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No More for the Road: Growing Liability for Bars that Serve Intoxicated Patrons

Thu, 27 Sep 2012 11:29:31 -0400

Last month, two separate wrongful death lawsuits filed in the Court of Common Pleas in Philadelphia County highlight the results of drunken driving accidents and the need for drinking establishments to serve with greater responsibility. The parents of Zachary Hartwell, a passenger in Jackass star Ryan Dunn’s Porsche 911, filed a wrongful death suit against Dunn’s estate and Barnaby’s West Chester – the bar that allegedly continued to serve Dunn alcohol even after he appeared intoxicated. Hartwell and Dunn died after Dunn allegedly lost control of his vehicle and violently crashed in West Goshen, PA in 2011.The second lawsuit, filed by the widow of fallen Philadelphia Highway Patrol Officer Brian Lorenzo, names both the alleged driver who struck her husband as well as the Bensalem T.G.I. Friday’s that allegedly served him alcohol in the hours prior to the collision. Lorenzo died in a head-on collision after John D Leck, Jr. reportedly drove the wrong way down I-95 in Philadelphia, according to the Philadelphia Inquirer.

Restaurants and bars have a legal obligation to cut guests off when they start to show signs of intoxication. Known nationally as the Dram Shop Act, this rule makes businesses that sell or serve alcoholic drinks to visibility intoxicated patrons liable for any injuries the intoxicated guests cause as a result. Currently, 38 states across the country, including Pennsylvania, have Dram Shop laws. According to the complaints, Hartwell’s parents are seeking both compensatory and punitive damages from Dunn’s estate and Barnaby’s West Chester. Officer Lorenzo’s widow is seeking lost monetary support and expenses related to the loss of her husband and father to her three children.

The loss of Officer Lorenzo, a 23-year veteran, was felt keenly across multiple police departments throughout the Philadelphia metro area. “The unit he (Lorenzo) was in is a very close-knit unit,” says Philadelphia Police Lieutenant Ray Evers, “especially the officers within Highway Patrol who’re on motorcycles it’s very close. We had motorcycle officers from many departments come to his services not only to honor him, but also because Officer Lorenzo trained probably any police department within a 75-mile radius of Philadelphia he trained a lot, if not all, of the motorcycle cops in the tri-state area. He was well known for being one of the best riders in the area. That’s the type of guy he was.” The Centers for Disease Control and Prevention estimate that nearly 30 people die every day in the United States in motor vehicle accidents that involve at least one driver impaired by alcohol. That statistic amounts to one death every 48 minutes nationwide and generates an annual cost exceeding $51 billion.

We represent clients throughout eastern Pennsylvania, including the Philadelphia Main Line (Merion, Narberth, Gladwyne, Wynnewood, Ardmore, Haverford, Bryn Mawr, Rosemont, Villanova, St. David's, Radnor, Wayne, Strafford, Devon, Berwyn, and Paoli) and the communities of Newtown Square, Malvern, Valley Forge, Philadelphia, Phoenixville, Reading, Doylestown, West Chester, Media, Lancaster, Allentown, Stroudsburg, Norristown, and Easton.

Our lawyers regularly appear in the courts of Berks County, Bucks County, Chester County, Delaware County, Lancaster County, Lehigh County, Monroe County, Montgomery County, Northampton County and Philadelphia County, as well as Federal Court.

Child Safety - Warning Lables Are Not Always Effective

Mon, 24 Sep 2012 11:23:12 -0400

Consumer Product Safety Commission Moves Away from Just Warning on Dangerous Products

In 2010, a toy that contained tiny but extremely powerful magnets was a huge hit in toy stores. Unfortunately, the magnets found their way into the hands of small children, who not surprisingly swallowed them and, in some cases, suffered serious medical complications. Regulators initially responded by putting a warning on the product and launching an intense public service campaign to advise parents of the danger.

Despite best efforts, at least nine more incidents occurred in 2010, followed by 17 incidents in 2011, and then 25 incidents in 2012. Regulators concluded that the public service campaign warning about the danger of swallowing two or more the magnetic balls had not been effective. As a result, the Consumer Product Safety Commission made the rare decision to ban the product completely.

Recently, the CPSC has begun to address the issues of warnings with a more proactive approach, requiring companies to redesign warning labels or make them more prominent. The CPSC can also demand a design change on a product when the current one fails to adequately warn consumers about a danger or is ineffective in catching the consumer’s attention. Courts have concluded that simply putting a warning on a product does not completely absolve a company of its duty not to sell an unreasonably dangerous product. If an injury is caused by an unsafe product, the consumer can seek legal recourse. In this situation, the CPSC concluded that the toy was just simply too dangerous and the warnings inadequate, resulting in an outright ban of the product.

