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1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

Certain claims can be asserted before the state Department of Labor & Industry. Most claims can be asserted in courts of general jurisdiction, although certain claims, such as discrimination claims, must be first presented to the appropriate administrative agency. In addition to litigation, disputes also may be mediated or arbitrated before a state or federal court, a state or federal agency, or a private mediator or arbitrator.


The Main Sources Of Employment Law

Employment arrangements are governed by general common law principles of contract law, but there are common law and legislative requirements that over-ride those general principles in some instances. Individual contracts (whether written or oral), collective bargaining agreements and, in some instances, employee handbooks can form part of the contractual relationship.


National Law And Employees Working For Foreign Companies

Federal law, state common law and state statutes apply to all individuals physically working in the state, regardless of nationality, and regardless of the law governing their employment contract, although in certain narrow instances a national treaty with a foreign government may pre-empt the application of national law. The parties may by contract agree to apply the law of another state in some circumstances (e.g., the state of incorporation of a company).


National Law And Employees Of National Companies Working In Another Jurisdiction

Federal law applies to all employees working in the United States and, in some circumstances, to employees outside of the United States for United States based companies. Pennsylvania law applies only when the employee is physically working in the state or when both parties have agreed in writing to the application of Pennsylvania law.


Data privacy

In Pennsylvania, employers have a common law duty to exercise “reasonable care” to protect sensitive employee information against an unreasonable risk of harm when that information is stored on an internet-accessible computer system. Criminal acts of third parties who may breach a computer system do not alleviate the legal duty on a business to protect such information. Employees have a private right of action against employers who fail to reasonably protect sensitive employee information.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

There are no requirements as to the form of an agreement to hire. The employment agreement can therefore be written or oral.


Mandatory Requirements
  • Trial Period

    • There are no requirements that employers provide an introductory, trial or probationary period at the start of employment.

  • Hours Of Work

    • The state does not impose maximum working hours on employers, but a “non-exempt” employee, as defined by federal or state statute, who works more than 40 hours per week must be paid overtime. The overtime requirement does not apply to “exempt” employees, including executive, professional, administrative and outside sales employees who earn a salary of at least $684 per week and other employees as described by statute. Effective October 3, 2021, Pennsylvania’s salary minimum for the executive, administrative, and professional exemptions will increase to $780 per week. Effective October 3, 2022, the salary minimum will increase to $875 per week.

  • Special Rules For Part-time Work

    • There are no special rules for part-time work. Employers must pay “non-exempt” employees for all hours worked regardless of number of hours worked, including for overtime as applicable.

  • Earnings

    • In Pennsylvania, minimum wage requirements are applicable to all employees.

    Failure to pay timely wages may in many cases result in an employer being required to pay the unpaid wages, a penalty of 25% of the amount unpaid and attorneys’ fees of the employee. Most employers are required to pay the higher of federal minimum wage or the state minimum wage. The current federal minimum wage is $7.25 per hour and Pennsylvania’s is $7.25 per hour. Certain employees, such as farm workers and domestic workers in a personal home, are exempt from minimum wage requirements. The minimum wage is set by the legislature and revised from time to time by amendment to the applicable federal or state statute.

  • Holidays/Rest Periods

    • Employees are not entitled to holiday leave. Most employees are not legally guaranteed rest or meal periods. Certain types of jobs have compulsory daily rest periods as established by Pennsylvania law. Federal law requires certain employers to provide break time for an employee to express breast milk for their nursing child for one year after the child's birth.

  • Minimum/Maximum Age

    • The normal minimum age is 14 (which can be varied in certain cases). Different rules (e.g. on working time) apply to children or young workers. There is no maximum working age.

  • Illness/Disability

    • Under state law, employees are not entitled to paid leave due to illness. However, it is common for employers to provide some paid time off for employees who are absent from work due to illness. Jurisdictions within Pennsylvania may establish local paid sick leave requirements. For example, both Philadelphia and Pittsburgh require most employers to provide paid sick leave to employees, which accrues based on hours worked.

    Federal and state law impose specific requirements to accommodate employees with a disability, including providing unpaid leave in certain circumstances. Federal law also requires certain employers to provide unpaid leave to eligible employees with a serious medical condition, who are caring for an immediate family member with a serious medical condition or who are caring for an injured military service member. Employees may have the right to use accrued paid time off during unpaid leave.

