Archive for the ‘Uncategorized’ Category

New FLSA Salary Test Halted

A federal court in Texas has temporarily blocked the implementation of the new FLSA regulations set to take effect on December 1, 2016. On hearing an Emergency Motion for Preliminary Injunction filed by 21 State Plaintiffs, the Court reasoned that a temporary injunction was appropriate. In a decision filed November 22, the Court said that the States could show that when Congress enacted the FLSA, based on the plain language in the statute, it intended for the executive, administrative, and professional exemptions to depend on the employee’s duties and not the employee’s salary, and that in the new FLSA regulations, the DOL “exceeded its delegated authority and ignored Congress’s intent by raising the minimum salary level such that i t supplants the duties test.” The Court observed that DOL itself said that employees who currently fall below the salary threshold would automatically become eligible for overtime without a change to their duties, but Congress did not intend the amount of salary to categorically exclude employees from exempt status. Because the Court found the new regulations unlawful, it also found that the DOL lacked the authority to implement the automatic updates to the salary level.

In granting the preliminary injunction, the Court stated that it would preserve the status quo while it determines the merits of the case. It is likely that the decision will be appealed. However, the future of the regulations is uncertain as the matter is not likely to be resolved before the new Trump Administration takes over, and the new Administration could revise the regulations. For now, employers do not have to comply with the new regulations which would require overtime for employees paid under the new minimum salary threshold, which was $47,476.

This article is authored by attorney Laura Bailey Gallagher and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice.  Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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The National Labor Relations Board (“NLRB”) has changed the way that it will determine whether a mixed group made up of employees from a supplier employer and employees from a host employer may constitute an appropriate bargaining unit. In its July 11th Miller & Anderson, Inc. decision, the Board determined that the consent of both employers is no longer necessary. Instead, the Board will apply its standard community of interest test to determine if such a bargaining unit is appropriate.

In other words, temps employed by a personnel supplier company who work for a business and employees working only for that business will be able to vote on representation together if the two groups perform a similar kind work under similar conditions and have common supervision. Employers hiring temps should be aware that if temps make up a high enough percentage of the bargaining unit, the unit could unionize without any support from the permanent employees working directly for the host employer.

According to the Board, each employer will have an obligation to bargain only over the employees with whom it has an employment relationship and only in regard to the terms and conditions that the business has the authority to control. This means that the host business will have an obligation to bargain concerning the terms and conditions of employment for both the temps and its own regular employees in the bargaining unit, while the temp agency will only have an obligation to bargain with its temps, not the regular employees working alongside them. The business and the temp agency would then need to bargain with employees over the terms and conditions of employment that each employer could control.

This ruling overturns a 2004 decision by the Bush Board, known as Oakwood, and returns to the 2000 decision by the Clinton Board in M.B. Sturgis, which Oakwood had overturned. In Sturgis, the Board had reversed almost thirty years of clear precedent requiring mutual consent of both employers before employees of separate companies could be combined into a single bargaining unit.

The Miller & Anderson decision compounds the existing hazards of outsourcing labor to a temp agency created by the Board’s ruling in Browning-Ferris. In that case, the Board found that the presence of “indirect control” is enough to determine the existence of a joint employer relationship, a significant change from the previous requirement that an employer had to directly exercise its power over employees to establish a joint relationship. As Board member Philip Miscimarra noted in his Miller & Anderson dissent, “the majority’s expansion of Browning-Ferris here will only make it more difficult for parties to anticipate whether, when or where this new type of multi-employer/non-employer bargaining will be required by the Board, nor can anyone reasonably predict what it will mean in practice.” As a final note, given the Board’s predilection for reversing itself, both Browning Ferris and Miller & Anderson will have a short shelf life if the Board’s composition changes as a result of the November elections.

This article is intended to provide general information, not a specific legal opinion or advice. Any particular questions should be directed to your legal counsel. If you do not have legal counsel, please feel free to contact Harmon & Davies, P.C.

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Congratulations to our long-term client, Warfel Construction on being named a finalist as Central Penn Business Journal’s Business of the Year!  We are proud to represent this great Company!



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Vigilant Against Violence

Workplace violence is a subject that most people do not like to discuss. After all, most times when workplace incidents make the news, they are shocking and frightening, and it’s simply easier to say “That will never happen here.” Unfortunately, that’s not always true, as nearly 2 million workers reported having been victims of workplace violence each year, with even more going unreported.

