1 presented by: thomas g. collins, esquire buchanan ingersoll & rooney pc p: 717.237.4843 f:...

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Presented by:Thomas G. Collins, EsquireBuchanan Ingersoll & Rooney PCP: 717.237.4843F: 717.233.0852E: [email protected]

W: www.bipc.com

A Potpourri of Wages, Hours, BenefitsA Potpourri of Wages, Hours, BenefitsAnd Miscellaneous Considerations … And Miscellaneous Considerations …

Everything you wanted to know,Everything you wanted to know,but were afraid to ask in 90 minutes or less.but were afraid to ask in 90 minutes or less.

mailto:[email protected]

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What are we going to accomplish today?

(1) “Hours worked”: What time is Compensable?(2) “White Collar” exemptions (just the basics).(3) Conflicts between the Federal FLSA and Pennsylvania MWA(4) Registry v. Agency?(5) ERISA Plan Documents: Why should I care?(6) Unemployment Comp: Should I appeal?(7) Terminating the Difficult Employee: How do

I protect my company from discrimination claims?

(8) Non-compete agreements: Do they really work?(9) Social Media and miscellaneous NLRB Considerations.

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(1) Hours Worked: What time is Compensable?Issues directly impacting home care:

• Call time (schedulers, etc.);

• Travel time;

• In-service training; and

• Sleep time (24/7 Care).

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(1) Hours worked: What time is Compensable?General considerations:• All hours “permitted” or “suffered” to work.• Hours “permitted” is the time you want employees to

work.• Hours “suffered” is the time you don’t necessarily

want the employees to work, but they do so anyway (usually applies in the context of unauthorized overtime).• Key: unauthorized overtime is a disciplinary issue/not a payment issue:

Employees must be paid for all time worked, even if unauthorized.

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(1) Hours worked: What time is Compensable?General considerations cont’d …• The moment employee begins principal activities for

the benefit of the employer.– Example. Before starting work for the day at a client

location, employee records notes. In such circumstances, the work day begins and the commute may be work time.

• Work time excludes de minimis activities of minimal duration (e.g. a few minutes to map driving routes before beginning work).

• No de minimis threshold. Rule of reasonableness. Activities areaggregated.

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(1) Hours worked: What time is Compensable?Examples of “on the clock”:

• Breaks of less than 20 minutes;

• Breaks of more than 20 minutes, where the employee is not free to leave or go about his or her own business; and

• Company required in-services or other training.

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(1) Hours worked: What time is Compensable?Examples of “off-the-clock”:• Commuting time to or from work: but only if it is

before the commencement of, or after completing, responsibilities.

• Time exceeding 30 minutes when the employee is free to engage in personal pursuits without restriction.

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(1) Hours worked: What time is Compensable?Examples of off-the-clock, cont’d …

• Meal periods, so long as the employee is free from all work duties and the break is long enough to be useful. (Be careful!)

• Sleep time, so long as the “tour of duty” is 24 hours or longer and no work is required. (We will discuss in detail later.)

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(1) Hours worked: What time is Compensable?Travel Time:• Travel directly to client site at the start of the work

day is not compensable time under FLSA and PMWA (concept of “portal-to-portal”).

• Travel from client site at the end of the work day is likewise not work time.

• Employee travel time between clients during the work-day, however, is compensable work time.

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(1) Hours worked: What time is Compensable?

Travel Time cont’d …• Travel time is also “on-the-clock” if it occurs

during an employee’s normal working hours.

• Issue: What if consumer visits are more than 30 minutes apart even taking into account travel time?

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(1) Hours worked: What time is Compensable?Travel Time cont’d …• Example: Consumer A is authorized for 2

hours of service between 9:00 – 11:00 a.m. Consumer B is authorized for 2 hours of service from 12:00 – 2:00 p.m. A and B live only 10 minutes apart. What portion of time is compensable between 11:00 – 12:00 if the same employee services A and B.

