The EEOC voted 4-1 to release enforcement guidance regarding the use of arrest and conviction records in the hiring process. With the easy availability of criminal records today, and a population who is increasingly coming into contact with the criminal justice system, particularly African-American and Hispanic men, the EEOC determined that updated guidance was needed. While acknowledging that having a criminal history is not a protected class under Title VII, liability may lie where an employer’s reliance on a criminal record to deny employment treats an employee differently due to his or her protected status or disproportionately screens out a protected group without relation to the position and business necessity.

The issue of whether an employer’s policy disparately treats a protected group is usually much easier to determine. Essentially, if an employer’s background check process treats an applicant from a protected group differently than an applicant outside that group (regardless of whether the other applicant is also in a protected group), then a finding of disparate treatment is likely.

However, determining whether a facially neutral criminal background check policy disparately impacts applicants in a protected group requires significantly more analysis. If an applicant can show that the employer’s policy eliminates members of a protected group more than applicants that are not part of the protected group, which may be as simple as showing that members of the protected group are arrested and convicted at a higher rate, the policy likely has a disparate impact. The employer must then show that the policy is justified in light of the job requirements and the necessities of the business.

In determining whether the policy is job related and consistent with business necessity, the EEOC emphasizes that arrests and convictions must be treated differently. An arrest is not sufficient to deny employment, but an employer may make the employment decision based upon the conduct underlying the arrest, if the conduct makes the applicant unfit for the job. The important distinction is the focus on the conduct, not the arrest. In short, the conduct may be considered if it would be sufficient to deny employment if the applicant had not been arrested.

Conviction records tend to be more reliable, and therefore, may be acceptable grounds for denying employment. However, the Commission does recommend that employers refrain for asking about convictions on job applications and limit any inquiries to those related to the position. To show that the policy operates to deny employment only to those applicants whose criminal conduct, and the dangers it indicates, are linked to the risks of the position, employers should either:

• create a screening process that is narrowly tailored, with the process validated per the Uniform Guidelines on Employment Selection Procedures or
• develop a screening process where, upon screening out an applicant, an individualized assessment is conducted

The individualize assessment requires notifying the applicant and allowing him or her to demonstrate that they should not be excluded. The employer should consider a number of factors during the assessment, including: the circumstances of the conduct, the number of convictions, whether the same time of work was performed post-conviction, the employment history before and after the conviction, rehabilitation efforts and character references. While quite onerous, if the applicant does not cooperate with the employer’s efforts to gather information, a decision may be rendered with the information the employer was able to gather. While not mandatory, the Commission does note that a screening process with an individual review will be less likely to violate Title VII.

Where federal laws and regulations disqualify convicted applicants from certain occupations, the employer is entitled to deny employment based on applicable convictions. However, state and local laws that limit or prohibit the employment of applicants with certain criminal convictions are preempted by Title VII and are not a viable defense.

In light of this new guidance, employers would be wise to eliminate policies where applicants are excluded for any negative criminal history, in favor of a policy that is narrowly and specifically tailored to the open position, with an individual review process. In order to narrowly and specifically tailor the policy, the employer should consider the requirements of the job and the liability risks that the job entails, and then determine the specific offenses that indicate unfitness for performing job. Consideration must also be given to the duration of the exclusion based on the available evidence. Finally, and of great importance, managers and other hiring decision-makers must receive training regarding the new hiring procedure in order to ensure that the criminal background check policy is implemented as intended and in compliance with Title VII.

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.

Whether you are a start-up or have grown to a large corporation, you must comply with business laws and regulations, and specifically with advertising laws.  Therefore, before you delve into advertising and marking your business to potential consumers, you need to understand some basic rules. 

All businesses are subject to federal regulations regarding advertising and some businesses may be subject to state and local government regulations.  This blog focuses on federal regulations.  The Federal Trade Commission (“FTC”) is the main federal agency charged with enforcing advertising laws and regulations.  Under the Federal Trade Commission Act:

• Advertising must be truthful and non-deceptive;
• Advertisers must have evidence to support their claims; and
• Advertisements cannot be unfair.

Certain specialized products such as alcoholic beverages, automobiles and real estate, for example, are subject to additional advertising regulations.

The FTC’s Deception Policy Statement describes a deceptive ad as one that contains a material misleading statement (or omits information) that is important to a reasonable consumer’s decision to buy or use the product under the circumstances.

Before a company runs an ad, it needs to have a “reasonable basis” for its claims, which means objective evidence, often times in the form of tests, studies, or other scientific evidence.  Keep in mind that statements from satisfied customers usually are not sufficient to support a health or safety claim, or any other claim that requires objective evaluation.

