Shared Work Plan an Alternative to Layoffs

Companies facing a downturn in business often lay off employees as the quickest way to cut costs. But many employers may be able to avoid layoffs by taking advantage of Pennsylvania’s Shared Work Program. To learn more read June Swanson's recent article, "Shared work plan an alternative to layoffs".

Companies Have Growing Employment Liability for Temp Workers

Beth A. Slagle
bas@muslaw.com
412.456.2890

Companies that use staffing agencies to hire temporary workers are facing new liabilities as courts increasingly determine that the temporary workers qualify as employees of the company, not just the staffing agency.

In a recent court case, a discount retailer used a staffing agency to help it fill available positions in its stores. At one of the company's Pennsylvania stores, a temporary employee said he and other African-American workers were subjected to racist comments and discriminatory working conditions. Eventually, the store fired the African-American temporary workers.

The temporary employee then filed discrimination claims against the retailer under Title VII of the federal Civil Rights Act of 1964 and the Pennsylvania Human Relations Act. The retailer, however, said that as a temporary worker from an agency, the worker did not meet the definition of an employee and therefore could not file a claim.

The federal district court agreed with the retailer, and dismissed the worker's claims. On appeal, however, the Third Circuit Court of Appeals carried out a closer examination of the employment relationship to determine whether the retailer was actually an employer and vacated the district court's dismissal.

There is no strict standard that determines whether a company that hires a temporary worker through a staffing agency qualifies as the worker's employer. Typically, courts examine factors such as which company pays the workers, hires and fires them, and supervises daily activities.

In the agreement between the staffing agency and the retailer, the staffing agency agreed to be responsible for hiring and paying "temporary employees" and workers reported to the agency if they were unable to make it to work for a scheduled shift. Once the temporary employee showed up to work at the retailer, however, the retailer was responsible for assigning appropriate duties to the worker and had full supervisory authority over him. Typically, the retailer assigned temporary workers to perform the same type of work as regular employees. If the retailer was unhappy with a temporary worker's performance, it could notify the agency to send an immediate replacement.

The Third Circuit Court decided that a reasonable jury might determine that the retailer was a joint employer with the staffing agency, and therefore would be liable for the discrimination claims.

Companies should keep in mind that the court's decision in the case is part of a larger trend of defining companies that hire temporary workers through a staffing agency as joint employers. Earlier in 2015, the National Labor Relations Board issued a decision in which it broadened the definition of joint employer to include a larger number of employment relationships involving staffing agencies.

Companies should also carefully review their relationships with temporary workers and staffing agencies to see whether they may qualify as the workers' employer, which opens up companies to many new liabilities. In some cases, companies may want to re-structure their relationships with temporary workers to avoid such liability. If the relationship with the temp worker is restructured, companies should be prepared that they will likely have to give up significant control over the temporary workers' activities if they want to avoid the liabilities of being an employer.

For more information about the legal hurdles of hiring temporary workers and other employment law matters, contact Beth Slagle, or any other Meyer, Unkovic & Scott attorney with whom you have worked.

Employers Must File Amended Petition Every Time H-1B Worker Moves

Joel Pfeffer’s article "Employers Must File Amended Petition Every Time H-1B Worker Moves" recently appeared in the Pittsburgh Post-Gazette.

Immigration Law Update

On April 9, 2015, the Administrative Appeals Office (AAO) of the U.S. Citizenship and Immigration Services (USCIS) issued a decision in the Matter of Simeio Solutions, LLC, overruling prior USCIS practice permitting employers to file a new Labor Condition Application (LCA) when an employee changed work locations. An LCA, certifying the prevailing wage for each work location, must be filed with all H-1b petitions.

The AAO ruled that it is no longer acceptable to file an LCA containing the new work location that is not covered in the original H-1b petition. The employer must file an amended H-1b petition and pay the filing fees, when the employee's place of employment changes to an area that was not covered by the original petition and LCA.

In this case, which involved a company providing information technology services, the employer represented that the job was an "in-house project" at the employer's facilities in Long Beach, California, and submitted an LCA for the Long Beach area. Two months after the start date of the employee's H-1b employment, the employer left the Long Beach facility and the USCIS showed up for a site visit and found that no company existed at the address indicated on the H-1b petition. The employer filed a new LCA indicating that the employee was working out of his home address, in a different area of California, and a client address in New Jersey. Both of these new work locations had a wage of over $9,000 more than the wage indicated on the H-1b petition and certified in the original LCA. The AAO footnotes that the new LCA "had to be submitted to the USCIS as part of an amended or new petition before the beneficiary would be permitted to begin working in those places of employment."

The AAO ruled that the change in the employee's places of employment constituted a material change to the terms and conditions of employment as specified in the original H-1b petition. Because the employer failed to file an amended petition with a corresponding LCA, the H-1b petition was revoked.

This decision could have significant impact on companies that move employees to various projects, with new work locations, and previously relied upon the filing of a new LCA to cover these work-sites. Under this AAO ruling, this practice is no longer sufficient and an employer should file an amended H-1b petition for the new work sites.

