Eastern District Court Dismisses FLSA Claim Based on Statute of Limitations

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In Everett v. The Maternal Child Consortium, LLC, the Eastern District of Pennsylvania dismissed claims arising from a violation of the Fair Labor Standards Act (“FLSA”) which did not fall within the two-year statute of limitations. Civil Action No. 18-746 (E.D.Pa. 2018). Plaintiff began working for Defendant’s company in September of 2004 as a scheduler. Between 2004 and 2016, Plaintiff alleges that she consistently worked 41.5 hours per week and estimated that on three occasions per week, her meals were interrupted which reduced her meal time to under twenty minutes, the amount of time required by law.

Plaintiff asserted two bases for her FLSA claim. First, she asserted that she was not paid overtime compensation for work performed during her meal breaks. Second, she asserted that she performed “compensable on-call work”. The FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees that cannot be modified by contract. Under the FLSA, “employers may not employ an employee for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.”

Defendant raised a statute of limitations defense and contended that Plaintiff has to show that Defendant willfully violated the FLSA. Since Plaintiff failed to do so, the Court dismissed all of her claims arising out of a violation of the FLSA which did not fall within the two-year statute of limitations. In addition, the Court found that Plaintiff’s single allegation that she “performed compensable on-call work” was not enough to state a claim because she was required to show “onerous on-call polices and significant interference with plaintiff’s personal life.” For these reasons, the Court dismissed Plaintiff’s second FLSA claim.

For more information, call our Philadelphia employment lawyers for Fair Labor Standards Act in Philadelphia and South Jersey at the Law Office of Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

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Third Circuit Rules Upholds District Court Ruling Against Employer who Alleged Misappropriation of Trade Secrets

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In Givaudan Fragrances, Corp. v. Krivda, Plaintiff Givaudan filed suit against its former employee and the employee’s new employer for misappropriation of trade secrets. 639 F.App’x. 840, 842 (3rd. Cir. 2016). Givaudan alleged that Krivda stole over 600 fragrance formulas from its database before leaving for another employer in 2008. Givaudan alleged that the fragrance formulas were worth millions of dollars and considered them to be trade secrets. While the District Court of New Jersey granted Defendants summary judgment on the vast majority of Givaudan’s claims, it permitted Plaintiff to move forward to trial as to 34 formulas allegedly misappropriated by Krivda. After a five-week jury trial, the jury unanimously ruled in favor of Krivda on all clams, finding that Givaudan failed to prove that Krivda violated his employment contract or misappropriated any of the 34 fragrance formulas. Givaudan appealed to the Third Circuit Court of Appeals.

The Third Circuit began its analysis by preforming a de novo review of the District Court’s grant of summary judgment. For misappropriation to be proven in trade secrete cases, “it is patently obvious that trade secrets must be identified with enough specificity to put a defendant on notice of what is actually alleged to have been stolen.” Additionally, the Third Circuit notes that circumstantial evidence can be used to establish misappropriation of trade secrets, but only after enough specific information has been given to the defendant so the defendant can defend himself from the accusations. However, the availability of circumstantial evidence, to prove misappropriation of trade secrets, is tempered by the fact that it cannot be used to substantiate bald assertions

Here, the Court noted that Givaudan failed to provide Krivda with enough specific information about many of the formulas it believed to have been misappropriated. Out of the 600 formulas alleged to be stolen, Givaudan provided specific information on only 34. The Third Circuit next noted that even though the District Court allowed Givaudan to submit circumstantial evidence which showed Krivda printing out formulas, and being recruited by his new employer, the jury rejected the circumstantial evidence. The Third Circuit therefore affirmed the District Court’s decision to grant summary judgment in favor of Krivda and, finding that since the District Court did not deprive Givaudan of a fair trial, there existed no basis to overturn the District Court’s jury verdict.

At the Law Offices of Sidkoff, Pincus & Green P.C. our experienced Pennsylvania and New Jersey attorneys handle many types of legal matters, including contract law. If you are interested in having a consultation with one of our attorneys, please call us at 215-574-0600 or contact us online.

