is simply too late. The issue had been waived. That's a pretty harsh outcome for a failure to object earlier - but it does serve as a strong cautionary tale.

One interesting side issue here. The employee argued that the trial court could not have erred because it relied on the Third Circuit Model Jury Instructions (or "Model Civil Jury Instructions for the District Courts of the Third Circuit"). No dice.
[W]e have never held that use of such an instruction cannot constitute error, and a model jury instruction itself is neither law nor precedential . . . . Model instructions are designed to help litigants and trial courts, not to replace their shared obligation to distill the law correctly when drafting proposed jury instructions. Thus, the existence of the antiquated model jury instruction here, which regrettably does not yet reflect the 2008 Amendments, fails to provide a second justification for our decision to not review the relevant jury instruction.
The model instructions are a great resource - but litigators still need to check them.

Tuesday, November 5, 2019

Pennsylvania employment law regarding election interference

I assume that most (all?) states have laws against threats, intimidation, and coercion to compel voting a certain way in an election. Pennsylvania has just such a law, 25 Pa. Cons. Stat. Ann. § 3547. But, did you know that it also has employer-specific provisions?

The following are misdemeanors:

  • [B]eing an employer, pays his employes the salary or wages due in “pay envelopes” upon which or in which there is written or printed any political motto, device, statement or argument containing threats, express or implied, intended or calculated to influence the political opinions or actions of such employes, or 
  • [W]ithin ninety days of any election or primary puts or otherwise exhibits in the establishment or place where his employes are engaged in labor, any handbill or placard containing any threat, notice, or information that if any particular ticket or candidate is elected or defeated work in his place or establishment will cease, in whole or in part, his establishment be closed up, or the wages of his employes reduced, or 
  • [O]ther threats, express or implied, intended or calculated to influence the political opinions or actions of his employes.
Happy election day!

Tuesday, October 29, 2019

"Pennsylvania Moving Forward with New Overtime Rules"

The new federal overtime regulations draw a lot of attention and media coverage. In Pennsylvania, however, they may be irrelevant in about a year. The PA Department of Labor and Industry (DLI) announced that it is moving forward with its own new overtime rules.

DLI submitted the final rule, which must be approved by the Independent Regulatory Review Commission before it takes effect. Like the federal rule, it raises the minimum salary level for the white collar exemptions (executive, administrative, and learned professional). The PA rule will set an even higher threshold starting in the second year:
This increase will be phased in over three steps: $684 per week, $35,568 annually (per federal rule), on January 1, 2020; $780 per week, $40,560 annually in 2021; and $875 per week, $45,500 annually in 2022.
Astute readers will notice that the PA cutoff in 2022 is slightly lower than the one initially proposed. Presumably, there will be some litigation around both the fed and PA rules - so stay tuned.