Third Circuit Defines “Willful” FLSA Violation

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The issue of whether an employer “willfully” violated the Fair Labor and Standards Act (“FLSA”) by failing to pay overtime wages is important because a willful violation allows a plaintiff to recover an additional year of lost wages. See 29 U.S.C. § 255(a). The question of what a willful violation is appeared recently in a Third Circuit Court decision in Souryavong v. Lackawanna Cty., No. 15-3895, 2017 WL 4159604 (3d Cir. Sept. 20, 2017). The issue in Souryavong arose because Lackawanna County failed to properly aggregate hours worked of county employees, who held two different part-time jobs, resulting in a failure to pay overtime. There was testimony on behalf of the county which said they were generally “aware” of their obligations under the FLSA, and there was also an e-mail from another county official that recognized this error in tracking time of these employees and the county took measures to address and fix the issue.

In order to find the county liable for a willful violation, the county must have known its conduct was prohibited, or “showed reckless disregard for the matter.” McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988). Acting only “unreasonably” is insufficient—some degree of actual awareness is necessary. The Third Circuit determined that willful violations of the FLSA require a more specific awareness of the legal issue than was present in this case. The Court further explained that the county lacked a level of egregiousness, which had been found in other willful violations in sister courts. Weighing these factors together, the Court determined there was no “willful” violation of the FLSA by the county.

For more information, call our overtime lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

Fraud in the Inducement Hurdle

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Parole Evidence Rule

When a contracting party has been painted a “false picture” of how a contract will operate, that party may have a fraud in the inducement claim. One instance of this is when an individual signs a materially different contract after the parties had agreed to language in earlier drafts. Under Pennsylvania law, plaintiffs are required to prove the following elements in a claim for fraud in the inducement: (1) a representation; (2) material to the transaction at hand; (3) made falsely with knowledge of its falsity or recklessness as to its truth; (4) with intent of misleading another into relying on it; (5) justifiable reliance on the misrepresentation; and (6) resulting injury. Broederdorf v. Bachelor, 129 F.Supp.3d 182, 198 (E.D. Pa. 2015). Successfully pled, such contracts are voidable. Giannone v. Ayne Institute, 290 F.Supp.2d 553, 564 (E.D. Pa. 2003).

However, in Pennsylvania, such claims are subject to the parole evidence rule. If the court finds that the agreement at issue constitutes “a writing that represents the ‘entire contract between the parties,’ then the court may not consider ‘preliminary negotiations, conversations[,] verbal agreements,’ or any other extrinsic evidence of representations made by the parties prior to the execution of the written contract.” Batoff v. Charbonneau, 130 F.Supp.3d 957, 970 (E.D. Pa. 2015). And so, the parole evidence rule will bar the admission of statements necessary to establish a fraud in the inducement claim, resulting in its dismissal. For instance, in Batoff, the court dismissed the fraud in the inducement claim because the settlement agreement clearly represented the entire contract between the parties through its integration clause. In a similar case, the District Court dismissed a fraud in the inducement claim because the contract expressly stated, “This Agreement contains the whole agreement between Seller and Buyer, and there are no other terms,” which triggered the parole evidence rule. Charlton v. Gallo, 2010 WL 653155, at *4 (E.D. Pa. 2010).

For more information, call our business lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

DOL Exempt Employee Salary Rule Invalidated by Judge

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The latest development in the controversy surrounding the Final Rule, issued by the Department of Labor (DOL) that changed the salary threshold concerning which workers are eligible for overtime, is a final judgement that invalidates the rule entirely.

The Final Rule was one of the last major actions of the Obama administration and raised the salary threshold for exemption from overtime pay from $23,660 to $47,476. Before the changes could go into effect on December 1, 2016, a lawsuit filed in a Texas federal district court won a preliminary injunction against the rule, effectively blocking it. The case known now as Nevada v. U.S. Department of Labor began as two separate lawsuits. In both cases, the plaintiffs argued that the DOL had overstepped its authority by doubling the threshold of the salary test, thereby giving it too much weight and detracting from the value of the Fair Labor Standards Act (FLSA) duties test.