  • Location Of Work/Mobility

    • There are no requirements concerning an employee’s location of work. Employers can require employees to work in different locations at any time.

  • Pension Plans

    • Requirements relating to pension plans are established by federal law. Employers may or may not contribute to pension plans on behalf of employees, depending upon the terms of the pension plan.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • There are non-discrimination and leave requirements for pregnancy. Federal law mandates unpaid leave requirements for parents after the birth or adoption of a child. Eligible employees are entitled to take up to 12 workweeks of unpaid leave in a 12-month period. State law requires that if an employer provides leave to care for a child following the birth or adoption of a child, that such options for leave be equally applicable to both male and female employees.

  • Compulsory Terms

    • State law mandates that employees must be advised as to when they will be paid and that employees must be paid for all hours worked.

    Philadelphia requires that certain covered employers provide non-exempt service, retail and hospitality workers with predictable schedules and compensate employees for unexpected, employer-initiated schedule changes.

  • Non-Compulsory Terms

    • The parties are free to agree to any specific terms, although terms that are less favorable than those provided by state or federal law may not be enforceable.


Types Of Agreement

No particular form of agreement is required. Agreements may be oral or written. Where employees are in a union, a collective bargaining agreement governs the terms and conditions of those employees’ employment.

Employment in Pennsylvania is generally “at will” meaning the employer can dismiss the employee at any time for any or no reason and with or without prior notice, as long as the employer is not terminating the employee’s employment for a reason that is unlawful (e.g., discriminatory, retaliatory, or based on the exercise of protected rights such as whistleblowing). No agreement is needed to establish “at will” employment; to the contrary, an employment agreement may alter the “at will” nature of the employment relationship.

An employment agreement may be for a specific term of employment and can generally provide for other terms and conditions of employment that are mutually agreeable to the employer and employee.


Secrecy/Confidentiality

Whether or not an employee has a written contract or is under an express secrecy/confidentiality clause, the employee has a common law and statutory duty to protect trade secrets and confidential proprietary information of the employer. Pennsylvania has adopted the Uniform Trade Secrets Act, which provides injunctive and monetary remedies to employers for the misappropriation of trade secrets.


Ownership of Inventions/Other Intellectual Property (IP) Rights

In the absence of a written agreement between the parties, ownership of IP rights is determined by federal statute.


Pre-Employment Considerations

In Pennsylvania, employers may consider an applicant's criminal history for the purpose of deciding whether or not to hire the applicant. However, employers may only consider an applicant’s felony or misdemeanor convictions (and may not consider summary offenses or arrests), and only to the extent such convictions relate to the applicant's suitability for employment in the position for which they have applied. If an employer decides not to hire an applicant based on their criminal record, the employer must so inform the applicant in writing.

Philadelphia prohibits employers from inquiring into a candidate's criminal history until after a conditional employment offer has been made. Employers cannot automatically exclude applicants, current employees, independent contractors or gig workers with criminal conviction records from a job or class of jobs. Employers must make an individualized assessment of the relationship between the conviction and the particular position, based upon six factors listed in the local law. If an employer rejects an applicant or current employee based on their criminal record, the employer is required to notify the candidate in writing and provide the basis for its decision as well as a copy of the criminal history report.


Hiring Non-Nationals

Employers are obliged by federal law to ensure that all employees are authorized to work in the US. Different requirements may apply depending on the nationality and immigration status of the individual concerned.

 

Hiring Specified Categories Of Individuals

There are restrictions on the types of work and the work hours that minors can be required to undertake.


Outsourcing And/Or Sub-Contracting

There are no restrictions on outsourcing or sub-contracting unless a collective bargaining agreement contains such restrictions.

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

As noted previously, employment in Pennsylvania is generally “at will” meaning the employer and employee can end the employment relationship at any time for any or no reason and with or without prior notice. Most “at-will” employees do not have employment contracts and, as such, an employer can unilaterally change the terms and conditions of employment. If an employer is going to modify an employee’s wages, the employer must provide notice to the employee before the change goes into effect. If there is an employment agreement or a collective bargaining agreement, the terms of those agreements will control and changes to the terms of those agreements may only be made with the consent of both/all parties.


