Court Blocks Implementation of Revised FLSA Regulations

Employment Law Alert

On Tuesday, November 22, a Federal Court Judge in the Eastern District of Texas issued a nationwide injunction halting the changes to the Fair Labor Standards Act (FLSA) regulations. This decision stops the regulations from going into effect on December 1, 2016.

Twenty one states filed an emergency motion for a preliminary injunction against the Department of Labor to halt the implementation of the revised regulations. The court found that the Plaintiff States who were challenging the law, established that the amendments to the FLSA regarding the salary level and the automatic updating of the salary every three years are without statutory authority. Therefore, the court enjoined the regulations from becoming effective on December 1, 2016.

There will likely be continued litigation and an appeal in this case, so it remains to be seen if this decision will be upheld.  Employers for now can follow the old salary threshold of $455 per week or $23,660 per year for exempt employees. Employers should keep in mind that any employee they classify as exempt from overtime must meet the duties of one of the exemption categories. The Department of Labor will be strictly scrutinizing employees' duties performed to ensure they are properly classified as exempt.

For more information about the FLSA regulations, contact employment attorney Elaina Smiley. Elaina's contact information is listed below.

This material is for informational purposes only.  It is not and should not be solely relied on as legal advice in dealing with any specific situation. 

Elaina Smiley is a Partner in Meyer, Unkovic & Scott's Employment Law Group.

She can be reached at: 412.456.2821 or es@muslaw.com.

Contractors Can't Sue Owners' Individual Representatives for Payment

CONSTRUCTION LAW ALERT

The Pennsylvania Supreme Court has finally answered a key question that has plagued real estate developers, contractors and subcontractors for years: Can contractors hold the people who authorized the work individually liable for payment?

The issue stems from ambiguous language in the Pennsylvania Contractor and Subcontractor Payment Act (CASPA) of 1994. The act ensures that owners of a construction project pay contractors and subcontractors in a timely manner for their work. CASPA defines an "owner of a project" as anyone who owns an interest in the property and orders improvements to be made, including any successors who buy or inherit the property and agents of the owner who are acting on behalf of the owner.

The term "agents of the owner" became a point of contention in a recent case, Scungio Borst & Associates v. 410 Shurs Lane Developers, when a contractor tried to hold an "agent" individually liable for payment. In that case, contractor Scungio Borst & Associates completed construction work on a condominium complex owned by 410 Shurs Lane Developers. Robert DeBolt, who owned a 50% share in 410 Shurs, signed the contracts on the company's behalf, and gave verbal direction for Scungio to perform an additional $2.6 million worth of work. In November 2006, the developer terminated its contract with Scungio Borst, leaving $1.5 million in outstanding payments.

When Scungio requested payment for the outstanding amount, DeBolt refused on behalf of the company. Scungio then filed a lawsuit under CASPA against both the company and DeBolt, seeking to hold him personally liable. Scungio's suit against 410 Shurs went to trial, and a judge ordered 410 Shurs to pay nearly $2 million to Scungio.

Meanwhile, DeBolt filed for summary judgment, claiming he could not be held personally liable under CASPA because he was not a party to the contract as an individual. Rather, only the company was a party to the contract. The judge granted summary judgment in DeBolt's favor.

Scungio appealed the case to a seven-judge panel of the Superior Court, arguing that Scungio had been acting as an agent of the company when he ordered the work and, therefore, qualified as an "owner" liable for payment under CASPA. A majority of the judges disagreed with Scungio, asserting that the law was not intended to create individual liability for agents. Rather, CASPA merely grouped "agents" in with property owners to make it clear that project managers, architects and other representative agents were not contractors entitled to the payment benefits under CASPA. Thus, the Superior Court upheld the lower court's grant of summary judgment.

Three of the judges dissented, accepting Scungio's argument that the term "agents" has been used in other Pennsylvania laws, such as the Wage Payment Collection Law. In many of those cases, Pennsylvania courts have determined that an "agent" authorized to make decisions on a company's behalf could be held personally liable for payment.