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(1) Hours worked: What time is Compensable?On-Call Time:• Merely being “available” to work is not work

time, e.g., carrying a pager on the weekend.• Employers who have employees

“engaged to wait” may pay employees a different rate for the waiting time.

• However, it is generally impermissible to pay employees two separate rates for the same work during a single workweek.

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(1) Hours worked: What time is Compensable?On-Call Time cont’d …• On-call “bonus” must be included in the employee’s

“regular rate” when calculating overtime.• Employees who do not have to be compensated for

on-call time still must be compensated for time actually spent taking call.

• Employer’s should be tracking time spent actually taking call and compensating for same on an hourly rate basis (or some multiple thereof, e.g., double time).

• DOL audit risk.• No issue for exempt employees.

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(1) Hours worked: What time is Compensable?On-Call Time Cont’d …• Example: Agency pays scheduler a flat fee of $125.00 to take

call on Saturday . The scheduler worked 40 hours between Monday and Friday during the workweek at $12.00 per hour. On Saturday, the scheduler spends 2 hours addressing call. If the US DOL conducts an audit, they will add the $125.00 into the schedulers “regular rate” for overtime purposes and expect additional overtime compensation as follows:

Regular rate = (40 hours x $12.00) + ($125.00)

42 hoursRegular rate = $14.40Overtime = $14.40 x .5 x 2 = $14.40

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(1) Hours worked: What time is Compensable?On-Call Time Cont’d …

In sum:

• Track time actually spent taking call.

• Pay some multiple of the employee’s standard rate for time spent taking call on weekends or evenings.

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24/7 Care: How do I pay my workers?

• Live-in Aides provide services around-the-clock.

• Although they maintain separate residences, they often stay at the consumers’ premises for weeks and sometimes months on-end, working 24 hour/7-day schedules.

• In the industry, these employees are often paid “day-rates.”

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• Is a “day-rate” permissible underFLSA and PMWA?

• Is “sleep time” compensable?

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24/7 Care: How do I pay my workers? • Two separate laws are implicated: the FLSA and PMWA.• Under the FLSA, there is a “companionship service”

exemption for employees that provide “companionship services” for individuals who because of age or infirmity are unable to care for themselves. See 29 U.S.C. § 213(a)(15).

• The “companionship service” exemption has been confirmed by the U.S. DOL as applying to situations where the Aide is employed by a third-party/Agency.

• In sum, acceptable under the FLSAfor now.

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• December, 2011: DOL Notice of Rule Making.– If the new rule proposed by the DOL goes into

effect, the “companionship services” exemption will no longer apply to agency employers.

– However, given the state of Pennsylvania law, this is likely not an issue for Pennsylvaniahome care providers.

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(1) Hours worked: What time is Compensable?24/7 Care: How do I pay my workers? • Under the PMWA, there is no counterpart to the FLSA

“companionship service” exemption with respect to third-party employment.

• Bayada Nurses, Inc. v. Pennsylvania Dept. of Labor & Industry, 8 3d. 866 (Pa. 2010).

• In Bayada, the Pennsylvania Supreme Court expressly held that agency employers may not rely upon the “domestic services” exemption set forth in the PMWA.

• Accordingly, home care aides employedby agency employers are entitled to boththe applicable PA minimum wage andovertime.

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(1) Hours worked: What time is Compensable?24/7 Care: How do I pay my workers? • The definition of “hours worked” under the PMWA may (it is

not certain) allow agency employers to exclude up to 8-hours designated for “sleep-time.” See 34 Pa.Code 231.1.

• The regulation governing payment of the minimum wage states that: “in the case of a residential employe [which is an employe who resides and works on the premises of the employer], the Secretary will approve any reasonable agreement between the employer and employe for determining hours worked.” 34 Pa.Code § 231.21(b).

• Issue: Is the consumer an “employer” for this purpose? Concept tacitly rejected by the Supreme Court in Bayada.

