Unlimited Geographic Restriction in Non-Compete Agreements may be Void

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Non-compete agreements incident to an employment relationship are common place in Pennsylvania. Non-compete agreements prevent employees from working for competitors, but the restriction must be reasonable in both the duration and the geographic area. See Socko v. Mid-Atl. Sys. of CPA, Inc., 633 Pa. 555, 569, 126 A.3d 1266, 1274 (2015). Since some businesses stretch nationwide or even worldwide, some non-competes attempt to prevent an employee from working for any competitor anywhere. However, the geographic restriction should be determined by the employee’s duties or sales territory, not the employer’s overall market. See Boldt Machinery & Tools v. Wallace, 366 A.2d 902, 909 (Pa 1976).

Usually when an employer’s geographic restriction is too broad, the court will modify the restriction to better fit the employee’s duties or territory. Sidco Paper v. Aaron, 351 A.2d 250, 254 (Pa. 1976). Despite this, some over broad geographic restrictions may be determined to be void and will not be modified. Adhesives Research v. Newsom, No. 15-0326, 2015 WL 1638557 (M.D.Pa. April 13, 2015).

In Adhesives Research v. Newsom, the former employee’s sales territory included the western half of the United States, but the non-compete included a restriction anywhere employer’s products were sold worldwide. The Court refused to tailor the agreement to create a reasonable geographic location. The Court explained that when an employer utilizes an overly broad geographic restriction, although a specific geographic location could easily be determined based on the employee’s duties, the agreement should be found void with no modification.

For more information, call the Law Office of Sidkoff, Pincus & Green at 215-574-0600 or contact us online. Our non-compete lawyers represent clients in Philadelphia.

Pennsylvania District Court Holds that Plaintiff was Exempt from Overtime Compensation Under the PMWA

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In Baum v. Astrazeneca LP, the Western District of Pennsylvania held that the plaintiff was employed in a purely administrative capacity and thus exempt from overtime compensation. 372 Fed. Appx. 246 (W.D. Pa. 2010). Plaintiff, a former pharmaceutical sales representative for AstraZeneca, filed for unpaid overtime wages under the PMWA. Plaintiff worked as a pharmaceutical sales specialist assigned to promote and visit with surrounding physicians. During these visits, Plaintiff would provide meals, promote the newest products, and address other medical areas all in an attempt to sell AstraZenenca products. In total, Plaintiff regularly worked sixty to seventy hours a week, travelling, setting up the meals, and promoting these products. Plaintiff brought a claim under the PMWA for unpaid overtime compensation for the hours in excess of forty that she worked.

The PMWA provides an exemption from overtime compensation to an employee who is “employed in a bona fide administrative capacity.” This exemption requires the following: “(1) a salaried compensation is at least $250 per week, exclusive of board, lodging or other facilities; (2) the employee’s primary duty consists of the performance of office or nonmanual work directly related to the management policies or general operation of his/her employer or the customers of the employer; and (3) primary duty requires the exercise of discretion and independent judgment.”

The Court held that the Plaintiff satisfied all three factors of this administrative capacity test and therefore was exempt from overtime compensation. Plaintiff earned more than $250 a week, her primary duty was nonmanual work related to the general operation of AstraZenaca, and since she spent most of her workday unsupervised and had discretion in how she set up the promotions and events, the third prong was satisfied. Therefore, the Court held in favor of AstraZeneca and rejected Plaintiff’s claim for overtime compensation.

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.

Pennsylvania District Court Denies Plaintiff’s Motion for Summary Judgment Regarding Claim for Unpaid Overtime for Time Spent Taking Protective Equipment On and Off

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In Tyger v. Precision Drilling Corp., Rodney Tyger, an employee of Precision Drilling Corp., brought a suit under the Fair Labor Standards Act (“FLSA”) seeking compensation for the amount of time it took to put on, and take off, personal protective equipment as well as compensation for the time it took to walk from the personal protective equipment changing area to the post-shift safety meeting location. Tyger v. Precision Drilling Corp., 308 F.Supp. 3d 831 (M.D. Pa. 2018). Precision Drilling Corp. argued that Tyger was not entitled to compensation for putting on and taking off personal protective equipment, or for the time it takes to walk between the area designated for putting on and taking off personal protective equipment and the post-shift safety meeting locations. Conversely, Tyger argued that Precision Drilling Corp. willfully violated the FLSA which entitled him to compensation.