New HBO Documentary Explores Divorce's Impact on Children

Fri, 21 Sep 2012 12:00:22 -0400

HBO will air a new documentary executive produced by Rosie O’Donnell called “Don’t Divorce Me! Kids Rules for Parents on Divorce.” Initially airing on September 20, 2012, this thought provoking documentary will be repeated several times in HBO’s rotation throughout October.

In a twist on the do's-and-don'ts guide for divorcing couples, "Don't Divorce Me! Kids' Rules for Parents on Divorce" tells it from the kids' point of view. The half-hour documentary features interviews of two dozen children ranging in age from five to ten years old, offering an honest, emotional look at divorce from the perspective of children. Far too often, well intentioned parents believe they are acting in their child’s best interest without understanding the impact of their actions on the children. While some counties in Pennsylvania require the “Our Children First” seminar, it is usually viewed once a custody action has been filed and initial hearing or conference is pending. This is often not necessarily a period of time when people are the most open to considering their roles and co-parenting responsibilities in a custody case. This documentary is an effort to change a person’s approach to custody, working toward an outcome that is truly in the child’s best interests.

Use It or Lose It - The $5.12 Million Gift Tax Exemption

Fri, 21 Sep 2012 11:09:03 -0400

The $5.12 Million Gift Tax Exemption - Use It or Lose It

The 2010 Tax Act created significant, but temporary, reductions in estate and gift taxes. The estate and gift tax exemption amount of $5.12 million plus lower tax rates have created opportunities for individuals to transfer wealth and save thousands or even millions of dollars in taxes - but only through December 31, 2012.

By its terms, the 2010 Tax Act will sunset after December 31, 2012, the estate and gift tax exemption is scheduled to revert to $1 million on January 1, 2013 and the maximum estate tax rate will increase from 35% to 55%. What Congress does after that date is anybody's guess. It is impossible to predict.

Many focus on the fact that the estate tax exclusion amount was raised to $5 million for 2011 and 2012 was big news. But the really big news was that the gift tax lifetime exemption, which had previously remained at $1 million even as the estate tax exemption increased to $2 million and $3.5 million, was also increased to $5 million. This creates an unprecedented planning opportunity to transfer assets by gift before the end of 2012 to take advantage of this exemption.

More Money for Family Members, Less for the Tax Man

Due to the uncertainty about what the exemption will be in the future, high net worth individuals should consider capturing the benefits of the current gift tax exemption of $5.12 million while it remains in the law. The estate planning techniques for using the exemption before the end of the year all involve making substantial gifts before year end to use up the available exemption. The benefits are numerous.

If the estate tax exemption is reduced in future years, a current lifetime gift can substantially reduce the estate tax burden to a family on the death of the donor. In many cases, a current gift of $5 million can reduce the estate tax burden by about $2 million. That means an additional $2 million goes to family members or other beneficiaries instead of to the federal government in taxes. Lifetime gifts also reduce the Pennsylvania inheritance tax if made more than one year before death.

In addition, when assets are transferred by gift today, any future income and appreciation on the transferred assets are also removed from the donor's taxable estate. Transferring assets that are likely to appreciate is one way to leverage the gift; and if non-marketable property is transferred, valuation discounts may be available to further leverage the gift tax exemption.

Gifts carry-over the donor's income tax basis to the donee. That is a disadvantage compared to passing property through an estate where it gets a basis step-up. However, often the donees are in a lower bracket than the donors. Keep in mind that the 15% capital gains tax rate we have now may be the lowest we ever see again.

Married donors have the opportunity to create a "spousal access trust." One spouse makes a $5 million gift to an irrevocable trust. The terms of the trust permit distributions of income and principal in the trustee's discretion to the donor's spouse. The spouse could be the trustee. This allows the donor to retain, through his or her spouse, some access to the assets that were given to the trust. Some planners recommend each spouse making one of these trusts but I caution you to beware of the reciprocal trust doctrine. If each spouse makes one and the IRS takes the position that each was made in consideration of the other (in other words, "I'll make a gift to a trust for you if you make a gift to a trust for me"); then your plan fails.

Another catch is that a gift that will use the $5.12 exemption must be irrevocable. The person making the gift can no longer have control over the assets.

