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This
Guide to Doing Business in Northwestern Pennsylvania is intended
to introduce the reader to the business, economic, investment
and legal aspects of conducting business in Northwestern Pennsylvania.
Table of Contents
I. INTRODUCTION
II.
PENNSYLVANIA'S POLITICAL, LEGAL AND ECONOMIC ENVIRONMENT
Government
Economy
III. INVESTMENT
CONSIDERATIONS
Location
Business Incentives
Keystone Opportunity Zones
Foreign Trade Zones
IV. BUSINESS
IN PENNSYLVANIA
Business Structure
Business Name
Licenses and Permits
Taxes
Identification Numbers
Personal Income Tax
Local Requirements
Filing Requirements
V.
EMPLOYEE-RELATED MATTERS
Employment At Will
Rule
Occupational Safety and Health
Administration (OSHA)
Law and Regulations Child
Labor Law
Equal Pay Law
Human Relations Act
Industrial Home Work Law
Medical Pay Act
Minimum Wage Act
Wage Payment and Collection
Law
Personnel File Inspection
Act
Prevailing Wage Act
Seasonal Farm Labor Act
Worker's Compensation Law
Occupational and Industrial Safety
Pennsylvania Unemployment Compensation
Law
Collective Bargaining
Worker Adjustment and Retraining
Notification Act
VI. PRIVACY
LEGISLATION
VII. TECHNOLOGY DEVELOPMENT
VIII. SECURITIES LEGISLATION
IX. GET PROFESSIONAL
ADVICE
IX. KNOX MCLAUGHLIN
GORNALL & SENNETT, P.C.
I. INTRODUCTION
This Guide focuses on the business, economic and legal
aspects of doing business in Northwestern Pennsylvania.
This Guide is provided for information purposes only and
does not constitute legal advice. This guide discusses
complex issues in a concise manner. It is recommended
that you consult with an attorney before acting upon any
of the information contained in this Guide.
II. PENNSYLVANIA'S
POLITICAL, LEGAL AND ECONOMIC
ENVIRONMENT
Government
In reference to Pennsylvania, the word "commonwealth"
is synonymous with state. The term is of English derivation
and implies a special devotion to the welfare of its citizens.
The Pennsylvania Constitution is the foundation of the state
government. The articles and amendments of the Pennsylvania
Constitution create the fundamental law of the Commonwealth.
This Constitution ensures the basic rights of Pennsylvania
citizens, outlines the structure of the government, and
provides the rules by which representatives are elected
and how elected officials conduct state business.
The Pennsylvania Constitution creates three government
branches: legislative, executive and judicial. The
legislative power of the state resides with the General
Assembly, which consists of the Senate and the House of
Representatives. Executive authority is given to the Governor.
A unified judicial system consists of the Supreme Court,
the Superior Court, the Commonwealth Court, courts of common
pleas, community courts, municipal courts, traffic courts,
and other such courts as may be provided by law. Each
of these three government branches is discussed below.
- The General Assembly is the legislative branch comprised
of the Senate and House of Representatives. The
Senators and Representatives are chosen by popular vote.
Each elected legislator represents, serves, and is responsible
to a specific area of the Commonwealth. The General
Assembly's existence, authority, and limitations are provided
by Article II of the State Constitution. The Pennsylvania
General Assembly consists of 253 legislators (50 Senators
and 203 members of the House of Representatives).
Senators are elected for a term of four years and Representatives
for a term of two years.
- The executive branch of the Pennsylvania government,
consisting of elected and appointed officials, is headed
by the Governor, who holds the state's highest office.
The Attorney General, Auditor General and State Treasurer,
all of whom are elected independent of the Governor, are
executive branch officials. The Lieutenant Governor,
also an elected official, and the appointed members of
the Governor's cabinet constitute the rest of the executive
branch. Cabinet members manage the operations of
the state government agencies and provide their expertise
as advisors to the Governor.