Judge Amos Mazzant combined the two lawsuits into one and granted the preliminary injunction. The DOL appealed his decision on December 1, 2016. Because of the election, everything was essentially on hold during the changeover in administrations. Employers and employees waited in limbo to see how the Trump administration would proceed with the issue.

On August 31, 2017, Judge Mazzant issued a final Opinion and Order in the case granting summary judgement to the plaintiffs. He declared the Rule invalid and unenforceable, stating that we would not be where we are today if the salary level had been adjusted for inflation rather than doubled by the DOL Rule. He agreed that certain salary tests are appropriate, but found that Congress was unambiguous in creating overtime exemptions based on duties and not specific salary levels.

Despite the final judgement by Mazzant, the status of the case is still in question because of the active appeal of his first injunction. The DOL has the option to appeal this ruling, but it is more likely that it will revise the rule and come up with its own update of the salary test. Last year when the Final Rule was first announced, some employers went ahead and raised managers salaries in order to avoid paying them overtime, starting December 1. Other companies waited to take action and it seems they will continue to wait for complete clarity on the issue of overtime.

Philadelphia Employment Lawyers for Fair Labor Standards Act at Sidkoff, Pincus & Green P.C. Provide Counsel on Wage and Hour Disputes

With all the current uncertainty about overtime pay, you may wonder if you are being paid fairly. The Philadelphia wage dispute lawyers at Sidkoff, Pincus & Green P.C. offer counsel for all of your legal employment needs. Call 215-574-0600 today to schedule a consultation about your case, or contact us online. From our offices in Philadelphia, we serve clients locally and throughout Pennsylvania and New Jersey.

Best-Interest Contract Provision from DOL Fiduciary Rule

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The Best Interest Contract, sometimes referred to as BIC, is part of the Labor Department’s fiduciary rule. The Trump Administration has mandated a request for information to guide the Department of Labor (DOL) in its review of the rule to either change it, or eliminate it all together. Last week, in a lawsuit over the regulation, the DOL filed documents stating that it would be seeking an 18-month delay in the implementation of the remaining parts of the fiduciary rule. This 18-month waiting period will give federal agencies, such as the Securities and Exchange Commission (“SEC”), a chance to weigh in. 

What is the BIC provision? 

A BIC is a legally binding agreement that allows stockbrokers to earn variable compensation on products that they sell to retirement investors so long as they act in the investors’ best interests. The BIC provision allows investors to file class-action lawsuits over violations of this rule. Lobbyists want to have the rule modified or stricken.

The 18-month delay period will allow agencies, such as the SEC, plenty of time to undo the contract. Critics of the rule say that it is too complicated and that it raises liability costs. At this point, the only thing that is clear is that agencies will continue working on drafting the rule for at least a few years. The SEC has already put out a request for comment on fiduciary duty. The DOL’s request for information also indicates that lawmakers may add specific exemptions to the rule for the sale of certain retirement investment products, such as clean shares.

By delaying the rule’s finalization that the DOL wants to collaborate with the SEC, Finra, and state insurance regulators, it is a very difficult and complex issue. According to many commentators, there is no end in sight.  This can be extremely frustrating to those who work in compliance. It is impossible to advise clients how to comply with regulations when they are hanging in limbo.

Philadelphia FINRA Lawyers at Sidkoff, Pincus & Green P.C. Represent Clients in Class Action Lawsuits

The Philadelphia FINRA lawyers at Sidkoff, Pincus & Green P.C. stay up to date on the latest changes in state and federal business law so that we can advise our clients with an eye to the future. Our trial lawyers represent clients in all types of FINRA lawsuits. To learn more about how we can help, call us today at 215-574-0600 or contact us online today.

Website Operator Denied Copyright Protection

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A recent Central District of California decision shed some light on the application of the Digital Millennium Copyright Act’s (DMCA) Section 512(c) safe harbor provision. Under the safe harbor, online service providers that meet certain requirements may avoid liability for damages that may arise from infringing content uploaded by service users. In Greg Young Publishing, Inc. (GYPI) v. Zazzle, Inc. (Zazzle), the court addressed the question of whether Section 512(c) safe harbor may protect an online service provider that commercially exploited infringing content.