Federal laws only provide general guidance, in the form of the Occupational Safety and Health Act of 1970, which requires employers to provide a safe workplace. While workplace violence is not always preventable, there are proactive steps you can take to reduce the risks and hopefully prevent a situation before it becomes dangerous, including:

  • Training managers and supervisors on the early warning signs of potential violence and how to address them
  • Implementing a comprehensive workplace violence prevention program
  • Clearly communicating to employees that the company wants to know when there are threats or incidents, and how serious the company is about handling issues
  • Making a good faith effort to investigate complaints where there is a reasonable concern that the employee’s behavior may cause harm to themselves or others
  • Considering additional security measures (sign-in desk, key-card systems, increased lighting, and video surveillance)
  • Identifying to all employees the contact person for communicating safety concerns or incidents

It is important to note, when preparing preventative measures, that workplace violence is not limited to employees; it also includes customers, clients and visitors.

Of course, while all of these measures will raise costs, it will likely be less expensive than the costs of a workplace violence incident. A 2006 study by Liberty Mutual reported assaults and violent acts as the 10th leading cost of non-fatal occupation injuries, at a cost of $400 million. Indirect costs, though difficult to quantify can include diverted attention and resources, loss of public trust, and reputational damage. Workplace violence can result in a number of legal actions against employers, including civil litigation, OSHA citations or fines and workers’ compensation. The key, as always, is finding a balanced approach that works for your particular business.

This article is authored by attorney Casey L. Sipe and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice.  Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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Early this year, the Commonwealth of Pennsylvania issued an opinion holding that even if public bid specifications state that the owner reserves the right to waive any formality in bids received, the owner may not waive a defect in the bid if the bid specifications expressly state that a bid will be rejected if certain information is not provided at the time of bid submission.  Where a governmental entity expressly states that a bid will be rejected if certain requirements are not met at the time of bid submission, such requirements become mandatory, even if not statutory.    Thus, the failure to comply with such requirements will be considered a material defect that precludes the bid from being considered.

In Dragani v. Borough of Ambler, the Borough of Ambler issued a public advertisement requesting sealed bids for its refuse, recyclables and yard waste hauling contract.  In relevant part, the bid specifications stated that each bidder must accompany its bid with a consent of surety from an approved surety company with its underwritten limitation therein stated to be at least equal to $20 million and that the failure to provide the required consent of surety at the time of bid submittal shall preclude a bid from being considered.  However, another section of the bid specification stated that the Borough reserved the right to waive any informality in bids received.

Three bids were submitted in response to the request for bids.  The consent of surety attached to BFI’s bid came from a surety with an underwriting authority of only $16 million.  BFI was the lowest bidder.  The next lowest bidder notified the Borough that BFI’s bid did not conform to the bidding instructions, in part because BFI’s surety did not have underwriting authority of $20 million, and therefore the bid should not be awarded to BFI.  BFI responded that the defects with its bid were nonmaterial and could be cured or waived by the Borough.

The Borough awarded the contract to BFI.  Thereafter, a resident taxpayer of the Borough took legal action to block the contract from being awarded to and carried out by BFI.  The trial court sided with the Borough on the grounds that: (1) the defects in BFI’s bid were not statutory; (2) the Borough reserved the right to waive bid deficiencies in the bid specifications and in the advertisement for bids; and (3) the waiver of defects by the Borough did not confer a competitive advantage on BFI.

The taxpayer resident appealed the trial court’s decision to the Commonwealth of Pennsylvania on the basis that BFI did not conform to the bid specifications.  Specifically, the taxpayer resident pointed to the fact that BFI’s surety only had underwriting for $16 million and that this defect was material and could not be waived by the Borough.

In examining this case the Commonwealth noted that it has repeatedly held that requirements set forth in bidding documents are mandatory and must be strictly adhered to in order for a bid to be valid, but that where the requirements in a bidding document are not required by statute and the bidding document reserves the right to waive defects, a non-compliant bid for public work may be accepted or cured if: (1) the effect of the waiver will not deprive a municipality of its assurance that the contract will be entered into, performed and guaranteed according to its specified requirements; and (2) a waiver will not adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders.  This standard is referred to hereinafter as the “Gaeta Standard.”

The tax payer argued that the Gaeta Standard should not be applied because the Borough could not waive a bid defect relating to a particular requirement in the bid specifications when the specifications expressly provided that the bid would not be considered if that particular requirement was not met.  In other words, while a governmental entity may waive a bid defect, it may not do so if the defect involves the waiver of a mandatory requirement that the bid specifications treat as non-waivable.