Time is Running Out

There are only four months to go. As the deadline approaches, many folks are trying to decide whether or not to take the plunge and make big gifts before year-end. They are torn - they want to take advantage of the $5.12 million gift-tax exemption, but they worry that they will "run out of money" and need the money back some day.

Some people are worried about the effect such large gifts will have on their children or other beneficiaries. They don't want to take away the children's incentive to be productive. This can be addressed by making the gifts to trusts where access is limited. Keep in mind that the same problem will exist at death if lifetime gifts are not made.

Early Planning Maximizes Your Options

If you are interested in doing this type of planning, start now. It takes time to create trusts. Some assets are difficult to transfer. You should get ready now even if you are on the fence. That way if you decide to jump and make a substantial gift, the plan will be ready; and you can take advantage of the opportunity before it disappears.

Money, Money, Money & Marital Infidelity . . . What Will the Affair Cost You in a Divorce?

Fri, 10 Aug 2012 13:06:02 -0400

Clients involved in a divorce proceeding frequently want to know what, if anything, will cheating on a spouse ultimately cost. In Pennsylvania, the Court may award alimony, “as it deems reasonable,” if it finds that alimony is necessary based upon various factors that are designed to aid in determining the nature, amount, duration, and manner of the payment of alimony. The seventeen factors are contained in a state statute, 23 Pa.C.S. Section 3701, and are as follows:

(1) The relative earnings and earning capacities of the parties.

(2) The ages and the physical, mental and emotional conditions of the parties.

(3) The sources of income of both parties, including, but not limited to, medical, retirement, insurance or other benefits.

(4) The expectancies and inheritances of the parties.

(5) The duration of the marriage.

(6) The contribution by one party to the education, training or increased earning power of the other party.

(7) The extent to which the earning power, expenses or financial obligations of a party will be affected by reason of serving as the custodian of a minor child.

(8) The standard of living of the parties established during the marriage.

(9) The relative education of the parties and the time necessary to acquire sufficient education or training to enable the party seeking alimony to find appropriate employment.

(10) The relative assets and liabilities of the parties.

(11) The property brought to the marriage by either party.

(12) The contribution of a spouse as homemaker.

(13) The relative needs of the parties.

(14) The marital misconduct of either of the parties during the marriage. The marital misconduct of either of the parties from the date of final separation shall not be considered by the court in its determinations relative to alimony except that the court shall consider the abuse of one party by the other party. As used in this paragraph, “abuse” shall have the meaning given to it under Section 6102 (relating to definitions).

(15) The Federal, State and local tax ramifications of the alimony award.

(16) Whether the party seeking alimony lacks sufficient property, including, but not limited to, property distributed under Chapter 35 (relating to property rights), to provide for the party's reasonable needs.

(17) Whether the party seeking alimony is incapable of self-support through appropriate employment.

Although one of the seventeen factors is the marital misconduct of the parties during the marriage (which includes having an affair), there are sixteen other factors taken into consideration by the Pennsylvania courts. Much to the surprise of clients, the court often places far more emphasis on the financial status of the parties, who has custody of the children, and the health of the parties, relegating marital infidelity to simply one issue for consideration.

Contact Bagby & Associates LLC , Main Line Attorneys, for your legal needs.

For a consultation with our experienced Pennsylvania family law or civil appeals lawyers, contact Bagby & Associates, by email, phone, or through this website. We represent clients throughout eastern Pennsylvania, including the Philadelphia Main Line (Merion, Narberth, Gladwyne, Wynnewood, Ardmore, Haverford, Bryn Mawr, Rosemont, Villanova, St. David's, Radnor, Wayne, Strafford, Devon, Berwyn, and Paoli) and the communities of Newtown Square, Malvern, Valley Forge, Philadelphia, Phoenixville, Reading, Doylestown, West Chester, Media, Lancaster, Allentown, Stroudsburg, Norristown, and Easton.