The FTC pays closest attention to ads that make claims: (1) about health and safety; and (2) that consumers would have trouble determining for themselves.  Ads that make subjective claims or claims that consumers can judge for themselves are less likely to receive FTC attention.  For example, the statement, “this perfume smells fantastic,” is unlikely to receive FTC attention.  Additionally, the FTC concentrates on national advertising campaigns and usually refers local matters to state, county, or city agencies.

If the FTC determines that your company is running a false or deceptive ad, it can impose penalties against your company, including cease and desist orders and/or civil penalties in the form of fines or refunds to consumers.

Thus, as a rule of thumb, before you engage in an advertising campaign whether print, online, or through another medium, carefully scrutinize whether your ad could be viewed as false or deceptive and research whether any additional advertising regulations apply to your particular industry or product.  Harmon & Davies can assist you with determining whether there are any advertising restrictions that apply to your particular industry, product, or the type of advertising that you want to engage in.

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.

The Superior Court of Pennsylvania recently upheld a York County jury verdict that found a homebuilder personally liable for defective construction work.  In Bennett et al. v. A.T. Masterpiece Homes at BroadSprings, LLC et al., two sets of homeowners who purchased new residential homes from A.T. Masterpiece Homes at Broadsprings, LLC (“A.T. Masterpiece”), sued the limited liability company and its managing member, Grant Colledge, in his individual capacity, for breach of contract, breach of warranty, and violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) alleging that the defendants engaged in deceptive and dishonest practices during the construction process.

The homeowners alleged that during the construction of their homes they noticed numerous building deficiencies and that Colledge, who was the homeowners’ primary contact during the construction process, made certain assurances to them in the form of statements akin to: “I guarantee it” or “I will take care of it.”  For example, when one of the homeowners noticed that the dormer above his garage did not correspond to building plans and structural design, Colledge assured the homeowner that the dormer had been redesigned and the final product would work fine.  In another instance, a homeowner visited her home to check on its progress and noticed a crack in the foundation.  When the homeowner reported the crack to Colledge, he stated that he “will take care of it and will take care of you.”  Colledge made other guarantees regarding issues with the flooring and repeated his intention to take care of both the specific problem and the homeowner’s general concerns.

After construction finished, the homeowners discovered that their new homes were in various states of disrepair and structural failure.  The dormer that had been an issue on one of the homes was in such bad structural shape that the homeowner had to install temporary bracing to avoid collapse.  There were other alleged deficiencies including nails protruding from sections of drywall, cracked tiles, and floors being so poorly laid that a person could feel the joints move while walking.

The homeowners retained an engineering expert who found similar construction defects and housing code violations in each home.  The deficiencies included:  using poor grade lumber, improperly installing the floor joists, and housing code violations related to the insulation, height clearances, ventilation, plumbing, and electrical systems.

At trial, the jury found Colledge and his company liable for breach of contract, breach of warranty, and violations of the UTPCPL.  The jury further concluded that Colledge’s representations and guarantees regarding the homes exposed him to personal liability and awarded the homeowners double the damages under their UTPCL claims.

Colledge appealed his case to the Superior Court of Pennsylvania arguing that the trial court erred: (1) by permitting the jury to hold him personally liable to the homeowners when he did not specifically agree to assume liability; (2) by holding him personally liable when there was no evidence of fraudulent conduct by him; and (3) by doubling the jury’s award under the UTPCPL when the Court itself did not view Colledge as an absolute crook.

Colledge argued that he should be shielded from personal liability because he was at all times acting only as an agent on behalf of a limited liability company.  Colledge claimed that any statements attributed to him (where he said “I will take care of it” or “I guarantee it”) were simply figures of speech and did not amount to express assumptions of personal liability.  The Superior Court disagreed and found that there was ample evidence presented at trial to lead the jury to find that Colledge had assumed personal liability.

The Court noted that the several occasions where Colledge had reassured the homeowners that he would take care of their concerns and made express promises guaranteeing the quality of their homes did not take place in a vacuum but in the context of recurring building deficiencies which arose during construction of the homes.  The court stated that although the homeowners officially contracted with A.T. Masterpiece, Colledge voluntarily assumed personal liability on the building contract when he guaranteed the final quality of the home because the statements were intended to calm the homeowners about the building deficiencies and to maintain their contracts.