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Third Circuit Court Affirms Grant of Summary Judgment in PMWA Statutory Construction Case

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In Livi v. Hyatt Hotels Corp., No. 17-3646, 2018 WL 4944823 (3d Cir. 2018) the Third Circuit Court of Appeals affirmed the grant of summary judgment in favor of Hyatt Hotels in a Pennsylvania Minimum Wage Act (“PMWA”) and Pennsylvania Wage Payment and Collection Law (“WPCL”) action. Plaintiff, a banquet server for Hyatt, filed a class action complaint on behalf of herself and similarly situated individuals alleging that she worked more than 40 hours but was not paid overtime and that she was entitled to contractual service charge which Hyatt retained.

Under Pennsylvania law, service establishments (including hotels) are not required to pay overtime to employees working more than 40 hours per week if they are exempt from the overtime requirement under 34 Pa. Code § 231.43(f). An employer may be exempt if the “regular rate of pay of the employee is in excess of 1 ½ times the minimum hourly rate applicable” or “more than half of the employee’s compensation for a representative period, not less than 1 month, represents commissions on goods or services.” Plaintiff fell within both exemptions because the Court found her regular rate of pay at Hyatt was more than 1 ½ times the minimum wage and the service charges Hyatt paid her comprised more than half her compensation.

However, Plaintiff argued that Hyatt was not exempt from the overtime requirement because the service charges do not “represent commissions on goods or services” under the Pa. Code. The Court reasoned that although the relevant Pennsylvania statutes do not define “commission” and the Pennsylvania Supreme Court had no guidance on the issue, it was appropriate for the Court to look to Pennsylvania’s intermediate appellate court for assistance. The Court then explained that Pennsylvania’s Commonwealth Court instructed that “when the PMWA substantially parallels the federal Fair Labor Standards Act (“FLSA”), Pennsylvania courts look to federal courts’ interpretation of the parallel FLSA provision for guidance. Looking then to the FLSA’s overtime exemption, the Court agreed with the District Court that banquet service charges represent commissions. Therefore, the District Court appropriately awarded summary judgment to Hyatt.

If you have been denied overtime wages, the experienced Philadelphia employment lawyers at the Law Office Of Sidkoff, Pincus & Green will fight to get you the compensation you deserve. To schedule a consultation, call us at 215-574-0600 or contact us online today. With offices conveniently located in Philadelphia, we serve clients throughout Southeastern Pennsylvania and South Jersey.

PA District Court Declines to Dismiss PMWA Based on Factual Insufficiency

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In Philadelphia Metal Trades Council v. Konnerud Consulting West, Civil Action No. 15-5621, 2016 WL 1086709 (E.D. Pa. 2016) the Court found that Plaintiff’s Pennsylvania Minimum Wage Act (“PMWA”) claim is not preempted by the Fair Labor Standards Act (“FLSA”) and declined to dismiss Plaintiffs claim. Plaintiff was an unincorporated association consisting of a number of local union chapters. Defendants were subcontractors conducting business and employing workers at Plaintiffs shipyard. Defendants, who are foreign corporations, were required to provide a certified payroll of their employees.

According to Plaintiffs, Defendants paid workers less than one and one half times their regular hourly wage for hours worked in excess of forty. Plaintiffs filed a complaint and alleged that employees worked over forty hours a week and that Defendants failed to pay them overtime wages in violation of the PMWA and the Pennsylvania Wage Payment and Collection Law (“WPCL”).

Defendant moved to dismiss Plaintiffs Complaint based on the fact that Plaintiffs PMWA claim was factually inadequate and preempted by the Fair Labor Standards Act (“FLSA”). As to the first argument, the Court found that Plaintiff’s claim under the PMWA was factually sufficient because Plaintiff plead sufficient facts to give rise to a plausible claim for relief under the PMWA. The Court found that Plaintiffs attachment of payroll audits which supported the allegations that Defendants were violating the PMWA as dispositive. As to the second issue, the Court found that Plaintiffs PMWA claim was not preempted by the FLSA because Plaintiff did not explicitly bring an opt-out class action which Defendants argue would conflict with the FLSA. Even if Plaintiff brought an opt-out PMWA class action as described by Defendant, its claim would still not be preempted by the FLSA.

