Articles contained in this issue of the CLE:
An Alternative to Surety Bonds: Subcontractor Default Insurance
OSHA update – OSHA Cites Pennsylvania Contractor for Trenching Hazards
Seven Strategies to Manage Construction Defect Risks
Court Deems Contractors Exclusion to be Ambiguous and Imposes Coverage
Pennsylvania Courts Allow Quantum Meruit Recovery Hnder HICPA
Social Media in the Workplace
Employees Accused by Former Employer of Breach of Duty of Loyalty, Breach of Fiduciary Duty, and Conversion
Related Information:
Construction Legal Edge Summer Newsletter 2013 Read More
Authored by: Matthew R. Wendler
Yesterday, the U.S. Supreme Court issued two decisions arising under Title VII of the Civil Rights Act of 1964-defining “supervisors” narrowly and establishing that the lessened causation standard that applies in mixed-motive cases does not apply in cases brought under the anti-retaliation provision.
Title VII of the Civil Rights Act of 1964 prohibits status-based employer discrimination (i.e., employer discrimination because of race, color, religion, sex, or national origin), including the creation or perpetuation of a discriminatorily hostile work environment. It also prohibits an employer from retaliating against an employee who opposed, complained of, or sought remedies for unlawful workplace discrimination. Yesterday, the U.S. Supreme Court issued two 5-to-4 decisions that concern such Title VII claims: In Vance v. Ball State University, 2013 WL 3155228 (U.S. June 24, 2013), it defined “supervisor,” providing long-needed guidance as to when an employer may be held vicariously liable in a hostile-work-environment case. And in University of Texas Southwestern Medical Center v. Nassar, 2013 WL 3155234 (U.S. June 24, 2013), it established which causation standard applies in retaliation cases.
Vance v. Ball State University
It is well established that an employee who has allegedly been subjected to a discriminatorily hostile work environment (e.g., a working environment that is racially or sexually hostile) may seek to hold an employer liable either directly or vicariously. See, e.g., Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998); Faragher v. Boca Raton, 524 U.S. 775 (1998). Indeed, the U.S. Supreme Court has made clear that one may hold an employer directly liable if it has acted negligently-i.e., if the employee proves that the employer knew or should have known about the conduct and failed to stop it; and that one may hold an employer vicariously liable in two situations: first, if the employee proves that a “supervisor” harassed him or her, and that the harassment has culminated in a “tangible employment action”; and, second, even when a supervisor’s harassment does not culminate in a tangible employment action, if the employer is unable to prove that (1) it exercised reasonable care to prevent and promptly correct any harassing behavior and that (2) the plaintiff unreasonably failed to take advantage of any preventive or corrective measured that it provided. Read More
As many institutions are quickly learning, colleges and universities face formidable federal compliance requirements under the Clery Act and Title IX. The Department of Education has made it known: Clery violations likely will be fined at the maximum penalty of $35,000 for each violation. Students and parents are now better informed and highly motivated to hold their schools accountable for failure to properly report and investigate incidents of sexual misconduct and offenses of domestic violence, dating violence and stalking. Further, the plaintiffs bar is capitalizing on case law holding that Title IX creates a private right of action against educational institutions.
Now, colleges and universities dealing with allegations of sexual misconduct, domestic violence, dating violence and stalking face an additional challenge: fulfilling the mandates of the Violence Against Women Reauthorization Act (VAWA), which President Obama signed into law March 7. The VAWA amendments do not take effect until next year, but schools must act now to ensure compliance with these new obligations.
The amendments add new categories of crimes that schools must track and report under Clery. VAWA also codifies, through Clery, portions of the Department of Education’s 2011 Dear Colleague letter, which provided guidance on responding to claims of sexual violence and related offenses under Title IX.
Employees of educational institutions need to understand how these amendments impact their responsibilities under Clery and Title IX. Failure to comply with these changes can lead to administrative sanctions, significant fines, costly litigation and potential civil liability.