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(1) Hours worked: What time is Compensable?24/7 Care: How do I pay my workers? • On March 6, 2006, the Pennsylvania

Department of Labor & Industry issued a letter ruling expressly approving the exclusion of up to 8-hours for “sleep time” from a home care worker’s “hours worked.”

• In such letter ruling, the Dept.further noted that it would deferto 29 C.F.R. § 785.22(b) (requiringthat at least 5-hours be uninterrupted)for enforcement purposes.

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24/7 Care: How do I pay my workers? • Although there is little guidance on the payment of

“sleep-time” under the PMWA regulations, a reasonable interpretation of the definitions referenced above would appear to allow employers to treat home care workers as “residential employees” and exclude up to 8 hours for sleep-time, provided that:– the employee gets at least 5 hours of

uninterrupted sleep (see FLSA regulations); and

– there is a “reasonable agreement” in place with the worker to exclude sleep-time from the “hours worked” calculus.

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24/7 Care: How do I pay my workers? • Still risk involved even if above steps are taken.• Dept. of Labor & Industry letter rulings are not

binding on Courts. (Current 8/80 issue, by way of specific example.)

• PMWA Regs. Define “hours worked”to include “time during which anemployee is required to be on thepremises of the employer, to be onduty or to be at the prescribedworkplace.” 34 Pa. Code. § 231.1.

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• In any event, however, the home care worker will be entitled to at least the minimum wage for the first 40 hours, and time-and-a-half for hours worked in excess of 40 in the workweek.

• Therefore, a “day-rate” isproblematic under the PMWA.

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(1) Hours worked: What time is Compensable?24/7 Care: How do I pay my workers? • PMWA “regular rate” regulations provide that “[i]f

the employe is paid a flat sum for a day’s work … his regular rate is determined by totaling all the sums received at the day rates or job rates in the workweek and dividing by the total hours actually worked. Heis then entitled to extra half-time pay at this rate for hours worked in excess of 40 in the workweek. 34 Pa. Code § 231.43(b).

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(1) Hours worked: What time is Compensable?24/7 Care: How do I pay my workers? • Example: Home care worker receives a “day rate” of

$120.00 per day. Works 16-hours per day (excluding sleep-time) for 7-days in the workweek. Day rate yields $840 for the week (7 x 120.00). Dept. of Labor & Industry calculation will yield additional compensation owed of $270.00. 16 hours x 7 days = 112 hours worked.Regular rate = $7.50 ($840.00 / 112).72 overtime hours (112 – 40) x ½ $7.50 = $270.00.

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24/7 Care: How do I pay my workers? • In light of the “regular rate” regulation under

the PMWA, the payment of a “day rate” is highly questionable under the PMWA.

• Better approach is to have an agreement premised on hourly compensation which expressly addresses the “sleep time” issue.

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(1) Hours worked: What time is Compensable?24/7 Care: How do I pay my workers? • “Day rate” solutions under the PMWA.– Establish a day rate equivalent of $145.00

[(8 x $7.25) + (8 x $10.88)] for the first 5-days of any workweek.

– Must pay full 16-hours at time and a half minimum wage of $7.25 or $10.88 for days 6 and 7 in any workweek ($174.08).

– Must have agreement in place with employee encompassing above and acknowledging that 8 hours will be excluded for sleep time.

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Overtime Calculation Issues:

• Employees working for two or more clients with different rate ― What rate to use for overtime?

• The “regular rate.”

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(1) Hours worked: What time is Compensable?Overtime Calculation Issues: Amounts included in the “regular rate”:• All non-discretionary amounts paid to employees

are presumed to be included in the “regular rate” when computing overtime.

Shift differentials. On-call bonuses. Attendance bonuses. Retention bonuses. Performance bonuses.

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(1) Hours worked: What time is Compensable?Overtime Calculation Issues cont’d … Hourly Paid Employee: Shift Differentials – An Example.• Calculation: Shift differential must be added in the regular rate.