Zazzle operates a website on which users may upload images. Other users may have the images printed on various merchandise including coffee mugs, posters, and t-shirts. The users typically do not own the images and have not obtained authorization from the owners to upload them. Zazzle does not ensure that images are not infringing, rather the company manufactures the product once it is ordered, delivers it to the purchaser, and pays a royalty to the user who uploaded the image.

Zazzle displayed 41 paintings owned by GYPI and created consumer products for sale from the paintings. GYPI sued Zazzle for copyright infringement and Zazzle asserted Section 512(c) safe harbor as an affirmative defense. GYPI argued that Zazzle could not rely upon safe harbor because: (1) Zazzle is not a service provider, (2) Zazzle knew that their services infringed upon GYPI’s copyright, and (3) Zazzle had the right and ability to control the infringing activity, choosing to exploit the paintings for financial benefit.

Case Argument

First, GYPI argued that Zazzle is not a service provider because it does not accept and display user-submitted images, but also manufactures and sells products based on those images. The court rejected this argument, finding that Zazzle was unquestionably a provider of online services and therefore a service provider within the definition of that term in Section 512(c) safe harbor.

Second, GYPI argued that Zazzle had specific knowledge of the infringing content, rendering Zazzle ineligible for safe harbor protection. The court held that a service provider only has such knowledge when the copyright holder submits a DMCA-compliant or a third party submits a sufficiently specific complaint. Therefore, GYPI’s complaints to Zazzle about infringing content and the fact that GYPI sent Zazzle a catalogue of images for them to check for infringement, were not enough to constitute specific knowledge.

Finally, the court held that Zazzle received a financial benefit from, and that it had the right and ability to control, the infringing activity. The court acknowledged that Zazzle had the ability to remove infringing content, terminate repeat infringers’ accounts, and engage in limited monitoring of the site. However, this does not amount to a right and ability to control, which only exists when a service provider plays a more active role in user content. This happens specifically when the service provider exerts substantial influence over activities such as selection, monitoring, and marketing of user content.

In this case, the court held that Zazzle did exert the substantial influence necessary to render it unable to be shielded by Section 512(c) safe harbor because Zazzle’s content management team approved user’s orders; the subsequent automated nature of the process is irrelevant. Therefore, Zazzle will be liable for copyright infringement damages resulting from the sale of products displaying the protected images.

Philadelphia Intellectual Property Lawyers at Sidkoff, Pincus & Green P.C. Represent Clients in Copyright Disputes

Philadelphia intellectual property lawyers at Sidkoff, Pincus & Green P.C. represent clients in copyright disputes throughout Pennsylvania and New Jersey, including Philadelphia and South Jersey. Contact us online or call us at 215-574-0600 to discuss your case.

Philadelphia Intellectual Property Lawyers Discuss Costco “Tiffany” Rings

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Recently, Tiffany & Co., sued Costco for selling millions of dollars’ worth of knock-off Tiffany rings. Costco described the rings as “Tiffany” rings on their signs. Tiffany & Co. argued that this was misleading to customers and falsely suggested that the rings were actually designed and manufactured by the famous jewelry maker.

Tiffany & Co. was the first company to set rings in a claw to show more sparkle and light refraction. Prior to its innovation, diamonds were encased in a metal cup, reducing the luminosity of the stone. Now, all rings set in a claw setting are colloquially referred to as “Tiffany setting” rings.

Tiffany & Co. was successful in its suit and the Court barred Costco from using the word “Tiffany” to describe products not associated with the actual Tiffany jewelry brand, and ruled that Costco should pay Tiffany & Co. over $11 million plus interest, and nearly $9 million in punitive damages.

Costco has announced that it plans to appeal the decision, emphasizing that the rings were not stamped with the Tiffany & Co. name, but rather the name of the company that manufactured them. Further, Costco argues that the rings were accompanied by appraisals that did not say “Tiffany & Co.” The receipts also did not mention that the rings were Tiffany rings and the infringement was limited to the signage promoted by Costco to sell the rings in its retail outlets.