Background on Clery Act
Codified at 20 U.S.C. §1092(f), the Clery Act applies to all public and private postsecondary institutions that participate in federal student financial-assistance programs, such as Pell Grants, the Federal Work-Study Program and Perkins Loans. Under the Clery Act, schools must track criminal activity occurring on and around their campuses by location and type of crime, using definitions set forth in the act and its implementing regulations. Read More
In a recent ruling, the United States District Court for the Southern District of New York has found that an unpaid internship program concerning the production of the film “Black Swan” ran afoul of the Fair Labor Standards Act (“FLSA”). In Glatt v. Fox Searchlight Pictures Inc., the court found that the defendants improperly classified two workers as unpaid interns instead of paid employees. In reaching its decision, the court relied on a United States Department of Labor (“DOL”) Fact Sheet addressing whether interns at for-profit businesses fall within the so-called trainee exception to the FLSA. In this Fact Sheet, the DOL enumerates the following six factors:
The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
The internship experience is for the benefit of the intern;
The intern does not displace regular employees, but works under close supervision of existing staff;
The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
The intern is not necessarily entitled to a job at the conclusion of the internship; and
The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
Applying the DOL factors, the court found that the unpaid interns worked as paid employees work; they provided an immediate advantage to their employer; the internship was not designed to be uniquely educational to the interns; and if the unpaid interns did not perform the assigned work, then it would have otherwise been completed by a paid employee. With respect to the last factor concerning whether the interns understood that they would not be paid, the court dismissed its relevance by noting that the FLSA does not allow employees to waive their entitlement to wages. Read More
Sarah Murnaghan is a very special ten year old girl. She has battled Cystic Fibrosis since she was 18 months old and has spent her life in and out of hospitals. In December 2011, her condition took a turn for the worse and she was placed on the pediatric lung transplant list, which is the list for those who are eligible to receive donated lungs from a child donor. Her condition continued to deteriorate culminating in her doctors’ approval in November 2012 for her to receive an adult lung. The pool of adult donors is 50 times larger than the pool of lungs donated by children. Sarah has spent the last 107 days at Children’s Hospital of Philadelphia, the last two weeks of which have been in intensive care. In May 2013, she was given weeks to live.
The National Organ Transplant Act of 1984 (“NOTA”), 42 U.S.C. § 274(b)(2), requires donated organs to be allocated equitably by the Organ Procurement and Transplantation Network (“OPTN”). However, the United States Department of Health & Human Services under current Secretary, Kathleen Sebelius, has in place a policy called the “Under 12 Rule” that requires children under age 12 on the adult list to go to the back of the line despite medical urgency and only become eligible when everyone on the list ahead of them has declined the transplant. Sarah became an unwitting victim of the Under 12 Rule. Despite urgent and emergent requests through proper channels the Secretary would not terminate application of the Rule as to Sarah, even though doing so could save Sarah’s life.
With the dire prognosis, Sarah’s parents challenged the Secretary’s determination and obtained an emergency order from the United States District Court for the Eastern District of Pennsylvania that immediately ceases application of the Under 12 Rule as to Sarah. Read More
Gaetan J. Alfano, a name partner in the law firm of Pietragallo Gordon Alfano Bosick & Raspanti, LLP, was recently appointed to the Pennsylvania Board of Law Examiners for a three-year term.
The Pennsylvania Board of Law Examiners is empowered by the Supreme Court of Pennsylvania. The PA Board of Law Examiners is sanctioned to recommend the admissions of persons to the bar and the practice of law. The board is also responsible for recommending rules pertaining to admission to the bar.
Mr. Alfano is Co-Chair of the firm’s Litigation Practice Group. He is recognized as a top litigator by his peers and he has extensive experience in commercial disputes, employment disputes, insurance insolvency and white collar criminal defense. Mr. Alfano has been nominated and selected by his peers as a Pennsylvania Super Lawyer every year from 2004 through 2013, an honor reserved by 5% of the Pennsylvania Bar.
Mr. Alfano is a member of the American, Pennsylvania, New Jersey, and Philadelphia Bar Associations. He currently serves as a member of the Philadelphia Bar Association Judicial Commission.
Mr. Alfano is heavily involved in community service through the Justinian Society, a group of Italian American lawyers and judges. He has held a number of offices within the Society and its charitable branch, the Justinian Foundation, where he currently serves as Treasurer. Read More
Not only was the IRS allegedly scrutinizing conservative groups more closely than their liberal counterparts, but apparently the Service was spending enough money to make even the wealthiest world travelers blush. The Treasury Inspector General for Tax Administration has completed an audit of the IRS’ spending over a three-year span beginning in fiscal year 2010. During that period, the Internal Revenue Service spent an astonishing $49 million on at least 220 conferences. The most costly of those conferences appears to be an August 2010 conference in Anaheim, California for 2,600 IRS employees who serve in a division that assists small businesses and self-employed individuals prepare their taxes. The conference cost $4.1 million.
IRS Acting Commissioner Daniel Werfel assumed his new role in the wake of the resignation of Commissioner Steven Miller last month. Mr. Werfel, a former senior official in the Office of Management and Budget has categorized the IRS’ spending habits as “an unfortunate vestige from a prior era.” Citizens providing the Service with information on tax cheats hope that Acting Commissioner Werfel will rejuvenate the whistleblower program of the prior era, as well.
