Thursday, March 2, 2017

PA Court Decision Assists Employees in Litigating Wage Claims

The Pennsylvania Wage Payment and Collection Law (WPCL) requires employers in Pennsylvania to pay wages to employees at regularly defined intervals. An employer's failure to pay employees wages or benefits on time can result in significant monetary damages. Furthermore, if an employee sues under the WPCL and is successful, a reasonable attorneys' fees award to the employee is mandatory. 

On March 1, 2017, in the case of Grimm v. Universal Medical Services, Inc., the Pennsylvania Superior Court addressed what effect an employee's agreement to limit his or her recoverable damages to $25,000 or less under a mechanism in the PA Rules of Civil Procedure had on a subsequent award of attorneys' fees. In other words, if an employee agrees to cap his or her damages at $25,000, does that limitation only apply to the amount of wages and penalties the employee can recover, or does it apply to wages, penalties, and attorneys fees?

In a win for future plaintiffs, the Superior Court held that a self-imposed damages limitation of $25,000 under PA Rule of Civil Procedure 1311.1 does not limit the amount of attorneys' fees a trial court may award to a successful claimant, even if the effect of that award brings the plaintiff's total recovery to over $25,000. 

In Grimm, for example, the plaintiff sued his ex-employer for failure to reimburse business expenses charged on his personal credit card prior to the end of his employment. Before trial, the plaintiff agreed to limit his damages to less than $25,000 under PA Rule of Civil Procedure 1311.1. The jury eventually found in the plaintiff's favor and awarded him more than $14,000 in unpaid reimbursements and liquidated damages. Following the verdict, the plaintiff requested an award of almost $26,000 in reasonable attorneys' fees from the trial court under the WPCL. The employer objected, arguing that because the plaintiff already agreed to limit his damages to $25,000, he could only recover attorneys' fees equal to the difference of $25,000 and the amount of the jury's verdict, or $11,000 ($25,000 cap - $14,000 jury award = $11,000). The trial court disagreed and awarded the entire amount of the requested attorneys' fees. 

The Pennsylvania Superior Court affirmed, holding that an award of attorneys' fees to a successful plaintiff under the WPCL does not constitute "damages recoverable" under PA Rule of Civil Procedure 1311.1. Rather, such an award is in addition to a jury's verdict and designed to make the successful plaintiff whole. The Superior Court also noted that accepting the employer's argument could result in a situation where WPCL plaintiffs could be discouraged from filing lawsuits for unpaid wages and benefits for fear of accruing burdensome legal costs that would offset any award they might obtain. 

Wednesday, May 18, 2016

New Overtime Rule for Salaried Employees Announced

This morning, President Obama and the Department of Labor (DOL) announced publication of a final rule that will change the minimum monetary threshold required for employers to categorize employees as "salaried" under the federal Fair Labor Standards Act (FLSA). 

In order to legally classify an employee as "salaried" under the FLSA, an employer must prove that the employee meets two tests: the weekly salary test and a factual job-duties test. The most commonly utilized job-duties tests are the executive, administrative, and professional exemptions (also commonly known as the "white collar" exemptions). The DOL's newly announced rule does not make any changes to the factual job-duties portion of these exemptions. 

What will change (and in a big way) is the amount of weekly salary an employee who otherwise meets one or more of the factual job-duties tests must be paid in order to properly be classified as "salaried." Currently, an employer need only pay an employee a minimum of $455 per week in order to meet the weekly salary test. Under the DOL's new final rule, however, that minimum will be increased to $913 per week, or $47,476 a year. This new rule becomes effective on December 1, 2016.

This means that in 6 months, Employers who fall under the requirements of the FLSA will have to ensure that all of their "salaried" employees earn at least $913 a week in order to keep that classification. If any employee earns less than $913 a week come December 1, it does not matter what his or her job duties are—the employer cannot pay that employee on a "salaried basis." Rather, the employee must be paid as an hourly employee, which means the employer is then legally obligated to pay overtime at a rate of one-and-a-half times the regular rate of pay to that employee for all hours worked in excess of 40 a week, no matter what type of job the employee is performing. 