(a) Hourly rate is $8.00. (b) Shift Differential for evening shift is $1.00/hour. (c) Employee works 48 hours in the week – 8 overtime hours, and 3 evening shifts.

* 24@ $8.00 hour $ 192.00* 24@ $9.00 hour 216.00

* T = $408.00 $ 408.00(d) Overtime premium: 408 ÷ 48= $8.50 regular rate.

(e) Regular rate x½ = overtime premium times overtime hours:

* $4.25 x 8 = $34.00. (f) Total compensation for the week: $408.00 (straight time pay) 34.00 (overtime)

$442.00• Same analysis if employee working for two clients at different rates.

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(1) Hours worked: What time is Compensable?Comp Time:• Essentially, comp. time does not exist for private employers.

• For private employers, the employee must be given the time off within the same week in which the overtime is accrued.

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(2) Are your “White Collar” employees really exempt?

• Issue spotting …

• Understanding salary basis compensation …

• Exempt duties … Executive, Administrative, Professional …

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(2) “White Collar” Exemptions …

• Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees who are employed in a bona fide: Executive; Administrative; Professional; or Outside Sales capacity.

• Certain computer employees may also be exempt professionals under Section 13(a)(1) or exempt under Section 13(a)(17) of the FLSA.

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Three Tests for Exemption:

• Minimum Salary Level;

• Salary Basis Compensation; and

• Exempt Job Duties.

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Minimum Salary Level: • For most employees, the minimum salary level

required for exemption under the FLSA is $455 per week.

• Must be paid “free and clear.”

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Salary Basis Test:• Regularly receives a predetermined amount of compensation

each pay period (on a weekly or less frequent basis).• The compensation cannot be reduced because of variations in

the quality or quantity of the work performed.• Must be paid the full salary for any week

in which the employee performs any work.

• Need not be paid for any workweek when no work is performed.

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Deductions from Salary:• An employee is not paid on a salary basis if

deductions from the predetermined salary are made for absences occasioned by the employer or by the operating requirements of the business.

• If the employee is ready, willing and able to work, deductions may not be made for time when work is not available.

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Permitted Salary Deductions:There are seven exceptions to the “no pay-docking” rule:

1.Absence from work for one or more full days for personal reasons, other than sickness or disability.

2.Absence from work for one or more full days due to sickness or disability if deductions made under a bona fide plan, policy or practice of providing wage replacement benefits for these types of absences.

3.To offset any amounts received as payment for jury fees, witness fees, or military pay.

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Permitted Salary Deductions cont’d …4.Penalties imposed in good faith for violating safety

rules of “major significance.”5.Unpaid disciplinary suspension of one or more full

days imposed in good faith for violations of workplace conduct rules.

6.Proportionate part of an employee’s full salary may be paid for time actually worked in the first and last weeks of employment.

7.Unpaid leave taken pursuant to the Family and Medical Leave Act.

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Additional Compensation:• An employer may provide compensation in

addition to the $455 minimum guaranteed weekly salary, such as: Commissions; bonuses; and additional pay based on hours worked

beyond the normal workweek.

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Executive Duties:• Primary duty is management of the enterprise or of

a customarily recognized department or subdivision;

• Customarily and regularly directs the work of two or more other employees; and

• Authority to hire or fire other employees or whose suggestions and recommendations as to hiring, firing, advancement, promotion or other change of status of other employees are given particular weight.

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Primary Duty:• Employees who spent more than 50% of their time

performing exempt work will generally satisfy the primary duty requirement under FLSA.

• However, the regulations do not require that exempt employees spend more than 50% of time performing exempt work.

• Lower threshold of 20% underPMWA.

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Administrative Duties:• Whose primary duty is the performance of office

or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

• Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

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Learned Professional:• The employee’s primary duty must be the

performance of work requiring advanced knowledge;

• In a field of science or learning;• Customarily acquired by a

prolonged course of specialized intellectual instruction.