- Pennsylvania's "unified judicial system" is
arranged so that every court in the Commonwealth is under
the supervision of the state Supreme Court. Subordinate
to the Supreme Court are the two appellate courts, Superior
Court and Commonwealth Court, followed by the Courts of
Common Pleas. Under the Courts of Common Pleas are
the community courts, district justices, as well as the
municipal and traffic courts. The function of the
judicial system is to interpret and apply the laws of
the Commonwealth.
Economy
Pennsylvania is a vital player in the world economy.
According to The World Bank's World Development Indicators
Database, Pennsylvania boasted the world's 17th largest
economy at $380 billion in 2000.
In industry and commerce, diversity came to Pennsylvania
as the coal, steel, and railroad industries declined.
The steel industry began to contract in 1963, although Pennsylvania
still leads the nation in specialty steel production.
Economic data during the last decade demonstrates Pennsylvania's
contribution in all sectors of the economy. According
to the U.S. Bureau of Economic Analysis, Pennsylvania ranked
seventh among the states in 2000 in value added from manufacturing.
Pennsylvania was also sixth in value of shipped manufactured
merchandise.
Another measure of economy is the annual gross state product,
which is the gross market value of all goods and services
attributed to labor and property located within a state.
According to the U.S. Bureau of Economic Analysis, Pennsylvania's
gross state product of 2000 was the sixth largest gross
state product in the U.S.A. According to the Northeast
Midwest Institute, Pennsylvania ranked ninth in 2000 in
agriculture, sixth in manufacturing, ninth in wholesale
trade, sixth in services, and sixth or seventh in all other
sectors. Additionally, the production and distribution
of chemicals, food, and electrical machinery and equipment
are important elements of Pennsylvania's industrial life.
Pennsylvania is also the leader in the cement industry,
providing more than ten percent of the nation's supply.
According to the Pennsylvania Farm Bureau, Pennsylvania
has 59,000 farms. Agriculture is Pennsylvania's number
one industry and Pennsylvania is first in the nation in
the number of acres of farmland preserved for agricultural
use. While the number of farms has declined over the
past fifty years, farm production has increased dramatically
due to technical improvements. Today, the Department
of Agriculture indicates Pennsylvania farmers sell more
than four billion dollars of crop and livestock products
annually, and "agribusiness" and food related
industries account for at least ten times that amount in
annual economic activity.
In Northwestern Pennsylvania, through the last thirty years,
the most prominent manufacturing firm has been General Electric.
This remains true today. However, over the past decade,
the most rapidly growing component of the manufacturing
sector is plastics production. Plastics production
has become a regional specialization. Although manufacturing
captures attention through its large numbers of employees
and high wage payments, Northwestern Pennsylvania features
other non-manufacturing specializations. These include:
insurance (e.g., Erie Insurance Group), higher education
(e.g., Gannon University, Mercyhurst College, Edinboro University
of Pennsylvania, Allegheny College, Penn State Erie – Behrend
College, and Lake Erie College of Osteopathic Medicine),
and health services (e.g., Hamot Medical Center, Regional
Cancer Center, Shriners Hospital for Children, Millcreek
Community Hospital, and St. Vincent Health Center).
Northwestern Pennsylvania is home to many smaller manufacturing
and fabrication industries. These businesses take
advantage of the Investment Considerations described in
Part III below and the highly skilled workforce in the region.
Vocational training services include the Center for Advanced
Manufacturing and Technology (CAMTech), Erie County Technical
School and other business and technical training institutions.
III. INVESTMENT CONSIDERATIONS
Location
Pennsylvania offers access to vital markets. According
to the Pennsylvania Department of Community and Economic
Development, six out of the ten major United States market
areas lie within a five hundred mile radius of Pennsylvania's
capital. Importantly, more than 40% of the populations
of the United States and Canada reside within that radius.