In 2006, Congress passed the Tax Relief and Health Care Act, which created the IRS Whistleblower Office and made rewards to whistleblowers less discretionary than in years past. Iowa Republican Senator Charles Grassley, a staunch supporter of whistleblowers, was the strongest congressional voice in support of the whistleblower provisions.
There are two basic tracks currently in place for whistleblower complaints that are filed with the IRS. On the first track, whistleblowers submit information concerning amounts in dispute (back taxes, interest, and penalties) in excess of $2 million. In these cases, the IRS is looking for non-compliant taxpayers with annual gross income of more than $200,000. If the IRS successfully obtains a recovery from a non-compliant taxpayer, the IRS is required to pay the whistleblower between 15 and 30% of the recovery. Read More
Marc S. Raspanti will serve on the panel, “Direct and Cross of Plaintiffs’ Witness,” at the ABA National False Claims Act and Qui Tam Trial Institute on June 7, 2013 in Washington, DC. Read More
The United States Court of Appeals for the Third Circuit has held that an employee who refuses to try a reasonable accommodation of a disability cannot maintain a discrimination suit under the Americans with Disabilities Act (“ADA”).
In Yovtcheva v. City of Philadelphia Water Department, No. 12-3089 (3d Cir. May 7, 2013), the plaintiff, Silvia Yovtcheva, was an analytical chemist with the Philadelphia Water Department’s Bureau of Laboratory Services. Ms. Yovtcheva subsequently informed the Department that she was experiencing health problems as a result of her work with a particular chemical. The Department advised Ms. Yovtcheva that she could wear a full-face respirator for protection. Ms. Yovtcheva was fitted for the respirator but only used it a few times because it made her claustrophobic and caused her to experience a panic attack. The Department then offered Ms. Yovtcheva a partial-face respirator but she refused to try it. Ms. Yovtcheva subsequently filed suit alleging, among other things, that the Department had discriminated against her due to her disability. The United States District Court for the Eastern District of Pennsylvania granted summary judgment in favor of the Department.
To maintain a claim for discrimination under the ADA, a plaintiff must show that: 1) he or she is disabled within the meaning of the ADA; 2) he or she is otherwise qualified to perform the essential functions of the job, with or without a reasonable accommodation by the employer and 3) he or she has suffered an adverse employment decision as a result of the discrimination. Under the ADA, an individual may refuse to accept an accommodation which is offered by the employer. However, if that individual rejects a reasonable accommodation which is necessary for that individual to perform the essential functions of a job, that individual is not a qualified individual for purposes of the ADA. Read More
Employee Retirement Income Security Act (“ERISA”) fiduciaries and plan sponsors, as defined by 29 U.S.C. § 1002(21)(A), have numerous investment responsibilities – particularly the responsibility to comply with and adhere to plan documents, perform their duties in the sole interest of a plan’s participants for the exclusive purpose of providing benefits to a plan’s participants and beneficiaries and the duty to defray administrative costs for the plan.
On March 31, 2012, the United States District Court for the Western District of Missouri issued an expensive lesson in prudence and diligence in Tussey v. ABB, Inc. (No. 2:06-CV-04305) (W.D. Mo. March 31, 2012), which held 401(k) plan fiduciaries liable for approximately $35 million in damages for plan losses caused by imprudent decision-making and prohibited transactions in violation of ERISA. In Tussey, ABB, Inc. sponsored two 401(k) plans, one for non-union employees and another for union employees, with assets totaling over $1 billion dollars. The plan fiduciaries for ABB, Inc.’s pension plans were required to select and monitor the plans’ investment options. These investment options included mutual funds offered by Fidelity Investments (“Fidelity”), such as the Fidelity Freedom Fund.
Additional Defendants Fidelity Management Trust Company and Fidelity Management & Research Company respectively served as the plans’ investment advisor and record keeper. The fees for these services were paid mainly through revenue sharing. The court emphasized that the type of revenue sharing employed in this case is a common industry practice, but found the fiduciaries’ process faulty in this instance because the fiduciaries failed to follow procedures in required plan documents. These failures could have been avoided simply by complying with the plan documents.
Failure to Calculate and/or Monitor Record-Keeping Costs
In direct contravention of the Investment Policy Statement (“IPS”), and required plan documents, the plan fiduciaries failed to calculate or monitor the dollar amount of record keeping fees paid to Fidelity via the revenue sharing arrangements. Read More