Moreover, the Superior Court found that there was sufficient evidence to support the jury’s finding of liability under the UTPCPL because the jury was not required to find proof of common law fraud to find that Colledge had engaged in misleading conduct under the UTPCPL.  Again, the facts presented at trial showed that Colledge made numerous specific representations to the homeowners regarding the construction and ultimate quality of their homes.  Despite such guarantees, Colledge failed to deliver the quality he promised to the homeowners and the homeowners received brand new homes in need of many thousands of dollars in repairs.  The jury heard this evidence and concluded Colledge’s conduct was deceptive or misleading.  Thus, the court found that the evidence at trial was sufficient to support the jury’s finding.

This case is concerning not only for contractors, but for any business owners who make statements such as “I guarantee it.”  In light of this decision, Pennsylvania small business owners should be particularly careful about the assures that they give to clients or else they may find themselves personally liable.

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.

The District Court of South Carolina struck down the NLRB requirement that employer’s post the “employee rights” notice poster in US Chamber of Commerce v. NLRB. The Chamber argue that the NLRB could not require employers to post the notice because it is not authorized by the National Labor Relations Act. The NLRB argued that Section 6 of the Act, which allows it to promulgate rules that are necessary to carry out its mission, provided the required authority.

The district judge ruled that Section 6 requires rules promulgated by the NLRB be necessary to carry out other provisions of the Act, and the NLRB failed to prove that the notice-posting rule was necessary. The judge noted in his opinion that with computers and the Internet, information is freely available to employees, further weakening the NLRB’s claim that the poster was necessary.

While this was certainly a step back for the NLRB, this will not be the last we hear of the “employee rights” notice poster. The NLRB will likely appeal the district court’s ruling, and both sides will argue their case before the court of appeals. However, the rules effective date will almost certainly be pushed back yet again, so stay tuned.

UPDATE: The District of Columbia Circuit Court has enjoined the NLRB from enforcing the regulation that would have required employers to post the employee rights notice poster.

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.

In November 2006, the Occupational Safety and Health Administration (“OSHA”) cited and fined Volks Constructors, a full service heavy industrial contractor, $13,300 for failing to properly record certain workplace injuries and for failing to properly maintain its injury log between January 2002 and April 2006.  The contractor contested the citations on the grounds that they were untimely because they were issued at least six months after the last recorded injury occurred.  Pursuant to OSHA regulations, no citation may be issued after the expiration of six months following the occurrence of any violation.

By way of background, the Occupational Safety and Health Act provides that each employer shall make, keep and preserve records of workplace injuries and illnesses.  OSHA regulations require employers to record information about work-related injuries and illnesses in three ways:

(1)               employers must prepare an incident report and a separate injury log within seven calendar days of receiving information that a recordable injury or illness has occurred;

(2)               employers must prepare a year-end summary report of all recordable injuries during the calendar year, which summary must be certified by a company executive; and

(3)               the employer must save all of these documents for five years from the end of the calendar year that those records cover.

In the case of Volks Constructors, OSHA began an inspection of Volks in May 2006 and discovered that Volks had not been diligent in completing its logs, forms, and summaries between 2002 and 2006.  OSHA then took approximately six months to issue a set of citations to Volks for violations related to Volks’ failure to fully complete incident report forms, its failure to enter injuries in the log, its failure to conduct year-end reviews between 2002 and 2005 and, in at least one instance, its failure to have the proper person certify the year-end review.  Notably, Volks was not cited for any violation of the requirement that it save the forms and the log for five years.

Volks’ improperly recorded injuries occurred between January 11, 2002 at the earliest and April 22, 2006 at the latest.  By the time OSHA issued the citations in November, however, the citations were issued a maximum of 54 months after the earliest improperly recorded injury and a minimum of six months, plus ten days, after the latest improperly recorded injury.

Volks moved to dismiss the citations as untimely because OSHA regulations state that no citation may be issued after the expiration of six months following the occurrence of any violation and the injuries giving rise to Volks’ recording failures took place more than six months before the issuance of the citations.  An OSHA Administrative Law Judge (“ALJ”) ruled in favor of OSHA and Volks appealed to the Occupational Safety and Health Review Commission (“OSHRC”).  On appeal the Secretary of Labor argued that Volks’ violations were continuing violations that prevented the six month statute of limitations from expiring until the end of the five-year document retention period.  The Secretary essentially argued that because Volks’ violations were still occurring on May 10, 2006 when the inspection began, the citations were timely because they were issued within six months of May 10, 2006.  The Commission agreed with the Secretary and affirmed the citations.  Volks then filed a petition for review with the United States Court of Appeals for the District of Columbia Circuit.

On review, the District of Columbia Circuit was asked to decide whether OSHA’s record-keeping requirement, in conjunction with the five-year regulatory retention period permits OSHA to subvert the six-month statute of limitations.

