3rd Circuit Employment Law News - U.S. Third Circuit
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The Third Circuit dealt the final blow to a long-running whistleblower suit last Tuesday. Jeffrey Wiest, a former accounts payable manager for Tyco Electronics, alleged that he had been illegally terminated in retaliation for raising concerns over expenditures on lavish parties featuring mermaid greeters, pirate performers and fire dancers. He sued, claiming that his firing months later violated the anti-retaliation provisions of the Sarbanes-Oxley Act.

The Third Circuit wasn't convinced, however, finding that Wiest had failed to show that his termination was connected to his mermaid expenditures complaints, rather than a later, independent sexual harassment investigation.

While Donald Trump campaigns to 'make America great again,' the Atlantic City casinos bearing his name have been doing anything but great. Trump casinos, hotels, and resorts have filed for bankruptcy no less than four times. The Trump Taj Mahal Casino first went into Chapter 11 in 1991, then again in September of 2014.

That most recent bankruptcy led to a protracted battle with the casino's union workers, who lost their bid to hold the Taj Mahal to its contracts last Friday, when the Third Circuit ruled that the bankruptcy code allowed debtors to escape their collective bargaining agreements.

If you want to officiate your cousins wedding, you can spend a few bucks and get ordained online in under 15 minutes. But if you want to establish a church plan, an ERISA-exempt defined benefit retirement plan, you better be a church. That's the gist of a recent ruling by the Third Circuit that concluded, "per the plain text of ERISA, only a church can establish" such plans.

Though the Third Circuit's ruling seems straightforward, it contrasts with years of IRS practice found that "nonchurch status is not fatal" when establishing church plans and decades of court opinions assuming that church plans could be established by entities that simply have strong ties to churches.

Overview of 3rd Circuit's Precedent-Setting FLSA Cases

Employment lawyers have been keeping their eyeballs on the Third Circuit lately. That court of appeals has been very busy making law with regards to the federal FLSA in two recent cases.

As an added bonus, the court was mercifully clear in its dicta and tone in both opinions. It might not be a bright line rule, but hey -- let's not be greedy.

You Eat on Your Own Time! 3rd Cir. Rules

Guards at Butler County Prison have lost their overtime lawsuit after they claimed that 15 minutes of an hour-long meal break was compensable under the Fair Labor Standards Act.

The suit was a case of first impression for the Third Circuit Court of Appeals. With this decision, the Third is the latest in a growing club of federal courts which have applied a harsh standard, essentially cutting off pay for workers who eat on what is arguably time for their own benefit.

Temp Workers Can Sue for Discrimination ... Maybe

The battle over workers' rights and employers' desire to conduct business lawsuit-free turned another page recently. In Faush v. Tuesday Morning. Inc,The Third Circuit overturned a grant of summary judgment in favor of the defendant temp-employer, remanding the case back to the lower court for further findings. The language applied in the court's opinion spells more trouble ahead for employers seeking to blur the distinction between 'temp' and 'employee.'

The situation is routine: a patient with an ERISA-governed health care plan goes in for a procedure. She signs an assignment form, giving her provider the right to collect payment under her plan directly. The assignment allows the provider to deal directly with the insurer in negotiating payment, taking administrative actions and potentially suing in federal court, should the health care plan refuse to pay for the procedure.

That is, except in the District Court of New Jersey, where an unusual intra-district split left district courts divided over whether the assignment for payment also included the right to sue to collect those payments. That divide was solved by the Third Circuit last week when it ruled that, yes, assignments for payment also confer standing to enforce those payments.

Employers cannot simply reject a faulty request for medical leave filed under the Family and Medical Leave Act, the Third Circuit ruled on Monday. Rather, employers have a duty to inform their workers about their request's deficiency and allow them an opportunity to correct it.

The case came after Deborah Hansel, a nurse's assistant at Lehigh Valley Health Network in Pennsylvania, requested medical leave for a then undiagnosed condition. After taking days off, the hospital fired her. At her termination, the hospital only stated that her request was faulty and had been denied.

Three insurance companies were sued by two patients and their pharmacies after the companies had refused to pay for blood-clotting-factor products under ERISA health plans. Eventually, the insurance companies paid them in full, including interest. Each time, the patients recovered through settlement, not court order.

The patients filed for attorneys' fees under ERISA, which allows for recovery of attorneys' fees when there has been "some success" on the merits. The settlements were success enough, the First Circuit reasoned, deciding for the first time that the catalyst theory allows recovery of fees in ERISA cases. ERISA attorneys, now's the time to pop the champagne.

Can an ERISA retirement plan, after having paid out a consistent pension to early retirees, later reduce those pensions based on the age at which the pensioners retired? Not without violating ERISA's anti-cutback rule, the Third Circuit ruled last Wednesday.

The case, Cottillion v. United Refining Company, involved pensioned retirees who began collecting before they were 65. After several years of pension payouts, United amended the plan to reduce, based on an actuary assessment, payments for early retirees. The court found this not only an impermissible interpretation of the plan's terms, but a violation of ERISA, the law governing employee retirement plans.