Pennsylvania also provides a number of ways to transport
products. These include: highways, air, rail, and
ports, including the Port of Erie. The City of Erie
is located on the southern shore of Lake Erie and is easily
accessible by Interstate 90 from Buffalo, NY and Cleveland,
OH and by Interstate 79 from Pittsburgh, PA (approximately
100 miles from each of these three cities). Erie International
Airport offers convenient commercial and passenger services
and is located within ten (10) minutes of downtown Erie.
Business Incentives
The Erie Regional Chamber and Growth Partnership (www.eriechamber.com)
should be a first step for those new to the Northwestern
Pennsylvania business community. The Regional Chamber
is dedicated to meeting the needs of business and will furnish
valuable information regarding demographic, geographic,
transportation, financial, capital investment sources and
other information suited to insuring the success of business
ventures in Northwestern Pennsylvania.
The Regional Center for Workforce Excellence encompasses
six (6) counties in Northwestern Pennsylvania: Erie, Crawford,
Venango, Warren, Clarion and Forest. Broadly stated,
the objective of the Workforce Investment Board is to bring
the existing workforce into align with the needs of Pennsylvania
business. Pennsylvania's Careerlink provides
a "one-stop" approach to connect employers and
job seekers with employment and education opportunities.
See
www.nwpawib.org for more information.
Various organizations create and implement economic development
initiatives. These include The Girard Area Industrial
Development Corporation (GAIDC) in western Erie County and
The Economic Development Corporation of Erie County.
Keystone Opportunity Zones
The tax free Keystone Opportunity Zone (KOZ) program of
Pennsylvania has been named the nation's leading economic
development program by Business Facilities magazine.
This Program provides for "virtual" tax-free zones
from now until December 31, 2013. In the City
of Erie, nine areas aggregating approximately 330 acres
at various locations throughout the community have been
designated KOZ sites. The Commonwealth has agreed
to forego PA Corporate Net Income Taxes, Capital Stock and
Foreign Franchise Taxes, and Personal Income Taxes on income
generated by businesses located in a KOZ, and the Sales
and Use Tax on purchases used and consumed by businesses
in a KOZ. Erie City, Erie County, and the Erie School
District, the local taxing bodies, have also agreed to forego
certain taxes, including Real Estate Taxes, Business Gross
Receipts and Mercantile Taxes, and Occupancy and Business
Privilege Taxes during the term of the Program.
The KOZ Act requires businesses that move into the zone
to do one of two things:
(1) Increase full-time employment by at least 20 percent
in the first full year of operation, or (2) Make a capital
investment in the property located within the KOZ that
is equal to 10 percent of the gross revenues of the business
in the immediately preceding calendar or fiscal year.
Foreign Trade Zones
Foreign Trade Zones are secure areas under U.S. Customs'
supervision that are generally considered outside the Customs'
territory. Located in or near U.S. Customs' ports
of entry, they are the United States' version of what are
internationally known as free-trade zones. Foreign
and domestic merchandise may be moved into zones for operations,
not otherwise prohibited by law, including storage, exhibition,
assembly, manufacturing, and processing. Foreign Trade
Zones are subject to the laws and regulations of the United
States as well as those of the states and communities in
which they are located.
Under Foreign Trade Zone procedures, the usual formal Customs
entry procedures and payments of duties are not required
on the foreign merchandise unless and until it enters Customs
territory for domestic consumption. Domestic goods
moved into the zone for export may be considered exported
upon admission to the zone for purposes of excise tax rebates
and drawback. Foreign Trade Zones are sponsored by
qualified public or private corporations, which may operate
the facilities themselves or contract for the operation
with public or private firms. The operations are conducted
on a public utility basis, with published rates. A
typical general-purpose zone provides leasable storage and
distribution space to users in general warehouse-type buildings
with access to various modes of transportation. Many
zone projects include an industrial park site with lots
on which users can construct their own facilities.
Contact our office for more information about Foreign Trade
Zones and for locations within Northwestern Pennsylvania.