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Nurses:• Registered nurses who are registered by the

appropriate State examining board generally meet the duties requirements for the learned professional exemption. Registered Nurses compensated on an

hourly basis, however, would not be exempt.

• Licensed Practical Nurses generally do not qualify as exempt learned professionals.

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(3) Conflicts between the Federal FLSA and Pennsylvania MWA …

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PMWA conflicts with the FLSA (domestic services exemption) (as discussed)

• FLSA § 213(a)(15) “companionship services” exemption interpreted to apply to agency employers. Long Island Care at Home, Ltd. v. Coke, 127 S.Ct. 2339 (2007).

• PMWA “domestic services” exemption interpreted not to apply to agency employers. Bayada Nurses, Inc. v. Commonwealth of Pennsylvania Dept. of Labor and Industry, 8 A.3d 866 (Pa. 2010).

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PMWA conflicts with the FLSA (Example: 8/80 Rule)• Section 207(j) of the FLSA allows a hospital nursing or

other establishment engaged in the care of the sick, aged or mentally ill to utilize a 14-day “workweek.”

• Pursuant to this rule, employees receive overtime for hours in excess of 8 in any day or 80 in the 14-day workweek (the “8/80 Rule”).

• There is no express counterpart to the 8/80 Rule under the PMWA.

• Issue is currently being litigated across the state.

• Key: 5 Pa. Dept. of Labor & Industry letter rulings authorizing the practice.

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PMWA conflicts with the FLSA (Example: Computer Professionals)• The FLSA includes an exemption for

computer professionals. 29 C.F.R. § 541.705.

• There is no exemption for computer employees under the PMWA.

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PMWA conflicts with the FLSA (Misc. Issues)• Definition of “regular rate” (e.g. how do

we include bonuses, premium payments etc.)

• Definition of “hours worked” (e.g., how do we deal with travel time, on-call time, etc.)

• In sum, be careful and always consider the PMWA when addressing exemptions from overtime.

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(4) Registry v. Agency?

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How is the difference defined in the Dept. of Health Regulations?

• Home care agency--An organization that supplies, arranges or schedules employees to provide home care services, as directed by the consumer or the consumer’s representative, in the consumer’s place of residence or other independent living environment for which the organization receives a fee, consideration or compensation of any kind.

• Home care registry--An organization or business entity or part of an organization or business entity that supplies, arranges or refers independent contractors to provide home care services, as directed by the consumer or the consumer’s representative, in the consumer’s place of residence or other independent living environment for which the registry receives a fee, consideration or compensation of any kind.

28 Pa. Code § 611.5

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Concerns:

• Can a home care worker legitimately be characterized as an independent contractor?

• If the home care worker is an “employee,” is there any possibility of “joint employer” status with respect to the Registry?

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Concerns cont’d …• Under the FLSA and PMWA, the “economic reality test” will be employed in

determining if an entity is an “employer” or “joint employer.” The relevant considerations include:

• 1) the degree of control exercised by the employer over the workers;• 2) the worker’s opportunity for profit or loss depending upon managerial

skill;• 3) the alleged worker’s investment in equipment or material required for the

tasks or the employment of helpers;• 4) whether the service rendered requires special skill;• 5) the degree of permanence of the working

relationship; and• 6) the extent to which the work is an integral part of the

employer’s business.• Commonwealth, Dept. of Labor & Industry, Bureau of

Labor Law Compliance v. Stuber, 822 A.2d 870, 874 (Pa. Cmwlth. 2003) (emphasis added), appeal granted, 577 Pa. 681, 843 A.2d 1239 (2004), affirmed, 580 Pa. 66, 859 A.2d 1253 (2004).

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Concerns cont’d …• Just because Dept. of Health regulations

recognize registries does not mean that the Dept. of Labor & Industry will not find “joint employer” status.