Pennsylvania Product Liability Law – Still No Resolution Regarding the Third Restatement

Tue, 24 Jul 2012 15:47:44 -0400

In a recent decision, the Pennsylvania Supreme Court issued an interesting opinion in a products liability matter, Beard v. Johnson & Johnson, Inc., No. 35 WAP 2010, slip op. (Pa. March 22, 2012). The medical device in question was designed for use in a variety of different surgical applications. The plaintiffs claimed that risk-utility balancing concerning the design of the device should be limited to the particular use to which the device was put in the plaintiff's surgery, thus ignoring other potential uses for the product. The Pennsylvania Supreme Court refused to limit the scope of risk-utility balancing in that fashion, noting:

For better or worse, this Court’s decisions have relegated our trial courts in the unenviable position of “social philosopher” and “risk-utility economic analyst.” This having been done -- and as the present case does not provide an appropriate opportunity for reconsideration of such assignment – we decline to require the trial courts to put on blinders. It should be enough to say that a product’s utility obviously may be enhanced by multi-functionality, so that it would be imprudent to deny trial courts the ability to assign some weight to this factor in assessing product design. . . . [Plaintiff’s] concessions of the net social utility calculus in the area of the [device’s] primary design [a different kind of surgery] are irreconcilably inconsistent with his claim of an inherent design defect. . . .. [T]here is much at stake in the condemnation of a product’s design, above and beyond any individual damages award or awards, including the impact on product costs and design innovation. On balance, we differ with [plaintiff's] position that the desire to streamline a particular facet of products litigation should be accorded priority over the wider-ranging assessment which was obviously intended from the outset, as manifested in the above characterizations of the trial court’s role, in the open-ended factors which have been accepted by Pennsylvania courts as the basis for risk-utility review, and otherwise.

Beard, slip op. at 24-24 (footnotes omitted).

At least with respect to design defect claims in Pennsylvania, defendants will now be able to defend by relying on the benefits of their designs in other uses of the product. This arguably should apply both to the Pennsylvania-peculiar judicial balancing of risks and benefits required under existing law (see Beard, slip op. at 25), and to the defense counsel’s presentation of a risk/utility defense to the jury at trial. See Phatak v. United Chair Co., 756 A.2d 690 (Pa. Super. 2000) (evidence bearing on same risk utility factors may be submitted to the jury in design defect cases). The Beard opinion will help defendants by allowing them to compare their design to the plaintiff's alternative design across the entire spectrum of a product's intended uses. Since the plaintiff's alternative design is usually tailored to address only the accident scenario in a given case, the alternative's adverse consequences affecting many other people who use the product will put before the jury the same broad perspective of product design that manufacturers utilize in the real world.

Unfortunately, the Pennsylvania Supreme Court yet again missed a perfect opportunity to finally address Pennsylvania’s idiosyncratic product liability law, failing to adopt the Restatement Third. Instead, we are left with the convoluted form of strict liability expressed years ago by Azzarello v. Black Brothers Co., 480 Pa. 547, 391 A.2d 1020 (1978). Justice Saylor, who wrote the opinion in Beard, stated in the opinion one of "several justices" on record as supporting a shift away from Azzarello's extreme separation of "strict liability" from "negligence." Slip op. at 23. Regrettably, "a majority consensus has not yet been attained in any case." Id. Although Justice Saylor was careful to avoid anything that would undercut the Third Circuit's prediction that the Court would eventually move to the Third Restatement, the Court has yet to adopt the Restatement. See slip op. at 23 (noting the Third Circuit prediction in Covell v. Bell Sports, Inc., 651 F.3d 357 (3d Cir. 2011), and "[r]ecogniz[ing] the continuing state of disrepair in the arena of Pennsylvania strict-liability design defect law").

The Court’s lack of a majority consensus in support of adopting the Third Restatement of Torts is best demonstrated by a simple footnote. The Beard opinion mentions the Third Restatement favorably in a footnote. Id. at 26 n.18. On the other hand, a three-justice concurrence (Baer, McCafferty, Todd, JJ.) disassociates itself from footnote 18, while also pointing out the rather unfortunate fact that “[defendants] failed to raise this [Third Restatement] issue in their Pa .R.A.P. 1925(b) statement of errors complained of on appeal.” Id. at 2. Nevertheless, these three justices steadfastly claim to “express no opinion on the merits of the adoption of the Restatement Third.” Id. Of equal interest, not one of these justices comments negatively about the Third Circuit's prediction in Covell of an eventual change. It would thus appear that a four justice majority on the current Pennsylvania Supreme Court will dittch Azzarello at some point in the not too distant future. Accordingly, any defendant adversely affected by Azzarello should preserve this issue from the outset and avoid preclusion of such an argument at the appellate level. See Schmidt v. Boardman, 608 Pa. 327, 353, 11 A.3d 924, 940 (2011).