The DOL also announced that this new "wage floor" for salaried employees will be adjusted every three years, so that the minimum weekly salary will always be equivalent to the 40th percentile of weekly earnings for full-time salaried workers in the lowest-wage Census Region. These adjustments will be published by the DOL at least 5 months before their effective date and will be placed on the Wage and Hour Division website. The first automatic adjustment will occur on January 1, 2020.

For more details on the DOL's final overtime rule, click here. Employers should start performing self-audits of their salaried employees now and put a game plan in place to ensure that compliance with these new requirements is achieved before December 1. 

Tuesday, November 24, 2015

Did You Know That a "Temp" Can Also Be An "Employee?"

For all you employers out there who regularly rely on "temp" agencies to supply individuals to fill gaps your day-to-day operations and cover for exigencies that arise, a recent decision from the Third Circuit Court of Appeals should give you pause and (perhaps) yet another thing to worry about (yay, law!)

In Faush v. Tuesday Morning, Inc. (available here), the Third Circuit held that a "temp" worker assigned by a temp agency to work at Tuesday Morning, Inc., could be considered an "employee" of Tuesday Morning for claims of race discrimination under Title VII and the Pennsylvania Human Relations Act (PaHRA).

The factual scenario was rather unremarkable and probably familiar to most employers. Tuesday Morning (a home-goods retailer) was in the process of opening a new store in Pennsylvania. But because it didn't yet have a full complement of employees at the new store, it needed to bring in some "temp" workers as a "stopgap measure." So, Tuesday Morning contracted with Labor Ready, a temp staffing firm, for help. One of the individuals Labor Ready sent to work at Tuesday Morning was Matthew Faush. Faush was an employee of Labor Ready, and only worked at the Tuesday Morning store for a few days. He claimed that while there, he and other African-American "temp" employees were subjected to racial slurs and abuse by white workers and the manager of Tuesday Morning. Faush filed suit against Tuesday Morning under Title VII and the PaHRA, claiming he was an "employee" of Tuesday Morning and had suffered from unlawful race discrimination.

Tuesday Morning sought (and won) a legal ruling from the trial court dismissing Faush's case on the basis that Faush was not its employee.

The Third Circuit disagreed.

After examining all the facts, the Court held that while Labor Ready set Faush's pay rate, paid his wages, taxes, and social security, and maintained his workers' compensation insurance, those factors did not foreclose Tuesday Morning's classification as Faush's "employer." Specifically, the Court noted that Faush worked exclusively at Tuesday Morning's store and Tuesday Morning assigned Faush all of his job tasks, which were the same or similar to those Tuesday Morning assigned its regular employees. Tuesday Morning supplied Faush with all of the tools and materials he needed to complete his assignments, verified his working hours, directly supervised his tasks, and provided him with site-specific training. The Court also found that by because Tuesday Morning paid Labor Ready an hourly rate that was dependent upon the number of hours Faush worked (including any potential overtime), Tuesday Morning was really "indirectly pa[ying] [Faush's] wages, plus a fee to Labor Ready for its administrative services." The services contract between Labor Ready and Tuesday Morning also provided that Tuesday Morning retained ultimate control over whether Faush was permitted to work at its store, and could request a replacement employee for Faush at any time. The agreement even referred to Faush (and all of the other "temp" employees supplied by Labor Ready) as "Temporary Employees,"of Tuesday Morning, and required Tuesday Morning to maintain a workplace that was "free from discrimination and unfair labor practices," in compliance with "all applicable federal, state and local laws and regulations concerning employment," including Title VII. The Court thus held that it was ultimately up to a jury to determine whether, on these facts, Tuesday Morning was Faush's "employer."

This case serves as a stark reminder for employers that sometimes, employees can have two "masters" (or as the law refers to it, "joint employers.") Just because an employer brings on a worker from a temp agency on a short-term assignment and the worker gets his/her paycheck and W-2 from the temp agency, does not automatically mean the employer is immune from claims under the federal and state anti-discrimination laws.

So, the take-away practice tip for employers here is: make sure to treat your "temp" workers the same way you treat your regular employees, because at the end of the day, the law may already be doing so.