In reviewing the Commission’s decision, the Circuit Court noted that pursuant to OSHA regulations, OSHA may cite employers for violations within six months of the violation’s occurrence; meaning if an injury is reported on May 1, OSHA can cite an employer for the failure to create a record beginning on May 8, and may issue a valid citation for such failure anytime within the following six months, and only the following six months.  Moreover, once an employer has made such a record, it must also retain it for five years.  If the employer loses or destroys a record before the end of the five year record retention period this is another violation.   OSHA may cite employers for violations of the five year record retention requirement within six months of the violation’s occurrence.  In other words, OSHA may cite a company for failure to maintain its records for the required five years for six months after the fifth year, and only for six months after the fifth year.  In the Volks case, OSHA never cited Volks for a violation of the five year record retention requirement because it could not cite Volks for the loss or destruction of a record that Volks never made.  Rather, OSHA only cited Volks for the failure to create a record.

Thus, the DC Circuit Court concluded that the citations were issued far too late and therefore had to be vacated.  The court concluded that the statutory language which deals with record keeping is not authorization for OSHA to cite the employer for a record-making violation more than six months after the recording failure. Rather, OSHA must enforce record-making violations swiftly or else forfeit the chance to do so.

In reaching this decision, the DC Circuit Court strongly disagreed with the Secretary’s argument that the five year record keeping requirement extended the statute of limitations by noting that the Secretary’s interpretation incorrectly assumed that the obligation to maintain an existing record expands the scope of an otherwise discrete obligation to make the record in the first place.  The Circuit Court viewed the two obligations as distinct stating “one cannot keep what never existed; a company cannot retain a record it never created.”

Notably, the DC Circuit Court distinguished the Volks case as a case of inaction ( i.e., Volks failed to properly create certain reports) from a case of continuing action.  For example, the court noted that where a company continues to subject its employees to unsafe machines, or continues to send its employees into dangerous situations without appropriate training, OSHA may be able to toll the statute of limitations on a continuing violations theory because the dangers created by the violations persist.

Based on the decision reached in the Volks case, if you receive an OSHA citation more than six months after a discrete violation of an OSHA regulation, you should strongly consider contesting the citation on the grounds of timeliness.  The attorneys at Harmon & Davies can assist you with contesting OSHA citations.

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.

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 10^th 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.

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) proudly announced on March 22, 2012 that it entered into a conciliation agreement to resolve allegations of hiring discrimination by two subsidiaries of FedEx Corp. with federal contracts.  These subsidiaries, like most companies that are awarded federal contracts, must comply with OFCCP requirements and regulations.

By way of background, federal contractors of a certain size or with federal contracts of a certain amount must file annual affirmative action plans (“AAPs”).  AAPs are generated using computer software.  The computer software creates an overview of the federal contractor’s workforce based on the overall workforce and the number of applicants, hires, promotions, and terminations that occurred during the previous year.  Such computer programs specifically look at the number of female and minority applicants, hires, promotions, and terminations to determine whether the federal contractor’s decisions with respect to hiring, promoting, and terminating indicates any statistically disparate impact on females and minorities.

In the case of the two FedEx subsidiaries, the OFCCP’s allegations against the FedEx subsidiaries were based on computer statistical analysis that presumably indicated a disparity in the subsidiaries’ hiring process and sparked the OFCCP’s investigation.  In other words, the OFCCP’s allegations against FedEx did not step from individual complaints of discrimination.  Even though no one apparently complained that FedEx’s subsidiaries discriminated against them during the hiring process, according to Secretary of Labor, Hilda L. Solis, that is okay because findings of discrimination can rest on disparate impact statistical analysis alone.  In the FedEx case, according to Solis, the OFCCP saw statistical “trends of discrimination, not only against one group, but against many groups across the country.”

More specifically, according to the OFCCP News Release, during a series of regularly scheduled reviews, OFCCP compliance officers found evidence that FedEx’s hiring processes and selection procedures violated Executive Order 11246 by discriminating on the bases of sex, race, and/or national origin against specific groups identified at 23 facilities in 15 states.  The reviews also allegedly uncovered extensive violations of the executive order’s record-keeping requirements.

The FedEx subsidiaries admitted no wrongdoing, but rather than engage in a prolonged and expensive resolution process with the Department of Labor, the subsidiaries entered into a conciliation agreement with the OFCCP under which the companies agreed to pay a total of $3 million in back wages and interest to 21,635 applicants who were rejected for entry-level package handler and parcel assistant positions and agreed to extend job offers to 1,703 of the affected workers as positions become available.