For more information, call our Philadelphia employment lawyers for Fair Labor Standards Act in Philadelphia and South Jersey at the Law Office of Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

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Pa District Court Rules That Employer Who Paid Its Employees One-And-One-Half Times the Minimum Wage Rate Was Still Required to Pay Overtime Compensations

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In Gonzalez v. Bustleton Service, Inc., the Eastern District of Pennsylvania held that an employer who paid its employees one-and-one-half times the minimum wage was still obligated to pay overtime compensation. 2010 WL 1813487 (E.D.Pa. 2010). Plaintiffs were landscape laborers who worked for a varying hourly rate. The “base” wage for each employee ranged from $8.00 – $13.50, but when the Plaintiffs were working on jobs for a government entity that set the applicable wage rate (“prevailing wage jobs”), they were paid nearly double their hourly rate. When Plaintiffs were working on normal jobs and receiving their “base” wage, they were all paid overtime wages in accordance with the FLSA, but Employer failed to pay them overtime when they were working on a prevailing wage job.

Employer argued that the overtime compensation should be based on the employees’ “base” wages, and when the employees were working on the prevailing wage jobs, they were paid above the necessary 150% of their base wage. Plaintiffs’ on the other hand argued that overtime is based on the weighted average of the rates the employee received during the workweek. For example, when an employee worked two different types of work, and received a different hourly rate for each, the overtime rate should be calculated on the average between the two hourly rates.

The Court agreed with Plaintiffs’ arguments and found that the Plaintiffs’ calculation was in accordance with the governing regulation by the Department of Labor. The Court refused to accept the employer’s calculation because, if accepted, this theory could allow employers to withhold overtime compensation if employees are paid one and one-half times the minimum wage.

If you have been denied overtime wages, the experienced Philadelphia employment lawyers at the Law Office Of Sidkoff, Pincus & Green will fight to get you the compensation you deserve. To schedule a consultation, call us at 215-574-0600 or contact us online today. With offices conveniently located in Philadelphia, we serve clients throughout Southeastern Pennsylvania and South Jersey.

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Pennsylvania’s Dragonetti Act

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Although the cause of actions of abuse of process and wrongful use of civil proceedings may seem to be one in the same, there are significant differences between them. The common law cause of action for abuse of process is defined as the use of legal process against another “‘primarily to accomplish a purpose for which it is not designed.’” Rosen v. American Bank of Rolla, 627, 426 Pa. Super. 376, 627 A.2d 190, 192 (Pa. Super. 1993). Wrongful use of civil proceedings (or more commonly known as the “Dragonetti Act”) covers a different tort. Its provisions are:

  • Elements of action. A person who takes part in the procurement, initiation or continuation of civil proceedings against another is subject to liability to the other for wrongful use of civil proceedings:
  • he acts in a grossly negligent manner or without probable cause and primarily for a purpose other than that of securing the proper discovery, joinder of parties or adjudication of the claim in which the proceedings are based; and
  • the proceedings have terminated in favor of the person against whom they are brought.

42 Pa.C.S. § 8351 et. seq.

Under the Dragonetti Act, the parties liable include the lawyer, the law firm prosecuting the case, the law firm’s client, and if applicable, the owner of a corporate client. The Dragonetti Act, including its provisions that allows actions to be brought against lawyers who file suits or prolong proceedings in violation of the Act was recently found to be valid by the Pennsylvania Supreme Court. See Villani v. Seibert, 639 Pa. 58, 83, 159 A.3d 478, 492 (2017).

The difference between the Dragonetti Act and abuse of process causes of action are well known in Pennsylvania jurisprudence. An action for abuse of process differs from a Dragonetti action (i.e., abuse of process is that the gist of an action for the improper use of process after it has been issued, that is, a perversion of it. Malicious use of civil process has to do with the wrongful initiation of such process.” Rosen, supra., 627 A.2d at 192. When civil proceedings are filed or prosecuted with a malicious motive and lacking probable cause, 42 Pa.C.S.A. § 8351(a)(1)-(2) is violated. A successful cause of action under the Dragonetti Act has three elements: (1) the proceedings were decided in favor of the defendant; (2) the lawyer, the law firm, and the client caused those proceedings to be instituted against the defendant without probable cause; and 3) the proceedings were instituted primarily for an improper cause. See Di Loreto v. Costigan, 600 F. Supp. 2d 671 (E.D. Pa. 2009) (Discussing cases).