In its argument, Precision Drilling Corp. cited to the Portal-to-Portal Act, which created two exceptions to the FLSA’s mandated compensation. The exception includes, “walking, riding, or traveling to and from the actual place of performance of the principal activity or activities which such employee is employed to perform….”Id. at 841. The Supreme Court of the United States has weighed in on what constitutes “principal activity or activities” which are excluded from the Portal-to-Portal Act exception to the FLSA’s manded compensation as, “all activities which are an ‘integral and indispensable part of the principal activities.’” Id. (citing Integrity Staffing Solutions, Inc. v. Busk, 135 S. Ct. 513 (U.S. 2014)).  Therefore, “an activity is integral and indispensable to the principal activity that an employee is employed to perform if it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.” Id. at 841.

The Court analyzed whether putting on and taking off personal protective equipment was an “integral and indispensable” aspect of employment. The Court found that when dealing with hazardous chemicals, employees of Precision Drilling Corp. put on and took off personal protective equipment while on the clock. The Court denied Tyger’s Motion for Summary Judgment claiming an issue of material fact existed as to how toxic the oil-based mud, a biproduct of oil and gas drilling, was to the employees and whether it necessitated putting on and taking off personal protective equipment.

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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Pennsylvania District Court Grants Motion to Dismiss in Favor of Defendant in FLSA and PMWA Wage Violation Claim

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In Matthews v. BioTelemetry, Inc., the Court found that the facts of the case did not create a plausible inference that Plaintiff was “based in Pennsylvania”, as is required for the application of the Pennsylvania Minimum Wage Act (“PMWA”). Matthews v. BioTelemetry, Inc., Civil Action No. 18-561, 2018 WL 3648228 (E.D. Pa. 2018). Plaintiff, a Virginia resident, began working for Defendant in 2011. Plaintiff initially worked as a Cardiac Specialist in Defendant’s Norfolk, Virginia office but was ultimately promoted to Remote Holter Technician in 2017. Although Plaintiff worked in the Norfolk office, Defendant’s principal place of business was in Malvern, PA. In this role, Plaintiff generally worked a total of 47.5 hours per week and occasionally on weekends. For wage purposes, Defendant classified Remote Techs, Plaintiff’s position, as “not eligible to receive overtime pay” while In-Person Techs were entitled to overtime wages. Plaintiff filed a complaint alleging violations of both the Fair Labor Standards Act (“FLSA”) and the PMWA for unlawfully failing to pay overtime compensation. Defendant moved to dismiss Plaintiff’s PMWA claim.

Defendant contends that Plaintiff was not an employee under the PMWA and specifically argues that independent contractors are distinct from employees and are not entitled to overtime compensation under the PMWA. In addition, Defendant stated that Plaintiff was not “based in Pennsylvania” for purposes of the statute. In deciding whether an individual is “based in Pennsylvania”, the Court employed a five-factor test derived from the Wage Payment and Collection Law (“WPCL”) which includes examination of: (a) employer’s headquarters; (b) employee’s physical presence; (c) extent of employees contact with Pennsylvania employer; (d) employee’s residence; and (e) employees ability to bring his claim in another forum. Plaintiff made only a few allegations which would enable plausible inference that Plaintiff was based in Pennsylvania for purposes of the PMWA. First, Plaintiff pointed to the agreement he entered into when taking the Remote Tech position which said Pennsylvania law was governing. Second, Plaintiff said he was supervised by the Malvern, PA office. Third, Plaintiff had to report to the Malvern, PA office on occasion. Lastly, Plaintiff had to respond to e-mails that originated from the Malvern, PA office. The Court found that the allegations did not create a plausible inference that Plaintiff was based in Pennsylvania for purposes of the PMWA and thus, granted Defendant’s Motion to Dismiss.

Philadelphia employment lawyers at the Law Office of Sidkoff, Pincus & Green P.C. have been serving clients throughout Pennsylvania for over 50 years. Our team of dedicated has a long history of successful outcomes in a vast array of varied employment law cases.

Call us today at 215-574-0600, or contact us online to see how we can help you with your employment legal issues. Our offices are conveniently located in Center City Philadelphia, allowing us to serve clients throughout Southeastern Pennsylvania and New Jersey.

Pennsylvania District Court Rules Employer Could Not Credit Purported Premiums Included in Its Lump Sums Towards Overtime Compensation as Required by the FLSA and DOL Rules.

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In Hickman v. TL Transportation, LLC, 318 F. Supp. 3d 718 (E.D. Pa. 2018), former employees brought a class action lawsuit alleging their former employer failed to properly compensate them for overtime hours worked under the federal Fair Labor Standards Act (“FLSA”), the Pennsylvania Minimum Wage Act (“PMWA”), and the Maryland Wage and Hour Law (“MWHL”).

