Labor & Workforce
Summary of the labor and workforce issues to be considered when establishing and growing a business in PA
In Pennsylvania (like a number of other states), workers will generally be considered to be “at will” employees unless they have an employment contract or statutory right that provides otherwise. An employer may terminate the services of an “at will” employee, with or without cause, at any time — as long as an employee is not let go for an unlawful purpose, such as age or racial discrimination. Conversely, “at will” employees have a similar right to resign their employment, for any reason (or no reason at all), at any time.
If an employment contract specifies a duration for performance of the contract (i.e., states that the employee agrees to work for the company for 2 years, for example), then the employer can only dismiss the employee for just cause (i.e., drug use on job, or failure to adequately perform his or her duties). When there is no time set for performing a job, the general rule in Pennsylvania is that employment is presumed to be terminable “at-will.” This means that either the employer or the employee can end the employment at any time. There are, however, a few exceptions to this rule, including: (1) an employer cannot dismiss an employee for discriminatory reasons, which include, but are not limited to, dismissal based on sex, race, religion, nationality, age, or disability; and (2) if the employer meets certain size criteria, employers must provide 60 days notice in advance of plant closings and mass layoffs.
Unions that are formed in Non-Right-To-Work states are allowed to negotiate with their employer for a clause in their contract that requires all employees to pay union dues. Unions that are formed in Right-To-Work states, in contrast, may not generally negotiate for this type of provision in their contracts with their employers.
Unions exist, and play important roles in ensuring the continuity and quality of the workforce in many U.S. states. Whether the workers of any specific company will or will not form a union, however, can be hard to predict, as these decisions are made on a case-by-case basis depending on the nature and location of the enterprise, quality of employeremployee relations, and the type of work that is involved. In 2011, approximately 15 percent of wage and salary workers in Pennsylvania were members of unions, compared with 24 percent of workers in New York, 16 percent of workers in New Jersey, and 13 percent of workers in Ohio (Pennsylvania’s neighbors).
Labor costs can vary between different parts of the country depending on the nature and skill of the work that is being performed. Pennsylvania’s labor costs are competitive with many different states, particularly after factoring in the productivity and skill of Pennsylvania’s labor force. Pennsylvania’s workforce is highly educated and many of the best colleges and universities in the country are located in the state, including the University of Pennsylvania, Carnegie Mellon, Swarthmore, Penn State University, and the University of Pittsburgh. The commonwealth is committed to helping to ensure that firms continue to have the best-trained workers in the country and has established a well-developed network of Workforce Investment Boards that provides ongoing support to employers for training and other purposes. These factors have encouraged world-class firms, including Sony, Ahold, AventisPasteur, and others, to make major investments in the Commonwealth.
Although very few categories of workers-such as aircraft pilots, for example-have restrictions on the number of hours they may work, most adult employees may generally work as many overtime hours as they wish. U.S. employers in all fifty states, however, generally pay hourly/line employees more (e.g., often 150 percent of their regularly hourly wage) for each extra hour that an employee works in excess of forty hours a week. Employers, however, generally do not have to pay overtime wages to certain categories of salaried employees, including those employed in a bona fide executive, administrative or professional capacity, or as outside salesmen (employees who spend over 80% of time away from employer’s place of business making sales or entering contracts on behalf of employer.)
Sometimes. Employers in all states in the United States are generally required to pay nonexempt (e.g. hourly/line) workers 150 percent of their hourly pay for each hour that they work in excess of 40 hours a week. Pennsylvania is the same as every other state in this regard. Employers, however, generally do not have to pay overtime wages to certain categories of salaried employees, including those employed in a bona fide executive, administrative or professional capacity, or as outside salesmen. Managers and supervisors usually work on a salary basis, and therefore do not receive extra compensation for overtime work.
Employers are not generally required by law to pay workers a premium rate for working weekends or holidays, however many employers across the U.S. do.
This varies a great deal depending on the location of your business, the type of industry in which you are involved, and the skill and qualifications of specific employees. Some employers award more benefits, others award fewer. Although a good rule of thumb would be to assume that benefits will cost approximately twenty to forty percent of an employee’s gross salary, the range may vary widely depending on the nature of the work in question.
This is not set by law, but by market circumstances. The standard varies based on location within the state and the type of industry. However, many employers throughout the U.S. award workers two weeks of paid annual leave.
Employees who meet certain legal requirements are entitled to twelve weeks leave for birth of a child, adoption of a child, poor health or the need to care for a family member in poor health.
Unemployment Compensation (UC), also known as unemployment insurance, provides temporary income to individuals who become unemployed through no fault of their own. UC benefits are paid, for a limited time, to individuals who are able and available for suitable work, while they are looking for another job. The UC program (which exists throughout the country) is funded in part by contributions from both employees and employers. Generally speaking, all employers providing full and/or part-time employment to one or more workers are required to pay into the UC fund.
The UC Law requires covered employers and employees to make contributions into a pooled reserve known as the UC Trust Fund. These contributions are used to pay benefits to jobless individuals who meet the claimant eligibility requirements of the UC law. Employers are required to report covered wages paid and to make payments to the UC Trust Fund based on those wages on a quarterly basis.
The workers compensation program is a type of insurance program (which exists across the U.S.) that assists workers who are injured on the job, or who sustain a work-related illnesses. The program helps pay for injured/ill workers’ medical expenses and, in the event the employee is unable to work, wage-loss compensation benefits until he or she is able to go back to work. The program also pays death benefits for work-related deaths to an employee’s dependent survivors. Employers provide these benefits through others-by purchasing appropriate workers compensation insurance from insurance carriers-or directly themselves by self-insuring.
Yes. The Pennsylvania Department of Labor coordinates, regulates and funds a strong system of Work Force Investment Boards and Career Links. These entities help employers find employees who are “qualified” on the basis of both training and education. Local Work Force Investment Boards try to anticipate and plan for the employment needs of their region within Pennsylvania and will provide substantial assistance to help employers find a qualified work force.
Yes, hiring temporary workers is permitted.
An employer may hire temporary employees from other countries, but the workers must obtain a work visa from the U.S. Immigration and Naturalization Service.
Whether an employee is considered a full-time, part-time, or temporary employee usually depends on the number of hours an employee works during the week and the contractual nature and length of the employment. Some employers who provide benefits to full time workers may choose not to provide the same benefits to their part-time or temporary employees.
Yes. Pennsylvania assists many businesses with customized job training and special grants to offset the cost of work force training for both employees and supervisors. Many local Work Force Investment Boards apply for and administer grants that are designated for individual companies or groupings of employers in the same industry, to help ensure that Pennsylvania’s employers remain competitive. These training programs can be tailored to meet the specific needs of particular employers.