• Lawyers are free to argue “joint employer” status regardless of views of Dept. of Health or Labor & Industry.

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Concerns cont’d …• The reason this distinction--independent contractor

(Registry) v. employee (Agency)-- matters:– Employment taxes (FIT, FICA, FUTA);

– Minimum wage & overtime;

– Workers compensation insurance; and

– Unemployment compensation insurance.

• Employees are free to challengecharacterization.

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Concerns cont’d …• The new regulations (28 Pa.Code §§ 611.1 et seq.), which

were published on December 12, 2009, have created additional responsibilities which “complicate” the registry model.

• Specifically, the registry model is again premised on the care givers not being employed by the registry, but rather the consumer.

• The new licensure requirements, however, obligate the registry to engage in screening, competency assessments and supervision.

• These requirements draw into question, at least, the employment of home care workers assigned through registries.

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The screening regulations require:

(1) face-to-face interviews;

(2) two satisfactory references;

(3) criminal history report; and

(4) The maintenance of documents confirming these steps have been taken for each caregiver.

See 28 Pa.Code § 611.2.

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The Competency and Supervisory regulations require:

(1) Other than nurses, new hires must demonstrate competency by either passing an exam administered by the registry/agency addressing certain enumerated core areas, or independently complete an approved training course such as a home health aide training program meeting the requirements of 42 CFR 484.36;

(2) Must also confirm and document competency through direct observation, testing, training, consumer feedback or combination of methods, including annual assessments;

(3) If a HHA is disciplined or sanctioned, thenthe foregoing supervision must occur with greater frequency (more than annually).

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• Separate agencies and entities determine whether an individual is an employee or independent contractor, such as:– PA Dept. of Labor & Industry;– U.S. Dept. of Labor;– The IRS ; and– Judges (via lawsuits).

• The foregoing entities utilize different tests with respect to independent contractor v. employee status.

• Fact and circumstance test will be applied regardless of any contract or agreement.

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• The new and additional supervision requirements push the independent contractor envelope and, accordingly, create risk for entities employing the registry model.

• There is no clear answer yet.

• Unfortunately, uncertainty breeds litigation.

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On to the fun stuff …

(5) ERISA Plan Documents:

Why should I care?

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(5) ERISA Plan Documents: Why should I care?What is ERISA?

The Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. (“ERISA”).

“Pension” and “welfare” plans covered. Our focus will be on “welfare

plans.” Plan documentation, reporting

and disclosure are key components to statutory scheme.

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(5) ERISA Plan Documents: Why should I care?• Plans must be maintained in writing.• Must provide covered employees with a

Summary Plan Description or “SPD.” • Insurance booklet may include broad coverage

language such as “employees of the employer” … working 32 hours or more on average.”

• Problem if your practice is not consistent with language in insurance booklet.

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(5) ERISA Plan Documents: Why should I care?Other “welfare plans” subject to ERISA.• Long Term Disability.• Short Term Disability (including funded sick leave

banks).• Life Insurance.• Vacation Plans (funded).• Severance Pay Plans (even those not

structured to conform with ERISA) are covered due to the incorporation by reference of LMRA § 302(c). 29 C.F.R. § 2510.3-1(a)(3); e.g., Blakeman v. Mead Containers, 779 F.2d 1146, 1149 (6th Cir. 1985).

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(5) ERISA Plan Documents: Why should I care?Homecare considerations:• If we offer coverage, are we doing so consistently

among caregivers?• Do our plan documents reflect accurately who is and

who is not covered.• Does our coverage constitute a “plan” for purposes of

ERISA?• Are pre-tax contributions being handled

through a § 125 “Cafeteria plan”?• What are we all going to do if

the Affordable Care Act moves forward?

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(6)Unemployment compensation:

Should I appeal?

