Wednesday, November 24, 2010

PA Supreme Court: In-Home Nurses Entitled To Overtime Pay

On November 17, 2010, in the case of Bayada Nurses, Inc. v. Commonwealth of Pennsylvania Dept. of Labor and Industry, No.: 67 MAP 2008, the Pennsylvania Supreme Court held that under the Pennsylvania Minimum Wage Act of 1968 (PMWA), an employer that provides in-home nursing care to individuals is not exempt from paying its nurses overtime pay under the "domestic services," exemption to the PMWA.

The general rule under the PMWA is that an employer in Pennsylvania must pay its employees a minimum wage plus overtime for hours worked in excess of 40 hours per week. However, the PMWA provides for a number of exemptions to this general rule, including the "domestic services exemption," found at 43 P.S. section 333.105(a)(2). This section provides that a Pennsylvania employer is exempt from the minimum wage and overtime provisions of the PMWA for "domestic services in or about the private home of the employer." A subsequent regulation promulgated by the Pennsylvania Department of Labor and Industry interpreting this statutory provision defined "domestic services" as "work in or about a private dwelling for an employer in his capacity as a householder, as distinguished from work in or about a private dwelling for such employer in the employer's pursuit of a trade, occupation, profession, enterprise or vocation." 34 Pa. Code section 231.1(b). In other words, under the Department's regulation, the only employers who qualify for the "domestic services" exemption to the PMWA are those that employ individuals for work in or about a private dwelling that the employer itself owns or possesses. In other words, according to the Department, work sought to be exempted has to be performed for an employer in his or her capacity as a householder.

In this instance, the Department notified Bayada Nurses, Inc., that it would be performing a wage and overtime audit. Bayada Nurses, Inc., is a Pennsylvania corporation that offers nursing care, personal care, physical therapy and rehabilitation to pediatric, adult and geriatric clients. Bayada employs licensed nurses, registered nurses and home health care aides. Bayada paid its home health care aides an hourly wage, with each hour of service billed to the client. Bayada did not, however, pay those aides overtime. Upon being notified of a potential audit by the Department, Bayada filed a petition seeking a declaration that: (1) challenged the validity of the Department's regulation as improperly limiting the scope of the domestic services exemption; (2) Bayada's clients were "employers" for purposes of the PMWA, such that Bayada and its clients could both take advantage of the domestic services exemption; and (3) the domestic services exemption of the PMWA should be interpreted consistently with the exemptions of the federal Fair Labor Standards Act (FLSA).

The Supreme Court rejected all of Bayada's arguments, and held that: (1) the Department's regulation interpreting the term "domestic services" to exclude those employers who are not householders themselves was consistent with the plain statutory language of the PMWA; (2) Bayada was not entitled to take advantage of the domestic services exemption because in providing aides to clients, Bayada was not a "householder" employer; and (3) the domestic services exemption should not be read consistently with the FLSA because the FLSA sets a federal "floor" for minimum wage and overtime requirements, and states are free to adopt more restrictive (i.e., more employee-friendly) laws and requirements. Since the domestic services exemption to the PMWA, as interpreted by the Department, is more restrictive and employee-friendly than the exemptions set forth in the FLSA, consistency of interpretation was not warranted, and the PMWA domestic services exemption was not pre-empted by federal law. In upholding the reasonableness of the Department's regulation in the first issue, the Supreme Court held that the Department's regulation of "domestic services," which limited the exemption to only those employers who are "householders," was not inconsistent with the plain language of the PMWA, in that "the unambiguous language [of the domestic services exemption] in the statute focuses on one type of employer - a householder."

The impact of this decision will extend well beyond the facts and circumstances of this case. In upholding the Department's application of the domestic services exemption to only those instances where an employee is performing work for his/her employer in the employer's capacity as a "householders," the Pennsylvania Supreme Court sanctioned a rather bright-line rule. Going forward, it would seem that every business in Pennsylvania that provides some manner of "work in or about a private dwelling," will now required to pay its employees overtime for hours worked in excess of 40 per week, unless that employer also owns the private dwelling where the work is being performed. And, given the Department's rather broad definition of "domestic services," as encompassing "all work in or about a private dwelling," this rule would apparently also extend to professions such as landscapers, maids, and cleaning services, and perhaps even to electricians, plumbers, painters, and the like. Therefore, employers in these types of businesses in Pennsylvania who may have been relying upon the "domestic services" exemption to justify a non-payment of overtime to hourly wage workers, need to take another look at their books.

You can read the Pennsylvania Supreme Court's full Opinion here: http://www.courts.state.pa.us/OpPosting/Supreme/out/J-105-2009mo.pdf

Wednesday, November 17, 2010

Friday, November 12, 2010

FMLA Insights: GINA Rules Require New Disclosures In Requests For FMLA Certification

This is a helpful article posted by "FMLA Insights" on the new GINA regulations that become effective January 10, 2011, which require employers seeking medical certifications in support of leave or accommodation requests to provide new disclosures. GINA Rules Require New Disclosures In Requests For FMLA Certification

Tuesday, November 9, 2010

Classifying Construction Workers as Independent Contractors Will Soon Become More Difficult In Pennsylvania

On October 13, 2010, Pennsylvania Governor Ed Rendell signed into law House Bill 400 of 2009, otherwise known as the new "Construction Workplace Misclassification Act." This Act sets forth specific criteria that now must be met before individuals employed in the construction industry in Pennsylvania may be classified as "independent contractors" for purposes of workers' compensation and unemployment compensation.

Specifically, an individual who works in the construction industry can only be classified as an "independent contractor" for purposes of workers' compensation and unemployment compensation where the following three conditions are met:

(1) the individual must have a written contract to perform those services

(2) the individual must be free from control or direction over the performance of such service both in the written contract and in fact; and

(3) the individual must be customarily engaged in an independently established trade, occupation, profession or business.

The Act subsequently sets forth a detailed list of multiple factors that must be met before an individual can meet the third prong of the above test, i.e., the "customarily engaged in an independently established trade," prong.

Additionally, the Act provides that an employer's failure to withhold federal or state income taxes or failure to pay unemployment compensation contributions or workers' compensation contributions with respect to an individual's pay shall not be considered a factor in determining whether an individual is an employee for purposes of workers' compensation or unemployment compensation.

An employer who fails to appropriately classify an individual as an employee under this Act faces an array of possible penalties, ranging from a criminal misdemeanor charge for an intentional violation, to a $1,000.00 summary offense, or administrative enforcement, which can entail significant fines and the issuance of a stop-work order for a construction site.

The Act also prohibits an employer from retaliating against any individual for exercising his/her rights under the Act, and creates a "rebuttable presumption" of retaliation when any "adverse action," is taken against an individual within 90 days of that person's exercise of rights under the Act.

While the Act appears to create a private right of action for an individual to report an employer's non-compliance with the Act (individuals who suspect non-compliance are authorized to file a complaint), there is no provision that allows for the collection of monetary damages, costs, or attorneys' fees. However, the Act does provide that if any individual alleges noncompliance by an employer, and does so in good faith, then that individual "shall be afforded the rights provided by this Act, notwithstanding the person's failure to prevail on the merits."

The Construction Workplace Misclassification Act becomes effective on February 13, 2011. All businesses in Pennsylvania engaged in the construction industry that have individuals working for them need to review their current employee/independent contractor classifications in order to ensure compliance with these new rules before the effective date.

You can read the final version of the Construction Workplace Misclassification Act here: http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=HTM&sessYr=2009&sessInd=0&billBody=H&billTyp=B&billNbr=0400&pn=4289 (the sections that are not lined-out are the provisions of the bill that have been signed into law).