The FedEx subsidiaries also committed to wide-ranging reforms including: (1) the company promising to correct any discriminatory hiring practices and implement equal employment opportunity training; (2) launching extensive self-monitoring measures to ensure that all hiring practices fully comply with the law; (3) agreeing to engage an outside consultant to perform an extensive review of the company’s hiring practice and provide recommendations to change and improve those practices; (4) agreeing to train incumbent and future supervisors and employees to monitor compliance with the equal opportunity laws enforced by the OFCCP; and (5) taking necessary steps to comply with all record keeping requirements.

The conciliation agreement entered into by the FedEx subsidiaries appears to have been an economic decision made by the company.  It will forever remain unknown whether FedEx actually engaged in discriminatory hiring decisions.

What’s clear from the FedEx ordeal is that federal contractors should be particularly attentive when it comes to OFCCP compliance. In addition to Executive Order 11246, the OFCCP enforces certain other acts aimed at protecting the disabled and veterans.  Those who do business with the federal government, both contractors and subcontractors, must not discriminate in employment on the basis of sex, race, color, religion, national origin, disability or status as a protected veteran.

For assistance with creating your Affirmative Action Plan or other OFCCP compliance issues, please contact Harmon & Davies, P.C.

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.

Employers routinely use background checks when hiring new employees, without considering the consequences of using them on every applicant. The EEOC’s current standing policy provides that criminal background checks should be limited to only those positions where such information is “job-related and of business necessity,” and should only seek information about convictions, not arrests.

The Fair Credit Reporting Act, in addition to providing rules regarding credit checks, imposes a number of requirements on employers seeking to obtain a criminal background check.  Before obtaining a criminal background check, an employer must disclose in writing to an individual that the report may include in-depth information about his or her character, general reputation, personal characteristics, mode of living, criminal, driving and work history.  The disclosure must be delivered no later than three days after the report was first requested and include a statement informing the individual of their right to request additional disclosures and receive a written summary of legal rights. If an individual requests additional information about the investigation, the employer must mail or otherwise provide the information within five days of receipt of the written request, or the request date of the report, whichever is later. Employers must take “reasonable measures” to protect against unauthorized access to or use of information in connection with the disposal of consumer information.

In order to prevent legal trouble, employers can take a few easy steps. Employers should have a clear reason for requiring a criminal background check, relating to the open position. For example, a position where the applicant will have access to the employer’s or customer’s money could require a background check to ensure that the applicant does not have any fraud convictions. In addition, employers should discuss the information they are allowed to consider with legal counsel, and then limit the background check to that information, so that no improper information is included in the background check, which ensures that there is no chance that improper information would be considered during the hiring process. Finally, blanket policies, where every applicant is given a background check, should be avoided. A discussion with legal counsel can provide specific guidance on when criminal background checks are appropriate, and what information can be sought.

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.

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.

In a growing trend, employers are asking job applicants and employees to provide login information to their Facebook pages and other social networking accounts. Many are questioning the propriety of asking for login information, particularly because an applicant or employee may believe refusing will cost them a job. However, even reviewing social media profiles, or utilizing a third-party application, to obtain information about applicants and employees may expose employers to legal liability.

Facebook has already confirmed that password sharing is prohibited under its Terms of Service. Facebook’s “Statement of Rights and Responsibilities” Section 4(8) explicitly prohibits password sharing:   “You will not share your password, (or in case of developers, your secret key), let anyone else access your account, or do anything else that might jeopardize the security of your account.” While violating the letter or spirit of the Facebook Rights and Responsibilities can lead to deletion of the user’s Facebook account, there are few real legal consequences for such violations. The Department of Justice regards entering a social networking site in violation of the terms of service to be a federal crime, but admitted that they would not prosecute offenders.

There are real legal dangers in asking an applicant or employee for login information, or even reviewing their social media accounts.  Many people post information on social media sites that may show a protected status (age, sex, religion, disability, genetic information, race, national origin and pregnancy), lawful off-duty conduct (alcohol or smoking), or criminal history.  Such information may be, albeit unintentionally, factored into hiring or workplace decisions. It could be particularly damaging if an employer requested access to social media accounts, and then makes a decision that detrimentally affects the applicant or employee. It simply creates more fodder for a potential lawsuit.

Employers that insist on reviewing applicant or employee social media profiles should take steps to maintain objectivity. Assigning a non-decision-maker to review the social media profiles, before passing on relevant information onto the hiring personnel, can help to prevent those making the hiring decision from relying on improper information. Employers may also want to limit their social media search to LinkedIn, because it is a professional site, which is much less likely to display improper information.

In the end, employers are generally better off not trying to obtain information about applicants and employees via Facebook and other social networks. The possibility that important information may be unearthed is greatly outweighed by the potential legal pitfalls and lawsuits a search may create.

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.