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(6) Unemployment compensation: Should I appeal?• The general rule is that an employee is entitled

to unemployment compensation unless (inter alia): They have voluntarily left employment without

“compelling and necessitous” reasons; Lack of work, perpetual layoffs, and drastic reductions

in hours constitute “necessitous and compelling reasons” to quit one’s job for purposes of determining eligibility for unemployment compensation benefits.

they have committed “willful misconduct.”

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(6) Unemployment compensation: Should I appeal?• An Employers’ position in challenging the

employee’s unemployment compensation claims should be consistent with their reasoning for termination.

• Arguments, testimony and other evidence offered at the Unemployment Comp. proceedings often finds its way into subsequent discrimination litigation.

• In sum, think about it and take your responses seriously.

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(6) Unemployment compensation: Should I appeal?• Many employers will agree to “not oppose” an

application for unemployment compensation benefits to appease a terminated employee.

• By not responding to the notice of unemployment compensation claim, the employer does not make any statement against interest.

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(6) Unemployment compensation: Should I appeal?• Generally speaking, Unemployment

Compensation “Referees” have a propensity to grant unemployment benefits.

• However, where the employer suspects a subsequent lawsuit may ensue, the hearing provides a good opportunity for examination of the employee.

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(6) Unemployment compensation: Should I appeal?• In sum, the decision to appeal is dependent

upon the circumstances of each case.

• Hard to gauge costs of any specific claim from an underwriting perspective.

• Be careful not to “invite” litigation. There are a lot of hungry lawyers out there with time on their hands.

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(7) Terminating the difficult employee: How can I protect against discrimination claims?

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• In sum, you can’t. Frivolous claims not only persist, but make up the bulk of all filings.

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Mitigating risk …

• The manner in which the employee has been treated in the termination is often more important to them than the fact of termination.

• The complaint isn’t just, “I can’t believe they fired me;” more often it’s, “I can’t believe the way they treated me when they fired me.”

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The following general principles are important to remember: “Winging it” is never a good idea; you only get one chance to make a

last impression. Witness! If you would not be comfortable explaining your decision in court, you

probably haven’t made the right decision. Even if the employee ought to know the reason for termination already,

if “The Question” is asked, it needs to be answered in honest and concise terms.

No matter how badly one feels about firing an employee, apologizing for doing so is never a good idea.

Anything you say can and will be used against you in a court of law.

Keep it simple. Not an opportunity to debate. Don’t sugar coat it!

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• If any kind of severance package is being offered, a release should be included.

• If the employee is over age 40, the release must conform with the requirements of the Older Workers Benefits Protection Act.

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(8) Non-Compete Agreements: Do they really work?

Yes.

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(8) Non-Compete Agreements: Do they really work?As a general rule:

Non-compete agreements are enforceable where they serve to protect an employer’s “legitimate business interests.”

This requires that the agreements be reasonably tailored in three aspects: geographic scope, duration, and the manner of activities prohibited.

There is “no mathematical formula for what makes a covenant reasonable; rather, the court must evaluate the specific circumstances of the case at hand.” Darius Int’l, Inc. v. Young, 2008 U.S. Dist. LEXIS 33489 (E.D.Pa. 2008).

• State laws vary widely on the enforceability of non competition agreements.

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(8) Non-Compete Agreements: Do they really work?• Warning: In Pennsylvania, where an employer fires an

employee for “failing to perform in a manner that promotes the employer’s business interests,” the employer “deems the employee worthless” and, therefore, it is “unreasonable as a matter of law to permit the employer to retain unfettered control [through a non-compete agreement] over that which it has effectively discarded as worthless to its legitimate business interests.” Insulation Corp. of Am. v. Brobston, 667 A.2d 729, 735 (Pa. Super. Ct. 1995) .

• In other words, some courts have held that where an employee is fired for failure to perform sufficiently, the non-compete agreement may not be enforceable.

