Category: Employment Law

The Pennsylvania Commissioned Sales Representative Act

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The Pennsylvania Commissioned Sales Representative Act (“PCSRA”) provides that a “principal shall pay a sales representative all commissions due at the time of termination within 14 days after termination” and “all commissions that become due after termination within 14 days of the date such commissions become due.” 43 Pa. Stat. §§ 1473–74.  If a principal “willfully” violates these provisions, then the sales representative may bring a civil action to collect all unpaid commissions plus exemplary damages in an amount not to exceed two times the commissions due to the sales representative, and costs of suit and attorneys’ fees. Id. § 1475.

Under the PCSRA, a “principal” is defined as any person who does all of the following: (1) engages in the business of manufacturing, producing, importing or distributing a product for sale to customers who purchase such products for resale; (2) (2) Utilizes sales representatives to solicit orders for such product; and (3) Compensates sales representatives, in whole or in part, by commission. Id. § 1471.

Furthermore, the PCRA defines a “sales representative” as “[a] person who contracts with a principal to solicit wholesale orders from retailers rather than consumers and who is compensated, in whole or in part, by commission.” Id.   A sales representative, as that term is defined in the PCRA, explicitly excludes “one who places orders or purchases for his own account for resale or one who is an employee of a principal.” Id.

Although the PCRA is an important and beneficial statute for sales representatives, it is important to keep in mind that it does not provide protection to all sales agents who work on commission. Not only does the precise language of the PCRA limit its coverage to the types of sales representatives described above, but the courts have often strictly construed the terms “retailers” and “consumers” to further limit the applicability of the PCRA, despite the fact that those terms are not defined in the statute. See, Kamco Indus Sales Inc. v. Lovejoy Inc., 779 F. Supp. 2d 416 (E.D.Pa.2011); Total Control, Inc. v. Danaher Corp., No. 02–668, 2004 WL 1878238, *3 (E.D.Pa.2004); United Products Corp. v. Admiral Tool and Manufacturing Co., 122 F.Supp.2d 560, 564 (E.D.Pa.2000).

How to determine whether an Unemployment Compensation Claimant is an Independent Contractor in Pennsylvania

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In Pennsylvania, there is a presumption under Unemployment Compensation Law (“Law”) that an individual receiving wages is an employee and not an independent contractor engaged in self-employment. Electrolux Corporation v. Department of Labor and Industry, Bureau of Employer Tax Operations, 705 A.2d 1357, 1359–60 (Pa.Cmwlth.1998).  However, an employer can overcome this presumption by establishing that a claimant is self-employed. Id. at 1360.  If an employer can establish that a claimant is an independent contractor (and thus self-employed), the Law provides that such an individual “shall be ineligible for compensation for any week … [i]n which he is engaged in self-employment.” 43 P.S. § 802(h).

An employer establishes that a claimant is self-employed by proving that the claimant was: (1) free from control and direction in the performance of his service; and (2) customarily engaged in an independent trade or business as to that service. See, 43 P.S. § 753(l)(2)(B); see also, Beacon Flag Car Company, Inc. (Doris Weyant) v. Unemployment Compensation Board of Review, 910 A.2d 103, 107 (Pa.Cmwlth.2006).

As to the first prong of the test , courts consider whether the employer exercised “control” as to the work to be done and the manner in which the work is to be performed.  A number of factors have been identified by the court in determining whether an individual is free of control; they include: “whether there is a fixed rate of remuneration; whether taxes are withheld from the [individual]‘s pay; whether the employer supplies the tools necessary to carry out the services; whether the employer provides on-the-job training; and whether the employer holds regular meetings that the [individual] was expected to attend.” CE Credits OnLine v. Unemployment Comp. Bd. of Review, 946 A.2d 1162, 1168 (Pa.Cmwlth.2008).  No one factor will control the outcome, but the courts will look to the entire relationship to determine whether the requisite control exists to establish an employer-employee relationship.” Tracy v. Unemployment Compensation Board of Review, 23 A.3d 612, 616 (Pa.Cmwlth.2011).

As to the second prong of the test—whether the claimant is customarily engaged in an independently established trade, occupation, profession, or business—courts consider “whether the individual was capable of performing the activities in question [for] anyone who wished to avail themselves of the services and whether the nature of the business compelled the individual to look to only a single employer for the continuation of such services.” Venango Newspapers v. Unemployment Comp. Bd. of Review, 158 Pa.Cmwlth. 379, 631 A.2d 1384, 1388 (1993). Where the employee is free to accept or reject an assignment, the individual generally is not considered to look to a single employer for the continuation of such services. Danielle Viktor, Ltd. v. Dep’t of Labor and Indus., Bureau of Employer Tax Operations, 586 Pa. 196, 229, 892 A.2d 781, 801 (2006).

Hostile Work Environment Claims under Title VII and the Pennsylvania Human Rights Act

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Title VII of the Civil Rights Act of 1964 “makes it unlawful for an employer ‘to discriminate against any individual with respect to his [or her] compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.’ ” Kunin v. Sears Roebuck and Co., 175 F.3d 289, 293 (3d Cir.1999), citing 42 U.S.C. § 2000e-2(a)(1). The scope of protection provided by Title VII includes protection against a hostile work environment.

There are five elements that a plaintiff must prove to establish a claim for hostile work environment under Title VII -1) the employee suffered intentional discrimination because of his or her protected class; (2) the discrimination was pervasive or regular; (3) the discrimination detrimentally affected the employee; (4) the discrimination would detrimentally affect a reasonable person of the same race in that position; and (5) the existence of respondeat superior liability. Clark County School Dist. v. Breeden, 532 U.S. 268, 270, 121 S.Ct. 1508, 149 L.Ed.2d 509 (2001); Andrews v. City of Philadelphia, 895 F.2d 1469, 1472 (3d Cir.1990). The same standards apply to the claims raised under the Pennsylvania Human Rights Act(“PHRA”). Jones v. School Dist. of Philadelphia, 198 F.3d 403, 410 (3d Cir.1999).

With respect to the second element, the Supreme Court has made clear that Title VII is not a “general civility code,” Faragher v. City of Boca Raton, 524 U.S. 775, 788, 118 S.Ct. 2275, 141 L.Ed.2d 662 (1998). The Court has also observed that “hostile work environment” harassment must be pervasive or severe enough “to alter the conditions of … employment and create an abusive working environment.” Meritor Sav. Bank. FSB v. Vinson, 477 U.S. 57, 67, 106 S.Ct. 2399, 91 L.Ed.2d 49 (1986), quoting Henson v. City of Dundee, 682 F.2d 897, 904 (11th Cir.1982). The test looks to the totality of the circumstances, including the frequency of the discriminatory conduct, its severity, whether it is physically threatening or humiliating or a mere offensive utterance, and whether it interferes with an employee’s work performance. Harris v. Forklift Systems, Inc., 510 U.S. 17, 21, 114 S.Ct. 367, 126 L.Ed.2d 295 (1993)

The standards governing employer liability for a hostile work environment differ depending on the source of the hostility. Imputing liability for co-worker harassment is grounded in the employer’s direct negligence. Ocheltree v. Scollon Productions, Inc., 335 F.3d 325, 333-34 (4th Cir.2003). Where a co-worker is the source of the hostile environment, “liability exists where the defendant knew or should of known of the harassment and failed to take prompt remedial action.” Kunin, 175 F.3d at 293 (internal citations omitted).