Scungio appealed the question to the Pennsylvania Supreme Court, which ultimately upheld both of the lower courts' rulings. The Supreme Court emphasized that under standard contract law, a contract only imposes liability on the parties that signed the contract. The purpose of CASPA was to ensure that contractors got paid -- not to create a new class of people who are individually liable for contractual payments despite not being a party to the contract. Thus, the Supreme Court held definitively that contractors cannot hold agents for a company personally liable for contractual payments owed by the company.

For more information about liability and payment on construction projects, please contact Josh Lorenz. Josh's contact information is listed below.

This material is for informational purposes only.  It is not and should not be solely relied on as legal advice in dealing with any specific situation.

Joshua R. Lorenz is a Partner in Meyer, Unkovic & Scott's Construction Law Group. He can be reached at: 412.456.2821 or jrl@muslaw.com.

December 2016 IP Roundtable

What
Meyer, Unkovic & Scott is proud to sponsor the Pittsburgh Roundtable for the American Bar Association's Intellectual Property Litigation Section. These quarterly meetings allow IP litigation practitioners to network with other attorneys and discuss topics of interest.

Lunch will be provided by Meyer, Unkovic & Scott.

Who
Practicing attorneys interested in intellectual property matters. Attendees need not be members of the ABA IP Section.

Topic
How to Identify and Contract with a Cloud Services Provider That You Can Truly Trust

When
Thursday, December 1, 2016
12:00 Noon

Where
Meyer, Unkovic & Scott LLP
Henry W. Oliver Building, 13th Floor
535 Smithfield Street
Pittsburgh, PA 15222-2304
412-456-2800

How
Please RSVP by Monday, November 28th to: rsvp@muslaw.com

David G. Oberdick will serve as Moderator of this month's IP Roundtable.

Mr. Oberdick is Of Counsel in Meyer, Unkovic & Scott's Intellectual Property Group. He can be reached at 412.456.2881 or dgo@muslaw.com.

Pennsylvania Offers Tax Amnesty

Kevin Israel looks at Pennsylvania's tax amnesty program in this Pittsburgh Post-Gazette article, "PA offers tax amnesty program to businesses, individuals".

Client Alert - New I-9 Forms To Be Used Starting 1/22/2017

On August 25, 2016 the Office of Management and Budget approved a revised Form I-9, Employment Eligibility Verification. It is expected that the United States Citizenship and Immigration Services (USCIS) will publish a revised form by November 22, 2016.  Many of the proposed changes to Form I-9 were designed to reduce technical errors and help employers electronically complete the form after they have downloaded it from uscis.gov. Employers may continue using the current version of Form I-9 with a revision date of 03/08/2013 until January 21, 2017. After January 21, 2017, all previous versions of Form I-9 will be invalid.

All employers have an obligation to verify the identity and employment eligibility of all newly-hired employees through the completion of the Employment Eligibility and Verification Form I-9.  The Form I-9 contains the signature of the employer and the employee, and it records the relevant data from the documents that the employer inspected to confirm the employee’s authorization to work in the United States.  It is important that the employer clearly identify the reviewed documents and their identification numbers. It is not necessary to retain copies of these documents.  Employers are required to maintain for inspection the original Form I-9 for all current employees.  In the case of former employees, retention of Form I-9 is required for a period of at least three years from the date of hire or for one year after the employment relationship terminates, whichever is longer.

The U.S. Department of Labor and the Department of Homeland Security through its U.S. Immigration and Customs Enforcement Bureau (ICE) are the government agencies with authority to audit I-9 compliance.  ICE is committed to increased work-site enforcement, particularly in cases of low skill and high turnover industries. Employers should regularly audit their I-9 procedures, compliance, and recordkeeping, as well as establish a protocol at the “front desk” to identity persons responsible to deal with government inquiry; Employers should also be sure that all policies and protocols relating to recordkeeping and government compliance are current and understood by key employees.

For more information about the new I-9 forms, or any other Immigration Law matter, please contact Elaina Smiley, Joel Pfeffer or Gary Sanderson. Contact information for Elaina, Joel and Gary is available by clicking on the links below.

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