PEPping Up the Economy and Employers

By: Maria L.H. Lewis

On October 26, Governor Tom Corbett (R-PA) signed into law the Promoting Employment Across Pennsylvania Act (PEP) (House Bill 2626).  This law is touted as an attempt to create new jobs in Pennsylvania and promote economic development.

What does this mean for thousands of Pennsylvania employers?  If you are able to create at least 250 new jobs in Pennsylvania within 5 years (with 100 of the new jobs created within the first 2 years), you will be eligible to retain 95% tax witholdings for the persons employed in the new jobs.  Under the Act, the employer may select to remit all of the personal income tax witheld from employees then receive a rebate of the tax from the Commonwealth.

Job creators grow while growing the economy in the process.  These tax savings may provide opportunities for employers to further increase their number of employees beyond the initial 250 or reinvest in other areas of the business.  Presumably, the Commonwealth benefits as well.  More persons employed in the Commonwealth lead to economic growth through purchasing power and sales tax revenues.

There are restrictions and critiques.  Non-profit entities, religious organizations, utilities, restaurants/bars, gambling establishments, retail stores, and education or public administration offices need not apply.  Plus, an open question remains whether the program amounts to an employee paying an employer for his/her job.

To take advantage of this opportunity, employers must enter into an agreement with the Department of Community and Economic Development (DCED).  Any interested employer should move quickly because the ceiling for the program in Pennsylvania is $5 million per year.  This Act expires January 1, 2018.

Federal Court Holds that FLSA’s “Fluctuating Workweek” Method Violates Pennsylvania Law

A recent decision out of the Western District of Pennsylvania, Foster v. Kraft Foods Global, Inc., Civ. No. 09-453 (W.D.Pa. August 27, 2012), highlights the challenges employers face in simultaneously complying with both local and national wage and hour regulations.  In Foster, the court held that the “fluctuating workweek” method of overtime compensation – which is expressly permitted by the FLSA – is not permitted under Pennsylvania law.

Under the fluctuating workweek method, an employer pays a nonexempt employee a fixed weekly salary, regardless of the number of non-overtime hours worked.  This method is generally used in industries in which an employee’s hours change unpredictably from week to week based on factors such as customer demand or seasonal variation – e.g., lawn maintenance companies, golf courses, or the travel industry.  In using this method, the employer benefits from significant cost savings over traditional methods of overtime calculation and the employee benefits from the stability of a fixed weekly salary.

There are five requirements for using the fluctuating workweek method.  The employee’s hours must fluctuate from week to week; the employee must receive a fixed salary that does not vary with the number of hours worked (excluding overtime); the salary must be high enough that the employee’s regular rate of pay is at least the minimum wage; the employer and employee must have a clear mutual understanding that the salary is fixed; and the employee must receive overtime compensation equal to at least one-half the regular rate for all hours worked over forty.

In Foster, the court’s analysis focused on this last requirement.  The court held that “the payment of overtime under the FWW method, at any rate less than one and one-half times the ‘regular’ or ‘basic’ rate,” is impermissible under the Pennsylvania Minimum Wage Law.  We’ll be watching this decision (if appealed) and subsequent cases closely, because if this interpretation of the Minimum Wage Act is upheld, the primary advantage to the employer in utilizing the fluctuating workweek method is eliminated.  In the meantime, Pennsylvania employers who use this method to compensate nonexempt employees should reconsider their policies, given that it may no longer result in cost savings.  Moreover, this case should serve as a reminder that, although many local wage and hour regulations are modeled after (and in some respects identical to) the FLSA, compliance with the FLSA does not guarantee compliance with local statutes.

To Compel Discovery Of A Party’s Social Media Content In Pennsylvania, There Must Be A Hook

By: Kate S. Gold and Aaron M. Moyer

Pennsylvania trial courts have been particularly active in the past few years in issuing opinions regarding how much, if any, of a party’s non-public Facebook and other social media content are subject to discovery in litigation.  A July 2012 opinion issued by Judge Wettick in Allegheny County, Trail v. Lesko, highlights these increasing discovery disputes and outlines the recent trends of the courts addressing the disputes.  As Judge Wettick found, courts have compelled very broad access to social media content in cases where one party has articulated that the publicly available portions of the other party’s social media site contains information relevant to the prosecution or defense of a claim.

Although there are no appellate court opinions on this subject matter in Pennsylvania, there are several trial court opinions.  On the one hand, some of the cases permit very broad access to Facebook and other social media content.  For example, at least three written opinions in Pennsylvania since 2010 have required the party from whom discovery is sought to provide his or her username, password or other login information to the requesting party. In these cases, the requesting party provided the court with specific evidence from the individual’s publicly accessible pages showing the likelihood that full access to the social media account would garner further relevant information.  In Zimmerman v. Weis Markets, Inc., the plaintiff claimed personal injuries from a workplace injury and his public profile said he enjoyed “ridin” and “bike stunts” and showed pictures of him with a black eye and his motorcycle both before and after the workplace accident at issue in the litigation.  And, as one Pennsylvania trial court put it in McMillen v. Hummingbird Speedway Inc., “[w]here there is an indication that a person’s social network sites contain information relevant to the prosecution or defense of a lawsuit, . . . and given [the case law’s] admonition that the courts should allow litigants to utilize ‘all rational means for ascertaining the truth,’ . . . and the law’s general dispreference for the allowance of privileges, access to those sites should be freely granted.”

On the other hand, a number of Pennsylvania trial courts, in written opinions, have completely denied any and all access to a party’s social media content.  Many of the requesting parties in these cases failed to identify any compelling or specific reason for obtaining access to the other party’s non-public social media content.  These courts have concluded that the mere fact that a party has a social media account, without anything more, is insufficient to justify broad discovery access to the account.

In Trail, Judge Wettick provides a comprehensive review of Pennsylvania’s case law addressing this question.  Judge Wettick also highlights cases from a number of other jurisdictions, which are generally consistent with the approach of Pennsylvania courts that have addressed this question in that the other jurisdictions tend to require some factual predicate suggesting the existence of relevant information prior to ordering access to the information being sought.  Unlike Pennsylvania, though, some other jurisdictions have sought to establish more of a middle ground between wholesale denial of the request for social media content and unlimited access to the user’s profile.  Judge Wettick reached what is perhaps the obvious conclusion from these cases: litigants seeking access through discovery to a party’s Facebook or other social media content must show that there is a sufficient likelihood that the discovery requested will provide relevant evidence that is not otherwise available.  Further, Judge Wettick said the court must consider the level of intrusiveness as balanced against the need for the discovery.  Although courts are still wrestling with this question and the answer will continue to evolve, the courts seem to fall back on the age-old principle that discovery should not be an unbridled fishing expedition into a party’s private information.  However, with a big enough hook (i.e., publicly accessibly portions of the social networking site suggesting that further relevant postings are likely to be found by access to non-public portions), Pennsylvania courts are willing to provide very broad access to a party’s social media content.