Plaintiffs claimed that although they often worked in excess of eight hours each shift, Defendant would only pay them $160 for each day worked, regardless of how many hours they actually worked. Defendant argued that under the FLSA, the lump sum paid to employees should be credited to any amount owed to Plaintiffs because the payment included a premium for overtime hours, which is recognized under the FLSA. The employer explained they determined the $160 lump sum payment based on the expectation that each employee would work ten hours a day, providing compensation for eight hours plus two hours of overtime compensation. However, the Court ultimately rejected Defendant’s argument, explaining a lump sum premium to employees must still take into account the amount of hours actually worked by the employee. Evidence showed that the employees often worked in excess of ten hours most work days.

The Court noted Defendants’ pay policy failed to provide an incentive to reduce employee hours—contrary to the goal of Congress in passing the FLSA to reduce overtime hours and create more employment opportunities. Therefore, the lump sum to employees could only be considered a “day rate” and the employer could not credit the alleged “premium” towards overtime compensation owed to the employees for any week they worked in excess of 40 hours.

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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Superior Court of Pennsylvania Upholds Employer’s Non-Compete Agreement That was Incidental to Employment and Reasonable in Time and Scope

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In Tyco Fire Products, L.P. v. Fuchs, the Superior Court of Pennsylvania held that Tyco Fire Products, L.P.’s (“Tyco”) non-compete agreement was enforceable against its former employee (“Fuchs”). 2017, WL 5509889 (Pa. Super. 2017). Tyco designs, manufactures, and distributes fire protection products such as chemical water and other fire preventative measures.  Fuchs worked as a senior sales manager for Tyco for approximately ten years. During his time at Tyco, Fuchs signed a Confidentially Agreement and a Non-Competition Agreement (the non-compete agreement). This non-compete agreement stated that Fuchs may not “employ, engage, or enter into employment” with any competing business in the Northeast (including 11 states) for a period of 12 months.  After his resignation in 2016, Fuchs began work at Reliable Automatic Sprinkler Company, Inc. which engages in the same type of business as Tyco. While employed at Reliable, Fuchs contacted former Tyco customers and engaged in business inside of the restricted zone of the non-compete.

When analyzing a non-compete agreement, the court will determine if the agreement is “incident to an employment relationship between the parties; the restrictions imposed by the covenant are reasonably necessary for the protection of the employer; and the restrictions imposed are reasonably limited in duration and geographic extent.”  Fuchs argued that Tyco’s non-compete agreement was unreasonably broad in both duration and geographic location.

The Court rejected Fuchs’ argument and found that the Tyco Agreement was enforceable under the required analysis. The Court ruled that the agreement was incidental to an employment relationship because of his actual employment as a sales manager for Tyco. Secondly, the Court ruled that Tyco’s agreement was reasonably necessary to protect Tyco’s legitimate business interests. In ruling on this issue, the Court looked to the fact that Reliable was in the same business as Tyco and Fuchs’ contact with the Tyco customers during his time at Reliable clearly show that there was a need to protect legitimate business interests. Lastly, and most importantly, the Court found that the 12-month (1 year) limitation was well within the reasonable limitations period and the 11-state geographic restriction was reasonable because Fuchs’ had conducted business in all restricted states during his time at Tyco. Thus, the Court ruled in favor of Tyco and affirmed the trial court’s decision.

Philadelphia non-compete lawyers at 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.

Pennsylvania Superior Court Rules in Favor of Employee in a Covenant Not to Compete Case Because Company had no Protectable Business Interest in Information Available in the Public Domain

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In Wolfington Body Company, Inc. v. O’Neill, the Pennsylvania Superior Court found in favor of the employee, Defendant O’Neill, holding that the covenant not to compete, which Wolfington Body Company made O’Neill sign as a condition of his employment agreement, was unduly restrictive and overly broad. Wolfington Body Company, Inc. v. O’Neill, 2018 WL 2011398 (Pa. Super. 2018).

O’Neill began working for Wolfington Body Company in the fall of 2013 as a commercial vehicle sales person. Once hired, Wolfington required O’Neill to sign an Employment Agreement which contained several restrictive covenants including Non-Compete and Non-Solicitation Covenants. These covenants included language which restricted where O’Neill could work once he left Wolfington, and how long he must wait before working in the bus sales industry again. The covenant restricted O’Neill from working in any state which Wolfington is conducting or has conducted business. This restriction functionally prohibited O’Neill from working in the 35 states in which Wolfington has or had done business. In addition, the covenant not to compete prohibited O’Neill from working for two years in the bus sales industry after he left Wolfington. In the fall of 2016, O’Neill left Woflington and began working for another company in the bus sales industry. Wofington brought a suit alleging that O’Neill violated the restrictive covenants of his Employment Agreement, specifically that the O’Neill had access to Wolfington’s confidential, proprietary, or trade secretes which are legitimate business interests worthy of protection. O’Neill t testified that based on his long employment history in the bus sales industry, he had compiled information including a customer base, and price estimates for building busses.  However, O’Neill asserted that he returned all confidential information to Wolfington before ending his employment.