Philadelphia Trademark Lawyers at Sidkoff, Pincus & Green P.C. Represent Clients in All Types of Trademark Disputes and Intellectual Property Matters

At Sidkoff, Pincus & Green P.C., we pride ourselves on providing clients with quality representation in various types of commercial and business matters. If you have questions about a trademark law issue, contact one of our Philadelphia trademark lawyers today at 215-574-0600 or contact us online.

Adequate Notice to an Employer to Receive Workers’ Compensation

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Under sections 311 and 312 of the Workers’ Compensation Act, when an injury occurs, an employee has 120 days from the day the injury occurred or from when the injured person had notice that the injury was work-related, to notify the employer of the injury to satisfy “employer knowledge”. 77 P.S. § 632.

In the case Gentex Corp. v. W.C.A.B. (Morack), the plaintiff developed injuries from repetitive lifting of helmets and sowing helmets together every day for over 30 years. 23 A.3d 528, 530-33 (Pa. 2013). Eventually, the plaintiff experienced swelling in her hands and legs, with pain so severe that she needed to take time off of work. The same day, she went to her doctor who informed her that the injury was from the constant, repetitive movements she made to complete her tasks at work. The Supreme Court of Pennsylvania held that the plaintiff’s voice messages to her employer’s phone, noting she has “work related problems,” were enough notice to satisfy the requirement. The court held that even an imperfect notice can satisfy Section 312, especially if the plaintiff admits that his or her notice was imperfect. Because of this ruling, Pennsylvania courts must look at all of the circumstances surrounding notice, because adequate notice is a fact-intensive inquiry that need not be perfect to suffice as adequate.

Philadelphia employment lawyers at Sidkoff, Pincus & Green P.C. handle cases involving Workers’ Compensation in Pennsylvania. Call 215-574-0600 today or contact us online to schedule a consultation in our Philadelphia office. We represent clients in Pennsylvania and New Jersey.

Workers’ Compensation and Illegal Immigrants

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Under Pennsylvania law, illegal immigrants can apply for Workers’ Compensation if they are injured while working. See, Reinforced Earth Co. v. W.C.A.B. (Astudillo), 810 A.2d 99 (Pa. 2002). In Reinforced Earth, the plaintiff was a maintenance helper and assisted with cutting and welding iron and climbing scaffolds and ladders while lifting steel beams. Id. at 101.  While working, he was struck in the head, neck and back with a steel beam and diagnosed with a concussion, mild head injury and back strain and sprain. Id. Even though he was an illegal immigrant, the court held that he was allowed to receive Workers’ Compensation because the purpose of the law is to protect those who need protection, including those individuals here illegally. Id. at 105. Additionally, the court found that not allowing the plaintiff to receive Workers’ Compensation would reward companies for not inquiring as to a worker’s legal status before hiring. Id. at n. 8.

However, there is a limit to the compensation an injured illegal immigrant worker is allowed to receive. Mora v. W.C.A.B. (DDP Contracting Co., Inc, and Penn National Insurance), 845 A.2d 950, 952 (Commw. Pa. 2004). In Mora, the court held that when an illegal immigrant is able to go back to any type of work, his or her workers’ compensation can be suspended. Id. Mora went from working full-time and earning $800.00 a week to working only part-time and earning only $140.00 a week. Id. The court reasoned that there was a large price gap in the paychecks because the plaintiff was illegal, not because of injuries on the job, and therefore stopped workers’ compensation. Id.

At Sidkoff, Pincus & Green P.C., our Pennsylvania and New Jersey attorneys handle many types of legal matters, including immigrant discrimination. To arrange a consultation with a knowledgeable employment lawyer in Philadelphia, call 215-574-0600 or contact us online.

Enforceability of Non-Compete Covenants in PA

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Employers often require new employees to sign agreements containing a non-compete covenant, which prevents an employee from working for or with a competitor within certain geographic bounds and for a certain amount of time after their employment with the company ends.