Change In Ownership Of The Business

Federal law requires that employers with 100 or more employees give employees 60 days’ prior notice (or 60 days’ pay) in the event of plant closings or mass layoffs that affect a certain threshold number of employees. Though Pennsylvania does not have a similar notification requirement, Philadelphia requires employers with 50 or more employees to provide 60 days’ notice in the event of a permanent closure or transfer of the business location. Collective bargaining agreements or the presence of a union may also impose certain obligations on employers when there is a change in the ownership of a business.


Social Security Contributions

There are mandatory federal social security contributions that must be made by both the employer and the employee.


Accidents At Work

Federal law requires employers to keep logs of all accidents at work. Pennsylvania law requires employers to maintain insurance to provide compensation to employees who suffer workplace injuries, in order to cover medical care, rehabilitation services and partial wage loss. Pennsylvania’s workers’ compensation law is generally the exclusive remedy for such injuries, and thus bars separate tort liability for employers under most circumstances.


Discipline And Grievance

Pennsylvania has no specific rules governing discipline and/or grievance procedures. If there is an applicable employment agreement or collective bargaining agreement, such agreements may provide guidelines and/or limitations on discipline and/or grievance procedures. Although not required, many employers provide non-contractual guidelines for the handling of disciplinary procedures in their employee handbooks.


Harassment/Discrimination/Equal pay

Federal and state law prohibit harassment and discrimination against employees on the basis of certain protected characteristics. In addition to federal law, Pennsylvania specifically protects employees from discrimination and harassment on the basis of their race, color, religious creed, ancestry, age, sex, national origin, non-job related handicap or disability, and the use of a guide or support animal because of blindness, deafness or physical handicap. The Pennsylvania Human Relations Commission has issued formal guidance interpreting sex discrimination as encompassing discrimination based on gender identity and sexual orientation. Local ordinances may explicitly prohibit discrimination based on sexual orientation and gender identity. The concept of equal pay is recognized by federal and state legislation.


Compulsory Training Obligations

In general, there are no training obligations for employers in Pennsylvania. However, there may be certain licenses, certificates or trainings required to work in certain industries, trades, or professions. Employers are still advised to train managers and employees on harassment (including but not limited to sexual harassment), discrimination and retaliation prevention, including how to raise an internal complaint of any such concerns.


Offsetting Earnings

State law prohibits deducting employee debts from employee earnings unless there is a specific written authorization by the employee for such a deduction. In addition, federal and state law require the payment of at least minimum wage for all hours worked during all pay periods and offsets for employee debts may not result in a payment of less than minimum wage.


Payments For Maternity And Disability Leave

There are no mandated payments for disability leave but if an employer provides paid disability leave it must treat maternity leave the same as disability leave and pay pregnant employees while on maternity leave to the extent they are unable to work.


Compulsory Insurance

There is compulsory workers compensation and unemployment insurance. Employers pay for workers compensation insurance. Employers and taxpayers pay for unemployment insurance.

Workers who are independent contractors do not generally qualify for unemployment compensation and businesses need not pay unemployment taxes for independent contractors. That said, the Pennsylvania Supreme Court recently clarified and narrowed the test for determining whether an individual is an independent contractor under Pennsylvania’s unemployment compensation law.

This means that a broader range of workers may be considered employees for purposes of determining unemployment taxes and compensation eligibility.


Absence For Military Or Public Service Duties

Federal law establishes the requirements for military leave. Employers generally are required to keep the job open/available while on military leave and reinstate employees upon their return from military service, which includes restoring their job position and benefits that they would have had if not for their military duty and leave. Employers are not required to pay employees while they are on military leave. There are no requirements for public service leave.

Pennsylvania law requires that if an employee goes on leave for active duty, the employer must continue the employee's group health insurance coverage for the first thirty days of active duty at no cost to the employee.

Pennsylvania law also provides certain protections for employees who are emergency responders, including volunteer fire fighters, volunteer fire police officers or volunteer members of an ambulance service or rescue squad. Such employees may be late for or absent from work if their absence was due to responding to an emergency.