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(8) Non-Compete Agreements: Do they really work?Two types of relief available under a non-

compete agreement: Relief at Equity: Court forces employee to

terminate his/her employment, and to cease performing new work for former-employer’s clients, etc.

Relief at Law: Court awards monetary damages suffered by former-employer. (Usually lost revenues due to lost clients/customers.)

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(8) Non-Compete Agreements: Do they really work?• Important distinction: Relief at Law (i.e.,

money damages) does not require the court to weigh the reasonableness of the relevant restrictions, and rather, merely looks for an enforceable agreement.

• Accordingly, a non-compete agreement does, in most circumstances, “work” (at least with respect to damages at law).

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(8) Non-Compete Agreements: Do they really work?In sum …• Don’t loose site of “quelling effect” … Employer’s

shy away from employees with covenants and employees seek to avoid risk of violation …

• Narrowly tailor any non-compete in the homecare setting when dealing with caregivers.

• Short durations and restrictions limited to former clients should be construed as reasonable.

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(9) Recent Changes to NLRB Rules Affect All Employees --Both Non-Union and Union …

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Introduction …

• In the past year there have been more changes at the NLRB than perhaps at any time since passage of the National Labor Relations Act. These changes have resulted in the NLRB enforcing laws against non-union employers.– Social Media …

– Proposed Election Rules …

– Posting Rules …

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Social Media …

• The use of social media by employees may have replaced the “water cooler” and “happy hour” as the commonplace to talk (i.e., “complain”) about work.

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What is Social Media?

• Social media essentially is a category of online media where people are talking, participating, sharing, networking, and bookmarking online.

• Social media is a term for the tools and platforms people use to publish, converse and share content online. The tools include blogs, wikis, podcasts, and sites to share photos and bookmarks.

• Examples: Facebook, Twitter, LinkedIn, MySpace, Blogs, Wikis, Podcasts.

90

NLRA …

• Employers may be violating the National Labor Relations Act …– Section 7 of the National labor Relations Act protects

“the right…to form, join, or assist labor organizations…and to engage in other concerted activities for the purposes of collective bargaining or other mutual aid or protection.”

– Section 8(a)(1) states that it is an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise of their rights guaranteed in Section 7 of this Act.”

91

The Problem …

• Section 7 of the NLRA has for years protected employees’ “water cooler talk” to share gripes about work.

• However, yesterday’s water cooler talk is not the same as broadcasting disparaging comments on Facebook that could reach millions of people.

• How then does an employer decide when an employee’s post on social media constitutes a protected posting versus an act for which it may legitimately discipline?

92

NLRA

• Key Threshold Considerations:– Is the content protected (e.g., related to a term or

condition of employment)?– Is the activity concerted (e.g., does it involve two

or more employees)?–Who is making the post (e.g., supervisor not

protected by the Act)?–Would a reasonable employee believe

the policy is meant to chill exercise of his or her Section 7 rights?

93

Proposed Election Rules …

• The new rules “are intended to reduce unnecessary litigation, [and] streamline pre- and post election procedures.”

94

Proposed Election Rules …

• Time Frame Change– Currently, the Board’s goal is to hold

representation elections within 42 days from the filing of the petition.

– As of April 30th, the election will be held 14 to 20 days from the filing of the petition.

95

NLRB Notification of Employee Rights …• All employers within the jurisdiction of the

Act were to post by April 30, 2012.• Lawsuits have delayed this posting

requirement.• On April 17, 2012, the D.C. Circuit Court

enjoined the rule until oral argument in September 2012.

• Employers may post their own notice in addition to the Board’s.

96

Questions …

97

It’s finally over !!!

Thank you for your attention!

Thomas G. Collins, EsquireBuchanan Ingersoll & Rooney PCP: 717.237.4843F: 717.233.0852E: [email protected]

W: www.bipc.com

mailto:[email protected]

1 presented by: thomas g. collins, esquire buchanan ingersoll & rooney pc p: 717.237.4843 f:...

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