In analyzing whether to enforce a restrictive covenant, the Court looks to see if, “… it must be reasonably related to the protection of a legitimate business interest… including trade secretes or confidential information, unique or extraordinary skills, customer good will, and investments in an employee specialized training program. In contrast, a post-employment covenant that merely seeks to eliminate competition per se to give the employer an economic advantage is generally not enforceable.”  For a restrictive covenant to be enforceable, there must be the presence of a legitimate protectable business interest.  Once it is established that a legitimate protectable business interest is present, the court applies a balancing test weighing the employer’s protectable business interest against the employee’s interest in earning a living. Then the court balances the employer and employee interests against the interest of the public.

Here, the Court found that the information necessary to enable an experienced sales person to perform their job are readily available in the public domain, therefore the information retained by O’Neill was of no secret value or of any peculiar importance to Wolfington. Additionally, the definition of confidential information set forth in the employment agreement was overly broad and included any information that O’Neill may have learned while working for Wolfington thus, the restrictive covenant was not reasonably tailored to protect Wolfington’s business interests. For a restrictive covenant to be enforced there must be the existence of legitimate business interest, and the restrictive covenant must be reasonably tailored to protect the employer’s interests.  Wolfington failed to establish that the restrictive covenant was reasonably tailored, even if there were legitimate business interests at stake worth protecting. Since neither of these two necessary factors are present, the Court found in favor of O’Neill.

Philadelphia non-compete lawyers at 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.

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PA District Court Invalidates Non-Compete for Lack of Adequate Consideration and Enforces Original Agreement

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In Allied Orthopedic Assoc. v. Leonetti, Civil Action No. 18-01566, 2018 WL 4051801 (E.D. Pa. August 24, 2018), Plaintiff successfully enjoined Defendant from violating a non-compete agreement the two parties previously entered into. Plaintiff in this case is a manufacturer’s representative that sells medical equipment. Defendant was hired by Plaintiff in 2008 as a sales associate and executed a non-competition, non-solicitation and confidentiality agreement. Among other things, the non-compete stated that “[e]mployee agrees that he/she will not, directly or indirectly, at any time while employed by [Plaintiff] and within eighteen months (18) months after termination with Plaintiff, with or without cause, make any independent use of, or disclosure to any person other than an employee at [Plaintiff’s company].” In 2010, Defendant signed another series of non-competition, non-solicitation and confidentiality agreements and was “essentially promoted”. Defendant resigned in 2018 and began working for a local competitor of the Plaintiff. Plaintiff brought suit alleging breach of contract, tortious interference with contractual relations, tortious interference with business relations and violation of Pennsylvania’s Uniform Trade Secrets Act and civil conspiracy.

Defendant initially contended that the agreements entered into in 2010 controlled rather than the original non-compete signed in 2008. The Court found the 2010 non-competition agreements were “not supported by adequate consideration” and thus not valid. In Pennsylvania, in order for a non-competition covenant to be enforceable, it must related to a contract for employment, be supported by adequate consideration and be reasonably limited in both time and territory.  Since the consideration, which was the “promotion”, was not contemplated in the agreement, the 2010 agreement was not valid and the 2008 agreements controlled. As to the validity of the 2010 non-compete agreements, the Defendant did not dispute that the non-compete was incident to the employment relationship with Plaintiff or that the eighteen-month duration of the non-competition provision was excessive. Rather, Defendant attempted to argue that the territorial limit of the non-competition agreement was overreaching and unfair. The Court concluded that the recent downsize of Plaintiff’s company, which shrunk their commercial activity to Delaware, Philadelphia and the Philadelphia suburbs, limits the restrictions in the non-compete agreement to those specific areas. Therefore, since Defendant was working within the Philadelphia area, he was in breach of the non-competition agreement.

Philadelphia non-compete lawyers at 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.

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Proposed Changes to the Minimum Required Salary for Pennsylvania White-Collar Overtime Exemptions

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On June 23, 2018, the Pennsylvania Department of Labor and Industry (“DLI”) proposed major rule changes to the Pennsylvania Minimum Wage Act (“PMWA”). The PWMA is the state version of the Fair Labor and Standards Act (“FLSA”), which creates minimum wage and overtime rules for employers.