Insurance Agent Has No Duty Following the Sale of a Policy

Thu, 19 Jul 2012 11:25:32 -0400

Simply stated, an insurance agent has no general duty to advise its insureds with regard to essentially anything after the issuance of the policy. In many jurisdictions, the basis for not holding agents to an ongoing duty to advise stems from a fear that to do so would create a situation where the tort floodgates would open to allow claims against brokers whenever an incident surrounding the policy occurs. When viewed exclusively in the insurance context, once the policy is issued, the insured is responsible for noticing any problems with the policy and bringing them to the attention of the agent immediately. With regard to administration of the policy following issuance, the basis for not requiring a duty of care stems from a belief that such would require an agent to continuously monitor a clients assets and adjust coverage accordingly. Since agents are generally in a position where they must rely on the information given to them by the insured, imposing such a duty of care is considered unreasonable.

This reasoning is consistent with the Superior Court’s opinion in Wisniski v. Brown Brown Ins. Co. of PA EMC. Judge Lally-Green comments, “It very well may be a wise and sound business practice for a broker to inspect premises and recommend insurance based on that inspection.” In the Court’ view, imposing a duty would be onerous for many reasons. “First, the time and expense of inspecting every property may very well outweigh the relative value of an inspection, particularly for low-value properties. Second, a knowledgeable insured may be able to provide all the information necessary for adequate coverage in an interview, without the need for a personal inspection. Third, we stress that we are concerned with extending this duty to brokers, not insurance companies or agents. While brokers may provide a variety of services, they are primarily in the business of acting as an intermediary between insurance companies and clients. Some brokers may not have the expertise to conduct a thorough inspection, and instead may rely on loss control experts at the insurance companies themselves to assess risks. Fourth, it is far from clear where the duty to inspect would end. If this Court recognized a duty of brokers to inspect business properties, it is difficult to see a principled basis for failing to extend that duty to homes, land, cars, boats, and other insurable items. Fifth, imposing a duty to inspect would unreasonably diminish the insured's own responsibility to ascertain and ask for appropriate coverage.”

Only in rare circumstances will courts go beyond the above mentioned bright-lined approach, which may occur in limited situations where there is a "special relationship". Otherwise, any causes of action arising after the policy has been issued are prosecuted against the actual policy provider (i.e., the insurance company), not the agent. Keep in mind, however, that there still may be a potential action against an agent for negligence in certain situations where, for example, the agent did not recommend the proper amount of coverage or failed to list the proper parties or beneficiaries.

Pennsylvania Commonwealth Court Raises Evidentiary Standard to “Clear and Convincing” Standard of Proof for Maintaining ChildLine Registry Reports

Thu, 19 Jul 2012 10:42:51 -0400

A split en banc Commonwealth Court has raised the evidentiary standard for the Department of Public Welfare to maintain information from certain child abuse reports on the ChildLine and Abuse Registry, a toll-free system for disclosing reports of child abuse to certain designated government officials, law enforcement, and other third parties. Under Pennsylvania Child Protective Services Law, a person seeking employment in which there is a significant likelihood of direct contact with children or residing in a family day care home must provide certification that he/she is not on the ChildLine registry. While it is undisputed that the state’s General Assembly has pronounced that substantial evidence must support a report, there was no legislative mandate regarding the standard of proof to be met for maintaining a report summary of the ChildLine registry.

In a 5-2 decision in G.V. v. Department of Public Welfare, Judge Anne E. Covey wrote for the majority and found that while CYS agencies are bound by the “substantial evidence” standard when issuing an indicated child abuse report, DPW must adhere to a stricter “clear and convincing evidence” standard when deciding whether to maintain a summary of such a report on the ChildLine Registry. In its reasoning, the Court noted the need to protect children and the difficulties associated with getting a conviction in a child abuse case, as demonstrated by the recent trial of former Penn State football defensive coordinator Jerry Sandusky which took 10 victims to come forward “to get the momentum to win. . . .” Many cases do not have such overwhelming evidence. In order to encourage more reporting, a substantial evidence standard is applied when issuing a child abuse report. Following an investigation of the report, DPW must determine whether the report summary should be maintained on the ChildLine Registry. The Court found that the “clear and convincing” standard should be applied as a higher evidentiary standard to protect against erroneously damaging an alleged abuser’s reputation. The practical effect of the Court's opinion remains to be seen.

Good News for Mental Health – Supreme Court Decision Offers More Benefits for Treatment of Mental Illness

Fri, 13 Jul 2012 14:51:45 -0400

In a 5 to 4 decision, on June 28, 2012, the Supreme Court upheld the constitutionality of the cornerstone provision of President Obama’s Affordable Care Act, the individual mandate. In the Court’s majority decision, which was written by Chief Justice Roberts and concurred in by Justices Breyer, Ginsburg, Sotomayor and Kagan, the law’s individual mandate was ruled a valid exercise by Congress of its taxing power. Justice Kennedy, who was widely viewed as the likely swing vote, joined with Justices Scalia, Alito and Thomas in a dissenting opinion. A surprise to most was that the controlling swing vote in favor of upholding the law proved to be that of the Chief Justice.