Pennsylvania employers generally must permit unpaid leave for employees to respond to a jury summons and/or serve on a jury.


Works Councils or Trade Unions

Under federal law employees can force the employer to recognize a union as the representative of employees in a defined bargaining unit by petitioning for and winning an election by majority vote. Federal law also provides certain protections for individuals who engage in concerted activities, such as supporting a union or participating in an organizing drive. Pennsylvania is not a “right-to-work” state, which means it does not prevent collective bargaining agreements from requiring union membership as a condition of employment. In contrast, over half of the states in the US have adopted some form of right-to-work legislation.


Employees’ Right To Strike

Under federal law, groups of employees may strike, even if there is not a collective bargaining agreement or formal union at the site of employment, subject to limits for employees who provide certain public services. Under Pennsylvania law, engaging in a strike is not a qualified reason to collect unemployment compensation.


Employees On Strike

Typically, employees on strike cannot be terminated from employment unless the employees engage in serious misconduct while on strike or the strike was unlawful and unprotected. However, if employees are on an economic strike, they may be permanently replaced by the employer and may be denied reinstatement if there are no open positions at the end of the strike and until appropriate positions become available.


Employers’ Responsibility For Actions Of Their Employees

Employers are responsible under common law agency principles for actions of their employees that occur within the scope of their employment. Employers generally are not responsible for employees’ actions outside the scope of their employment. Pennsylvania employers may be liable for harassment by supervisory/management employees.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

There are no required procedures for terminating an employee’s employment unless specified in a collective bargaining agreement or a contract of employment. Pennsylvania law requires employers to issue the final paycheck to an employee whose employment has terminated on or before the next regularly scheduled pay date.


Instant Dismissal

As noted above, employment in Pennsylvania is generally “at will” meaning the employer can dismiss the employee at any time for any or no reason and with or without prior notice, as long as the employer is not terminating the employee’s employment for an unlawful reason (e.g., discrimination, retaliation, in connection with the exercise of protected rights such as requests for certain leaves, or whistleblowing). A collective bargaining agreement or an employment contract can alter the “at will” nature of the employment relationship and include limitations on dismissal of an employee.


Employee's Resignation

“At will” employment also means that an employee can resign at any time for any or no reason and with or without prior notice to the employer. Employment contracts may provide for notice requirements.


Termination On Notice

As is noted above, notice is not typically required for termination of employment, unless required by a collective bargaining agreement or an employment contract. Under federal law and in some local Pennsylvania jurisdictions, certain covered employers must provide 60 day’s notice to workers if there will be a plant closure or mass layoff, as defined by applicable law.


Termination By Reason Of The Employee's Age

Generally, employment cannot be terminated because of the employee’s age. Federal law provides for certain limited exceptions, such as circumstances where age is a bona fide occupational qualification, or there are public safety concerns.


Automatic Termination In Cases Of Force Majeure

Although employment agreements can be terminated in cases of force majeure, such occasions are rare.


Collective Dismissals

Federal law requires that employers with 100 or more employees give employees 60 days’ prior notice (or 60 days’ pay) in the event of plant closings or mass layoffs that affect a certain threshold number of employees. Though Pennsylvania does not have a similar notification requirement, Philadelphia requires employers with 50 or more employees to provide 60 days’ notice in the event of a permanent closure or transfer of the business location.

For layoffs involving more than one employee, employers wishing to obtain a release of federal age discrimination claims must follow specific requirements, which include providing information about other employees considered for layoff in the “decisional unit” and a 45-day consideration period for the employee to decide whether to agree to release the claims.


Termination By Parties’ Agreement

The parties can agree to terminate employment at any time by agreement.


Directors Or Other Senior Officers

There are no specific requirements for the dismissal of a director or senior officer unless a requirement is set out in an employment agreement. Termination of the employment of a director generally does not automatically end the director’s board membership. Separate steps, as may be specified in the company’s by-laws or articles of incorporation, may need to be followed to end a director’s term.


Special Rules For Categories Of Employee

There are no special rules for certain categories of employees relating to termination, other than those already discussed above.