The Dragonetti Act provides that a plaintiff is entitled to recover for (1) the harm normally resulting from any dispossession or interference with the advantageous use of his land, chattels or other things, suffered by him during the course of the proceedings; (2) the expense, including any reasonable attorney’s fees, that he has reasonably incurred in defending himself against the proceedings; (3) any specific pecuniary loss that has resulted from the proceedings; and (4) punitive damages according to law in appropriate cases.

For more information, call Philadelphia business lawyers at the Law Office of Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

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Eastern District Court Approves FLSA Settlement Agreement After Restaurant Engaged In “Time Shaving”

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In Excellent Pancake, Inc. v. Giannattasio, Civil Action No. 18-cv-176, 2018 WL 3913109 (E.D. Pa. August 15, 2018), the Court approved a settlement agreement to the extent that the agreement releases Defendants from claims that fall within the statutory and common law causes of action. Plaintiff in the case worked as a waitress at Defendant’s restaurant. Plaintiff alleged that Defendant engaged in “time shaving” by deducting time from server’s paychecks for breaks that the servers did not take. Plaintiff also alleged that Defendants did not pay Plaintiff overtime when she worked more than forty hours per week.

A majority of courts have held that bona fide FLSA disputes may only be settled or compromised through payments made under the supervision of the Secretary of the Department of Labor or by judicial approval. A proposed settlement agreement may satisfy judicial review if it is a “fair and reasonable resolution of a bona fide dispute over FLSA provisions”. Such an agreement resolves a bona fide dispute if its terms “reflect a reasonable compromise over issues such as back wages” and the court will determine whether the agreement is fair and reasonable to the plaintiff.

In this case, the Court found that the agreement resolved a bona fide dispute because the agreement paid the amount of back wages allegedly owed. Further, the Court found that the terms of the settlement agreement were fair and reasonable because the agreement awards the claimed unpaid wages along with liquidated damages and attorney’s fees.

For more information, call our Philadelphia overtime lawyers in Philadelphia at The Law Office of Sidkoff, Pincus & Green P.C. at 215-574-0600 or submit an online inquiry.

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Third Circuit Court of Appeals Holds that Helicopter Pilots are not Exempt Under the FLSA

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In Pignataro v. Port Authority of New York and New Jersey, the Third Circuit Court of Appeals held that that helicopter pilots did not fall under professional employee exemption. 593 F.3d 265 (3rd. Cir. 2010). Plaintiffs in this matter were helicopter pilots for the Port Authority of New York and New Jersey. Under the FLSA, employees are entitled to one-and-one-half their hourly rate for all time worked in excess of forty hours. Defendant claimed that both Plaintiffs qualified for an exemption to this general requirement known as the professional employee exemption.

In order to qualify under the professional employee exemption, an employee’s primary duties must require “work requiring knowledge of an advance type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education and from an apprenticeship, and from training in the performance or routine mental, manual or physical processes.” This exemption is meant to be narrowly applied against the employer and is primarily applied to employees in an academic or scientific setting, such as lawyers, doctors, engineers, and teachers.

The Court held that the pilots did not qualify under this professional employee exemption because the pilots were not required to obtain academic degrees or spend any significant time in a classroom in order to obtain their license or certification. Most of the training was done though in-flight instruction, and the few written tests required did not qualify as “prolonged.”  Thus, the Court held that the specialized knowledge and unique skill of the pilots was not sufficient to qualify under the professional employee exemption.