The Commonwealth Court agreed with the taxpayer and held that the Gaeta Standard did not apply because the Borough removed its discretion to waive a defect pertaining to the surety having $20 million in underwriting when it provided that the bid would be rejected if this requirement was not met at the time of bid submission.  Although the bid instructions reserved the right to waive any informality and the bid specifications reserved the Borough’s right to accept any contract, the Borough removed any discretion it had to waive a defect pertaining to the consent of surety when it provided that the bid would not be considered if the consent of surety required by the specifications was not provided at the time of bid submission.  BFI did not provide the consent of surety required by the bid specifications at the time it submitted its bid.  Because this requirement was mandatory, the failure to submit a consent of surety from a company with at least $20 million in underwriting was a legally disqualifying error.

This article is authored by attorney Shannon O. Young and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice.  Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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A few weeks ago, in Fedor v. Van Note-Harvey Associates, et al., the Eastern District of Pennsylvania reaffirmed the long-standing rule in Pennsylvania that employers of independent contractors are not typically liable for the negligence the contractor.  In that case the plaintiff, an injured roofer, unsuccessfully argued that three exceptions to the rule applied.  Although the roofer lost his case, it is important for owners and property managers to be mindful of the three exceptions. 

Exception No. 1:  Peculiar Risk

A special danger or peculiar risk exists where: “a reasonable employer of a  contractor would foresee the risk at the time the contract was executed and would recognize the need to take special measures.   

  • The Risk needs to be different from the usual and ordinary risk associated with the general type of work done  
  • Circumstances need to be unusually dangerous  
  • Can’t be routine construction work 
  • Violations of safety conditions are not a basis for invoking the doctrine 
  • Activity itself must be of increased risk-manner in which the worker engages in that activity is not relevant 

 Exception No. 2:  Retained Control

 A second exception to the general rule of employer nonliability exists where the owner retains sufficient control of the work to be legally responsible for the harm to plaintiff.  To demonstrate sufficient control to warrant application of the exception, a plaintiff needs to establish all or some of the following:

  • Contractual provisions that give the owner control over the manner, method, and operative details for the work 
  • The owner exercised actual control over the work 
  • Excludes a property owner retaining a certain degree of authority over safety issues 

Exception No. 3:  Negligent Hiring

 Section 411 of the Restatement (Second) of Torts provides that “[a]n employer is subject to liability for physical harm to third persons caused by his failure to exercise reasonable care to employ a competent and careful contractor (a) to do work which will involve a risk of physical harm unless it is skillfully and carefully done, or (b) to perform any duty which the employer owes to third persons.” Rest. (Second) Torts § 411. 

  • In Pennsylvania it has been held that the scope of section 411 is properly limited to claims by third persons other than employees of the negligent independent contractor itself.   

This article is authored by attorney Shannon O. Young and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice.  Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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I know, I know – today is Black Friday so you may think we’re jumping the gun by discussing Cyber Monday.  In fact, many of our readers may be shopping as we speak and therefore missing our blog today.  But those of you who aren’t battling the bargain-hungry shoppers in stores today will likely understand the reasoning behind today’s post.  Cyber Monday replaces Black Friday in many shoppers’ books – and with good reason.

Cyber Monday, the Monday following Black Friday, is a marketing term used to signal the internet’s equivalent of Black Friday.  In 2006, online shopping increased by 25% on Cyber Monday, generating $608 million in sales.  In 2009, the number was up to $887 million.  This number will likely only continue to rise as stores offer free shipping at any price and rival the sales many saw on the previous Friday.  Last year, 96.5 million Americans shopped online during Cyber Monday while only 79 million shopped in actual stores on Black Friday.  It looks like Cyber Monday is actually replacing Black Friday.

What does this mean to you?  Well, last year, 52.7% of purchases online on Cyber Monday occurred from work computers.  Understandably, many employers worry that this puts company networks at risk due to increased spam, viruses and phishing attacks.  Of possibly even greater concern is the likelihood of lower productivity.  CareerBuilder found that employers lost $580 million in productivity on Cyber Monday in 2008.  CareerBuilder has further estimated that of those shopping online, 43% will spend at least one hour doing so and 23% will spend two hours or more shopping from their workplace computer.