Americans suffering from mental illness, as well as their providers, now have reason to celebrate, as the Affordable Care Act promises to give them something they never had before, namely health insurance not just for medical conditions, but also for psychiatric disorders as well. Previously, individuals suffering from mental illness faced higher deductibles, annual and/or lifetime caps on coverage or no coverage at all. Under the Affordable Care Act, psychiatric illness is treated like any other illness, thus removing obstacles to fair and reasonable treatment. Exclusion of individuals based on pre-existing conditions is forbidden, which is significant in the mental health field, as half of all serious psychiatric conditions are present by the age of 25. Older Americans benefit as well, because the law will eventually fill in the Medicare drug coverage gap.

Employers must plan now for the full impact of this law. Given the uncertainty about the constitutionality of the law prior to the Court’s decision, many employers with health care plans delayed focusing attention or resources on compliance with the new law by the 2014 full implementation date. The Supreme Court’s recent decision upholding the law, however, means that a “wait and see” approach is difficult to justify. The 18 months remaining between now and January 1, 2014, is a relatively time in which to implement full compliance with the notice, administration and benefit changes health plan sponsors will have to implement.

Defendant’s Smile Earns Him an Extra Six Months in Prison

Tue, 03 Jul 2012 11:28:57 -0400

In court for sentencing after being convicted of assaulting the mother of his children, White Twin was facing up to 78 months in prison plus three years of supervised release. U.S. District Judge Charles Kornmann of the District of South Dakota then noticed Twin was smiling at the sentencing. Finding a lack of humor in the proceedings, Judge Kornmann noted for the record that the defendant was smiling and then added six more months to the defendant’s prison sentence. The Eighth Circuit upheld Judge Kornmann’s upward sentencing departure on June 27, 2012, noting that the district court has discretion to increase its sentence under four guidelines, including criminal history, inadequacy, extreme psychological injury for the victim, extreme conduct, and dismissed and uncharged conduct.

Pennsylvania Ranked 12th in Worst States to Obtain a Divorce

Tue, 03 Jul 2012 11:28:03 -0400

Forget Pennsylvania, according to Bloomberg Ranking’s analysis. For a quick divorce, New Hampshire is the place to go. Bloomberg rated the Keystone State the 12th worst state in the country as far as obstacles one might face in obtaining a divorce. As reported by msn.com on February 2, 2012, the rankings took into account obstacles to obtaining a divorce, such as filing fees, minimum separation period, minimum length of residency, minimum waiting period after filing for the divorce, and minimum number of days for the entire process (start to finish). Bloomberg’s reasoning for Pennsylvania’s low ranking was the minimum processing time of 270 days, the $270 filing fee, and the grounds for a fault divorce which include “such indignities to the innocent and injured spouse as to render that spouse’s condition intolerable and life burdensome.” The slow processing time is yet another reason to prepare for your first meeting with your divorce lawyer to address the following four topics: (1) child custody and visitation; (2) the marital home post-separation; (3) child support; and (4) marital assets and debt.

Joint-Employer Test Established by Pennsylvania Appellate Court

Tue, 03 Jul 2012 11:27:19 -0400

In a case of first impression, the Third Circuit recently created a four-part test to determine whether a company is an employer under the Fair Labor Standards Act. The issue arose in class action litigation against Enterprise Holdings, which was sued by assistant managers at Enterprise Rent-A-Car branches across the country for allegedly failing to pay overtime wages in violation of the FLSA. Rejecting the assistant managers claims, the Third Circuit established a four-prong test that focuses on how much control the alleged employer would have over the work and structure of the employment and enumerated four factors to assess this relationship: (1) Does it have authority to hire and fire?; (2) Does it have authority to promulgate work rules and assignments, and set condition of employment, including compensation, benefits and hours?; (3) Does it conduct day-to-day supervisions, including employee discipline?; and, (4) Does it control employee records, including payroll, insurance, taxed and the like? These factors are similar to those used in other circuits across the country and reflect a practical approach taken by the court. Thus, Enterprise Holdings was not found to be a joint employer with the individually owned branches of Enterprise Rent-A-Car.