For more information, call our Philadelphia employment lawyers for Fair Labor Standards Act in Philadelphia and South Jersey at the Law Office of Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

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Middle District of Pennsylvania Rules Employees Do Not Qualify for Motor Carrier Act Exemption to the FLSA

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In Mazzarella v. Fast Rig Support, LLC, the Middle District of Pennsylvania held that truck drivers who primarily transported water from various fracking sites within Pennsylvania did not qualify under the Motor Carrier Act exemption to the FLSA.  823 F.3d 786 (M.D. Pa. 2016). Plaintiffs claimed that they often worked in excess of forty hours, but only received overtime when they exceeded forty-five hours in a single week.  Under the FLSA, employees are entitled to 150% of their hourly wage for any hours worked above forty. There are various exceptions to this overtime requirement including employees “to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service.” These exemptions, including the one at issue, must be construed narrowly against the employer, thus the defendant bears the burden of establishing “plainly and unmistakably” that the employees fall within this exemption.

The Motor Carrier Act exemption required Defendant to show that the drivers’ transportation of water was part of a continuous stream of interstate travel. When analyzing this issue, courts refer to various factors including the following: (1) whether and to what extent a product pauses in a warehouse or other location during transportation before reaching its final destination; (2) whether the product is altered in any way during its transport; (3) the employer’s intent concerning the delivery of the product at the time the transportation commences; and (4) whether the employer’s business involves an integrated system of interstate shipments.”

In an attempt to satisfy these factors, Defendant presented a DOT certificate, which authorized the drivers to engage in interstate commerce, an online article stating that most fracking water is trucked out of Pennsylvania into Ohio, and lastly, a spreadsheet indicating that certain shipments of water were tracked and bound for specific destinations in Pennsylvania. The Court found that none of this evidence “plainly and unmistakably” established that the employees were engaged in interstate commerce, and thus rejected Defendant’s argument and refused to apply the Motor Carrier Act exemption.

For more information, call our Philadelphia employment lawyers for Fair Labor Standards Act in Philadelphia and South Jersey at the Law Office of Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

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Eastern District Dismisses Breach of Contract Claim Against Former Employee for Alleged Violation of Non-Compete

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In Sales Benchmark Index LLC v. DeRosa, SBI sued DeRosa after he resigned from the company and went to work for another company. No. CV 18-2680, 2018 WL 3918090, at *1 (E.D. Pa. Aug. 16, 2018). SBI claimed DeRosa was in violation of the non-compete provision within his employment agreement by providing the same or substantially the same duties at the new employer; however, SBI did not allege the subsequent employer was a competitor of SBI, but that DeRosa himself was competing. The relevant portion of the agreement stated:

“Employee shall not directly or indirectly, in any Capacity, engage in Restricted Activities for a Competing Business[.]” “Restricted Activities” are “work activities, duties and/or responsibilities” that are “the same as, substantially similar to, or include,” the type of activities an employee had with SBI, including “sales and/or marketing advisory and/or consulting services.”

The Court’s analysis of this issue required a resolution to whether or not DeRosa was providing the same or substantially similar services for the subsequent employer, as he did when he was with SBI. To classify as a competing business, thereby creating a potential violation of the non-compete, the agreement defined a “Competing Business” as:

[A]ny Person in the business of providing sales and/or marketing advisory and/or consulting services, including businesses that supply, manufacture, produce, design, sell and/or market, as applicable, products and/or services which are the same or substantially similar to the products and/or services that [SBI] … supplied, manufactured, produced, designed, sold and/or marketed during the Reference Period. Businesses that engage in Competing Business include … the Employee operating Employee’s own business in any Capacity.

SBI attempted to argue DeRosa should be considered a “Competing Business” for purposes of an alleged breach of the non-compete. The Court refused to accept SBI’s argument, that the agreement prevents DeRosa from doing the same or substantially the same duties for a competing business. The Court noted that nowhere in the complaint did SBI allege the DeRosa ran his own business.

Since the Complaint failed to show DeRosa was not personally competing with his new employer, and SBI did not claim the new employer is a competitor, the Court dismissed the breach of contract claim for a violation of the non-compete.

Philadelphia contract lawyers at the Law Office of Sidkoff, Pincus & Green P.C. protect employees’ right to work. For assistance in any type of employment law matter, call 215-574-0600 to schedule a consultation in our Philadelphia office, where we represent clients in Pennsylvania and New Jersey, or contact us online.