The most significant proposed change involves the minimum salary level pertaining to the white-collar exemption. For an employer to avoid paying overtime to salaried employees, the employee must meet both the “Duties Test” and the minimum salary level. As it currently stands, the FLSA requires salary employees under the white-collar exemption to be paid at least $455 per week or $23,660 annually. The proposed regulation to the PMWA would change this minimum salary level to: $610 per week or $31,720 annually effective on the date the final rule is published in the Pennsylvania Bulletin; $766 per week or $39,832 annually effective one year after the publication of the final rule; and $921 per week or $47,892 annually effective one year later.

In addition to the proposed changes to the minimum required salary, the DLI also proposed changes to the “Duties Test”, which explains what job duties an employee must perform to qualify under the white-collar exemptions. However, the proposed rule changes do not mirror the FLSA regulations when it comes to the test and will presumedly create confusion for employers trying to comply with both the FLSA and PMWA. For example, certain exemptions such as the computer professional or highly compensated employee exemptions are recognized under the FLSA but not under the proposed change to the PMWA.

The DLI states within the proposal that these changes are needed to more closely align with federal regulations, and because the minimum salary levels in Pennsylvania have not been updated in 40 years and fail to keep pace with economic growth.

Philadelphia overtime dispute lawyers of Sidkoff, Pincus & Green are highly skilled business and employment litigators with experience representing employees with overtime claims under the Fair Labor Standards Act. Call 215-574-0600 today or submit an online contact form to arrange a consultation.  Our office is located in Philadelphia, Pennsylvania and we represent clients throughout the Philadelphia and South Jersey regions.

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PA District Court Holds that Employer Had Legitimate Nondiscriminatory Reason for Termination in Age Discrimination Case

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In Terrell v. Main Line Health, Inc., Civil Action No. 17-3102, 2018 WL 2462005 (E.D. Pa. June 1, 2018) Plaintiff, an employee at Defendant’s Hospital for thirty-five years, was terminated from her position as operating room secretary. Plaintiff alleges that her employer terminated her because of her age. Defendant countered and argued that Plaintiff was terminated for a legitimate, nondiscriminatory reason. Specifically, Defendant alleged that Plaintiff accessed information regarding a co-worker in violation of Defendant’s polices relating to patient privacy and in violation of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). Plaintiff filed a complaint against Defendants with the Equal Opportunity Employment Commission (“EEOC”) and the Pennsylvania Human Rights Commission (“PHRC”). Defendants ultimately moved for summary judgment.

To succeed on an age discrimination claim based on disparate impact, a plaintiff must demonstrate that age “was the ‘but-for’ cause of the employer’s adverse decision.” In age discrimination cases, it is not sufficient to simply show that age was “a motivating factor” in the adverse employment action. Rather, a plaintiff must demonstrate that age was a determinative factor or “the ‘but for’ cause of the employers adverse decision.” Age discrimination may be established by direct or indirect evidence. Regardless of the method of proof, “the plaintiff retains the burden of persuasion to establish that age was the ‘but-for’ cause of the employer’s adverse actions. To establish a prima facie case of discrimination in ADEA cases, the plaintiff must show (1) that the plaintiff was forty years of age or older; (2) that the defendant took an adverse employment action against the plaintiff; (3) that the plaintiff was qualified for the position in question; and (4) that the plaintiff was ultimately replaced by another employee who was sufficiently younger to support an inference of discriminatory animus. Plaintiff successfully established a prima facie case of age discrimination.

Accordingly, the burden shifted to Defendant to produce a legitimate nondiscriminatory reason for termination. Defendant then produced the evidence that Plaintiff twice accessed information regarding a co-worker in violation of Defendant’s polices relating to patient privacy and in violation of the HIPAA. Therefore, the burden went back to Plaintiff to establish the proffered reason was merely pretext.

Plaintiff did not challenge the allegation that she accessed information regarding co-workers. Rather, she argued that a factfinder could disbelieve Defendants’ articulated legitimate reason for terminating her because her “two business-related data accesses absolutely do not fall into the categories of conduct required for termination.” The Court ultimately ruled that Plaintiff failed to raise a triable issue of fact as to whether the proffered reason for her termination were pre-textual and that Defendants were entitled to summary judgment.

For more information, call our employment discrimination lawyers in Philadelphia at the Law Offices of Sidkoff, Pincus & Green at 215-574-0600 or submit an online inquiry.

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