But is cracking down on computer use on Black Monday really worth it?  Probably not.  Allowing employees to do some of their holiday shopping from work is an easy, cheap way to boost employee morale.  Trying to prohibit computer use for personal endeavors such as shopping may appear rigid and enforce a divide between business and personal lives that many employees and employers are abandoning.  Many employees no longer follow the strict 9-5 workday.  More and more employees are doing work during off hours at home while enjoying some time at work taking care of personal business.  Allowing this flexibility may actually improve productivity.

Instead of trying to strictly enforce a “work related internet use only” policy, which also means you must be prepared to discipline employees accordingly, allowing limited use for personal reasons shows that the employer acknowledges that employees are responsible enough to make good decisions with respect to getting their work completed.  In turn, employees will feel more valued.  Another added benefit to allowing limited personal internet use is that employees will be less likely to take days off in order to get their shopping completed in time for the holidays.

Of course, if work is not being completed adequately or abuse of the policy is apparent, discipline may be appropriate or the problem may be dealt with in terms of a performance issue.

Regardless of how you plan to handle Monday at your place of business, knowledge of the costs and benefits are always useful.  And you never know; you may just find that perfect holiday gift.

This article is authored by attorney Samantha Sherwood Bononno and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice.  Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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In the Community…Going Green

You don’t have to look very far to see that the trend of “going green” is really catching on. In fact, some local businesses and government offices right here in our area are taking steps to save energy…and even your money. You may want to jump on this bandwagon.

Berks County has partnered with an energy service company in an effort to come up with a comprehensive plan to cut the county’s energy consumption. And with good reason. The combined monthly electric bill for the Berks County Services Center and the Courthouse is $75,000. With rate caps expiring this year, the bill is only going to increase. 

Over the next 15 years, this initiative should save $21 million in taxpayer dollars. That’s right – $21 million. The county is making many changes, large and small alike. New lighting throughout county buildings is expected to save more than $142,000 a year in lighting bills alone. In an effort to lead by example, employees are being informed on how their actions can save energy as well. For example, the difference in using a screen saver and turning your computer off is over 20 watts. The county is on to something by addressing the issue from both angles; saving energy and our taxpayer dollars is something we can all appreciate.

Moving southwest, businesses and organizations in Lancaster County are also taking the initiative to go green. One of our own clients, Warfel Construction Company, is the first contractor in Pennsylvania to achieve a GreenPlus Certification from the Institute for Sustainable Development. Warfel offers sustainable designs and LEED (Leadership in Energy and Environmental Design) Certification to their clients, both of which are becoming more and more important to developers today.

Not only do they build green, but Warfel has also made their own facility eco-friendly in an effort to show how attainable it is to build and renovate with green elements. Carpeted floor tiles are made from recycled materials while hard flooring is made from rapidly renewable materials. Automatic lighting based on motion detection is found throughout the building. Even the men’s room is green; it contains waterless urinals. Talk about walking the walk.

Businesses in Lancaster County that are interested in going green themselves or offering green services have many resources to help them do so. One of these is the Lancaster Chamber of Commerce and Industry. They are committed to connecting businesses to organizations and programs that can help them begin their own green initiative. They currently offer connections to certification organizations such as Green Seal and Green Plus and also provide a library of best practices that Lancaster businesses are implementing. The Chamber also supplies an extensive list of state and national resources to help you get started. For more information, click here.

 Whether you want to save your own or your client’s money, going green is a smart place to start. Not only will it keep your pockets a little more full in the long run, but it also benefits everyone around you. It is impossible to ignore the effects of our energy-driven society so it’s nice to know that we’re living and working in a place that acknowledges the necessity and benefits of being environmentally conscious. Whether you’re a county employee, a business owner or just a member of the community, we can all appreciate that our fellow citizens are forging ahead in this innovative area.

This article is authored by attorney Samantha S. Bononno and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice. Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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Misnomer – “An Error in Naming a Person or Thing.”

It seems like politicians have become downright chummy with “misnomer”.  In fact, I think they’re married to the word. Because every piece of legislation proposed as of late seems to be just that – a misnomer.  Like the “Employee Free Choice Act”. Quite the misnomer, since it actually proposes taking away the freedom of employees to make their choice in private. Strange when, for political elections, we still have the right to vote in private. So why wouldn’t the politicians, elected themselves through such a process, want to allow employees to continue to have such a right in the workplace? Thankfully, as Americans, we like to keep things short; we like acronyms. Love them, in fact, almost as much as politicians love misnomers. So proposed legislation like the “Employee Free Choice Act” gets cut down to “EFCA”. And, if you’re in my seat, we cut it down even further to “Act”.