Whistleblower Laws

In addition to federal whistleblowing protections, Pennsylvania statutorily prohibits public bodies, and companies that perform work or provide services to public bodies, from taking adverse action against an employee for reporting, or intending to report, wrongdoing and/or waste. Though there are circumstances where this law applies to private employers, such circumstances are relatively narrow.


Specific Rules For Companies in Financial Difficulties

Federal law requires that employers with 100 or more employees give employees 60 days’ prior notice (or 60 days’ pay) in the event of plant closings or mass layoffs that affect a certain threshold number of employees. Though Pennsylvania does not have a similar notification requirement, Philadelphia requires employers with 50 or more employees to provide 60 days’ notice in the event of a permanent closure or transfer of the business location. Exceptions to the notice requirements exist when the layoffs resulted from closure of a faltering company or unforeseeable business circumstances.


Special Rules For Garden Leave

There are no special rules for garden leave in Pennsylvania.


Restricting Future Activities

Generally referred to as “restrictive covenants,” employees may agree to restrictions on future activities, though there are limits on certain types of restrictive covenants under Pennsylvania common law. By way of example, Pennsylvania permits employees to enter into non-compete agreements that apply for a specified period after termination of employment, but employees must receive consideration and the non-compete restrictions must be reasonable, which is a fact-specific analysis. To be reasonable, non-compete provisions must be limited in geographic and temporal scope (or else a court may impose such limits itself). Continued at-will employment is not valid consideration for a post-employment non-compete agreement; separate and additional consideration is required if the agreement is entered into after the employment relationship commences. Similar restrictions apply to non-solicitation agreements or provisions. Confidentiality, intellectual property and trade secret protections, on the other hand, are not as limited and may apply in perpetuity long after employment ends.


Severance Payments

Severance is not required unless the employer has a severance policy or the employee has a written contract providing for severance. Certain requirements may apply in order for a severance agreement containing a release of claims to be valid. For example, state common law generally requires that the language in a severance agreement be clear and comprehensive and that the severance payment constitute adequate consideration for the release. Under federal law, covered employers must follow specific statutory requirements to obtain a release of federal age discrimination claims.


Special Tax Provisions And Severance Payments

There are no special tax provisions relating to severance payments. Severance payments are subject to income, social security and other regular employment taxes. Federal law imposes a penalty tax on certain deferred compensation payments.


Allowances Payable To Employees After Termination

There are no specific allowances that an employer is required to pay to an employee after termination of employment. Pennsylvania law requires employers to issue the final paycheck to an employee whose employment has terminated on or before the next regularly scheduled pay date.


Time Limits For Claims Following Termination

There are time limits for claims following termination. The time limits (statutes of limitation) vary depending on the claim. Discrimination, harassment and retaliation claims generally must be brought within 300 days under federal law and within 180 days under state law.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

Pennsylvania’s Medical Marijuana Act permits individuals with certain conditions to use marijuana for medicinal use. Employers may not discharge, threaten, refuse to hire or otherwise discriminate or retaliate against an employee solely on the basis of such employee's status as an individual certified to use medical marijuana. Employers do not, however, have to accommodate the use of medical marijuana on their premises. Employers may discipline an employee for being under the influence of marijuana in the workplace or for working while under the influence of marijuana when the employee's conduct falls below the standard of care normally accepted for that position.

In relation to the COVID-19 pandemic, Pennsylvania’s governor mandated numerous restrictions for employers. These restrictions have varied based on industry and the governor regularly modified the restrictions over the course of the pandemic. Pennsylvania did not, by either executive order or legislation, mandate that employers provide any pandemic-related time off.

In general, Philadelphia is more restrictive for employers than the rest of the state. For example, in addition to the restrictions and requirements mentioned throughout this chapter, Philadelphia prohibits employers from asking job applicants for their salary history and from using salary history information to set wage rates. As another example, Philadelphia requires entities and individuals who employ domestic workers to provide them with written employment contracts, meal and rest breaks, and paid and unpaid leave. It is very important for employers to consider federal, state and local laws, as may be applicable.



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Marc J. Scheiner
Duane Morris LLP
United States


Elizabeth C. Mincer
Duane Morris LLP
United States


Disclaimer:

© 2021, Duane Morris LLP. All rights reserved by Duane Morris LLP as author and the owner of the copyright in this chapter. Duane Morris LLP has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021