In Pennsylvania, such covenants are disfavored, but may still be enforceable when the restrictions imposed by the covenant are considered to be reasonably necessary for the protection of the employer, and are reasonably limited in duration and geographic reach. A non-compete covenant that is overly broad, in duration or geographic reach is considered unreasonable, and will typically be unenforceable. Unreasonableness is an affirmative defense which a defendant bears the burden of proving. See Victaulic Co. v. Tieman, 499 F.3d 227, 234 (3d Cir. 2007).

Courts must balance the employer’s legitimate business interest(s), the individual’s right to work, the public’s right to unrestrained competition, and the right to contract when determining enforceability of a non-compete covenant. See, WMI Group, Inc. v. Fox, 2015 Pa. Super. 25, 109 A.3d 740 (2015).

The determination of reasonableness, including duration and geography, depends largely on the specific facts and circumstances of each case. Generally, “legitimate business interests” include trade secrets, confidential information, good will, and unique or extraordinary skills. Victaulic, 499 F.3d at 235. A reasonable, enforceable covenant must be narrowly tailored to protect these interests so as not to favor the employer or the employee.

Philadelphia Non-Compete Lawyers of Sidkoff, Pincus & Green P.C. Advise on Drafting and Enforcing Non-Compete Agreements

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 Court Upholds PHRC Ruling in Favor of Employee Who Alleged Religious Discrimination and Retaliation After Complaining About Bible Quotes on Paychecks

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In Brown Transport Corp. v. Com., Pennsylvania Human Relations Com’n, Brown petitioned the Court of Common Pleas to review an order of the Pennsylvania Human Relations Commission (“PHRC”) that granted relief to a former employee, Stephen Soffer, who asserted claims of religious discrimination, retaliation, harassment, and failure to accommodate. 578 A.2d 555, 559 (Pa. Comm. 1990). This religious discrimination included bible verses on Soffer’s paycheck and religious articles printed in the company newspaper. Soffer complained about the checks and the articles to management, but they refused to either remove the bible verse stamps on the checks or remove the religious content from the company newspaper.. At one point a manager at Brown told the Soffer that he should be grateful to be getting a paycheck at all. Id. at 556. After complaining multiple times Soffer was fired despite stellar performance reviews.  Id. at 559. The PHRC ultimately found in favor of Soffer, noting his impeccable record two months prior to his termination.  Id. at 561.

Brown petitioned the Court to overrule the PHRC based on the following: 1) the PHRC should not have permitted Soffer to add a claim under Section 5(d) of the Pennsylvania Human Relations Act (“PHRA”), 43 P.S. § 955(d), for retaliatory discharge; 2) that the PHRC’s findings of fact concerning Soffer’s allegations were unsupported by substantial evidence; 3) the PHRC erred in its application of law to the facts by concluding that Brown committed acts of retaliation and harassment against Soffer; and 4) Soffer was precluded by limitations in  in Section 959(f) of the PHRA, 43 P.S. § 959(f), from recovering any sums in the nature of either punitive or compensatory damages.

The Court ruled that Section 12(a) of the PHRA provides that provisions under the PHRA may be construed liberally, and the PHRC properly construed Soffer’s complaint to sufficiently allege discharge. Second, the Court found that Soffer provided sufficient evidence to support his allegations, and upheld the PHRC’s decision that Brown’s witnesses were non-credible as to why Soffer was fired. Third, the Court ruled that the PHRC’s findings were consistent with the evidence such that it did not err in its application of the law to the facts when ruling that Brown committed acts of retaliation and harassment against Soffer. Lastly, the Court relied on Consumer Motor Mart v. Pennsylvania Human Relations Commission, 529 A.2d 571 (Pa. Comm. 1987) to support the PHRC’s award of punitive and compensatory damages.

Philadelphia Employment Lawyers of Sidkoff, Pincus & Green P.C. Represent Clients in Employment Discrimination Matters

At Sidkoff, Pincus & Green P.C., our Pennsylvania and New Jersey attorneys are knowledgeable in all matters related to employment discrimination. To schedule a consultation with a Philadelphia employment lawyer, call 215-574-0600 today or contact us online.