Another recent misnomer is the “Patient Protection and Affordable Care Act”.  A mouthful, isn’t it? Think we’ll ever refer to it by its “given name”? Never. It isn’t referred to as the PPACA though, either. Most folks simply refer to it as “Obamacare”. I’ve got another word for it…but I probably shouldn’t use it here.

If a misnomer is an error in naming something, then there are more errors than just the name associated with “Obamacare”. For example, one of the promises President Obama made while lobbying for the passage of Obamacare was that “if you like your health care plan, you will be able to keep your health care plan.”  True?  Doesn’t seem so. Most Americans who have a health care plan by virtue of their employment will not be able to keep their current plan. Folks thought employer-based plans would achieve “grandfathered” status and, thus, wouldn’t be impacted by Obamacare. Unfortunately, for employers and employees alike, that simply won’t be the case for the vast majority of such plans.

Alterations or changes to a plan will cause it to lose its “grandfathered” status. And alterations and changes to health care plans are standard practice these days. In the last decade, year-to-year changes to employer-based health care plans have become the norm – because of the cost of insurance now, it’s what businesses have to do in order to provide reasonable health care to its employees. So, what kind of alterations and changes are we talking about?

Well, most obviously, if the employer changes its health care provider, “grandfathered” status is lost. If the deductible for your plan changes, “grandfathered” status is lost. If the percentage of the insurance paid by the employer/employee changes, you guessed it, the “grandfathered” status is lost. And if the “grandfathered” status is lost, then so is the plan. And small businesses are already struggling to provide health care to its employees. Under the new regulatory scheme, it’s believed that small businesses will be forced to drop health care coverage all together. This means that more Americans will be required to obtain coverage on their own. Something that has never been considered an affordable option.

As to how far-reaching the impact of Obamacare will be on the average American, I don’t think we’ll know that until 2014 when the majority of the “reforms”, and the penalties, take effect.

Of course, there’s still something we can do between now and then. We can make our views on the legislation known to the folks that are representing us. And we can get out and vote. Don’t underestimate the power – and the importance – of voting, particularly this November.

This article is authored by attorney Susan M. Zeamer and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice.  Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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While my previous posts addressed how to avoid construction claims, today’s blog explores two types of claims that you can assert or have asserted against you.  These claims include payment and defective performance claims.  Delay claims are the topic of a future post.   

     A.      Payment Claims:  Show Me the Money

Simply stated, payment claims arise over a failure to make a payment.  And while payment may seem straightforward, things get befuddled when the parties can’t agree on what is owed for changes and extras. 

Carefully drafted clauses regarding changes can help prevent unexpected claims for additional costs allegedly not compensated for in the change order.  This scenario may also be curtailed by adding language to your standard change order form, expressly excluding any contention that notice requirements were waived by the issuance of the change order and mandating strict compliance with all contractual requirements related to change orders. 

     B.      Defective Performance Claims:  But that’s Not the Color I Specified

Defective performance claims occur as a result of poor quality workmanship and non-conformance to plans and specifications. 

Under what is known as the doctrine of waste, damages in a defective performance claim are awarded based upon the cost to correct the defective work or the diminution in market value, whichever is less.  Let me explain: 

Let’s say that you are building a house and you tell the GC to install brand-name fans.  Instead the GC installs generic fans.  If it costs more for the GC to remove the generic fans and install the brand-name fans, than the resulting diminution in the value of the home, the homeowner will only be awarded damages in the amount of the diminution.  This is why most owners will want to argue that the resulting diminution in value goes far beyond the cost of repairs. 

While the doctrine of waste may run counter to our playground sense of justice, at some level it makes sense.  It’s illogical for an entire dividing wall to be ripped down just because it was misplaced by an inch- unless the misplaced wall substantially diminished the value of the structure. 

Luckily, the law gives an owner a number of remedies to address defective performance including breach of contract, breach of warranty and representation, negligent construction, and negligent misrepresentation and/or fraud. 

An owner may also withhold payment for defective work, but if this option is elected, the owner should inform the contractor of its reason and if possible, explain the basis for the amount withheld. 

Check back next week for our blog on delay claims. 

This article is authored by attorney Shannon O. Young and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice. Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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