For more information about H-1b visas and other immigration matters, contact Joel Pfeffer, Elaina Smiley, or Gary M. Sanderson.

Health Care Employers Should Prepare for Overtime Changes

Gary Sanderson's article "Health Care Employers Should Prepare for Overtime Changes" recently appeared in Western Pennsylvania Healthcare News. You can access the online version here.

Tips For Conducting An Interview

This video blog highlights a few things that small business owners or HR managers can do to ensure a successful interview process.

Severance Agreements May Go Too Far

Beth Slagle's article "Severance Agreements May Go Too Far" recently appeared in Western Pennsylvania Healthcare News. You can access the online version here.

Compensation For Signing Non-Competes

Beth A. Slagle

Most employers ask some or all of their employees to sign non-compete agreements to prevent them from leveraging the knowledge and connections gained during the course of their employment to get a job with a competitor.

Although many employers may not realize it, Pennsylvania law dictates that employers always must offer employees some type of valuable compensation in exchange for signing a non-compete agreement. Without compensation, the company will be unable to enforce the agreement in Pennsylvania courts.

It's a common misconception that employers can get around the compensation rule by making sure that the non-compete agreement says that both employee and employer "intend to be legally bound" by the document.  The belief comes from Pennsylvania's Uniform Written Obligations Act (UWOA), which states that any contract is valid, even if no payment or other benefits have been exchanged, as long as the contract states that both parties intend to be legally bound by it.

But a recent ruling by the Pennsylvania Superior Court forcefully dispelled that misconception, making it clear that the rule to give employees compensation for signing non-compete agreements trumps the UWOA.

In the case, a company hired a salesman who had worked for it previously.  Upon accepting employment, the company asked him to sign a non-compete agreement that restricted him from working for a competitor for two years after leaving the company.  Later, the company asked the salesman to sign another agreement that further restricted him from working for competitors in several states, including Pennsylvania. The salesman was given no extra compensation or consideration for signing the non-compete agreement.

When the salesmen took a job with a competitor in Pennsylvania, his former employer threatened legal action against the new employer, which fired the salesman. The salesman then sued his former employer, claiming that his non-compete agreement was invalid because the company didn't compensate him for signing it.   The company argued that despite the lack of compensation, the contract was legally binding under the UWOA.

The Pennsylvania Superior Court ruled in favor of the salesman, noting that non-compete agreements "have always been disfavored in Pennsylvania." The UWOA does not relieve employers of their obligation to compensate employees for signing non-compete agreements.  For new employees, the job itself is acceptable compensation.  But for existing employees, employers must offer some other benefit, such as a bonus or promotion.  Courts do not consider "continued employment" to be acceptable compensation.

The ruling serves as a warning to all employers of the difficulty of enforcing non-compete agreements in Pennsylvania.  Employers should review their non-compete agreements and administration policies to make sure that the agreements are enforceable in court.

For more information about non-compete agreements and other matters related to employment law, contact Beth Slagle at bas@muslaw.com or 412-456-2890.

Beth Slagle has practiced law for more than 20 years and focuses her practice on business disputes and employment law. Beth's work has earned her a spot in Best Lawyers in America since 2010, and she is the chair of the firm's Insurance Coverage Litigation Group. She can be reached at bas@muslaw.com or 412.456.2890. 

Healthcare Workers Under the Influence

An impaired medical employee can create risk to patients and legal liability for employers. There are several items healthcare employers can include in a drug and alcohol policy to create a safe, drug-free workplace. Elaina Smiley addresses this in her article “Healthcare Workers Under the Influence” on page 4 of this issue of Western Pennsylvania Healthcare News.

Health Care Employees Can Reap Benefits From Employment Reviews

Hospitals, physician’s practices and other health care employers can protect themselves by conducting regular employment reviews. Learn more in Patricia Farrell’s article “Health Care Employees Can Reap Benefits From Employment Reviews” on page 11 of this issue of Western Pennsylvania Healthcare News.

H-1B Visa Update

Do not delay in preparing your H-1B visa applications as the demand is great, and it is likely that the U.S. Citizenship and Immigration Services (CIS) will receive more applications than there are available visas during the first week of April, 2014. There is a cap on the number of H-1B visas available: 65,000 for those applicants holding the equivalent of a U.S. Bachelor's degree and an additional 20,000 visas available for foreign nationals with a U.S. Master's degree or higher. In the past several years, the CIS has conducted a lottery to determine which applicants would be eligible for an H-1B visa due to the great demand.

It is recommended that employers file on or about April 1, 2014, to secure a slot for employment beginning October 1, 2014. Companies employing students on OPT (Optional Practical Training) with work visas expiring in the months between April and September, 2014, may have the opportunity to extend the work of students until October 1 with a timely H-1B visa application filing.

It is important for companies to carefully prepare their applications as the CIS has increased its scrutiny and regularly requests additional evidence from employers. Employers need to work with counsel to develop detailed explanations about why the employee qualifies for this visa.

For more information about H-1B visas and other immigration matters, please contact Joel Pfeffer or Elaina Smiley.