IV. BUSINESS IN PENNSYLVANIA
Business Structure
Once you decide to establish a business in Pennsylvania,
you must consider the type of business organization to use.
Legal and tax considerations will help to determine your
final choice, as well as personal needs and the needs of
the business. There are four principal business structures:
(1) sole proprietorship, (2) partnership, (3) corporation
and (4) limited liability company. There are advantages
and disadvantages to each business type. You must
examine all the characteristics and consult a knowledgeable
legal professional when considering the business structure.
Each of these business structures is discussed in turn below:
- An individual who owns and conducts a business in his/her
own name (or a fictitious name) operates as a sole
proprietor. This is the simplest organization
and allows a single owner to have complete control.
The proprietorship is the most easily established form
for the commencement and operation of a business entity.
Other advantages of a sole proprietorship include a minimum
of legal restrictions, owner retention of all the profits,
and ease in discontinuing the business. However,
a sole proprietorship is also the most restrictive in
terms of capital investment and continuation of management.
Business expansion from capital investment is limited
to the proprietor's resources. Additionally, a sole
proprietorship offers no limitation on the amount of personal
liability for all debts and liability of the business.
Both business assets and the proprietor's personal assets
are available to satisfy the liabilities and debts to
business creditors.
The proprietorship is not a separate taxable entity.
All items of income, deduction, gain, loss, and credit
are reflected on the proprietor's individual income
tax return. These items are presented on federal
Form 1040, Schedule C.
- A partnership is similar to a sole proprietorship
except that two or more people are involved. Thus,
a partnership is an association of two or more persons
for the conduct, as co-owners, of a business enterprise
for profit. Advantages of a partnership include:
ease of organization; ability to draw upon both the financial
and managerial strength of all the partners; profits are
not taxed at the entity or partnership level. On
the other hand, some disadvantages are: unlimited personal
liability for the partnership's debts and liabilities;
potential termination of the business with the death of
a partner; and the fact that one of the partners can act
as an agent and commit the entire firm to obligations.
Respective shares of profits and losses, management rights
and responsibilities, and other matters pertaining to
or affecting the partnership relationship may either be
set forth explicitly in an agreement among the partners
or implied or determined by law. A partnership is
not a taxable entity for federal income tax purposes.
It is however, a reporting entity. The partnership
tax return includes Schedules K-1, which reflect
each partner's allocated share of relevant tax items.
The taxable income or loss of the partnership is passed
through to the partners and is reflected on each partner's
individual tax return.
There are two types of partnerships: (1) General
Partnership and (2) Limited Partnership.
The differences between a general and a limited partnership
principally relate to matters of liability and control.
Each partner in a general partnership and the general
partner or partners in a limited partnership are responsible
for the debts, liabilities, and obligations of the partnership.
Limited partners are not liable for the debts and obligations
of the limited partnership. Each partner in a
general partnership and the general partners in a limited
partnership participate in management of the business
affairs of the partnership. Limited partners do
not participate in the management of a limited partnership.
In order to form a general partnership, it is advisable
to have a written agreement drawn up between all parties.
While there is no filing requirement to form a general
partnership, it may be required to file a fictitious
name registration.
In order to form a limited partnership, a Certificate
of Limited Partnership must be filed with the Corporation
Bureau, Pennsylvania Department of State. Contact
our office regarding documentation and filing requirements.
- A corporation is an entity organized for the
benefit of its shareholders. The principal difference
between a partnership and a corporation is that a corporation
is an entity separate and distinct from its owners.
A corporation is owned by its shareholders, but it is
managed or governed by a board of directors. As
a separate entity, the corporation may have perpetual
existence (as distinguished from the business of a proprietorship
or partnership). The shareholders of a corporation
have limited liability, meaning that a shareholder's liability
is limited to the amount of his or her respective investment
in stock of the corporation. Although the value
of their stock (the evidence of their ownership in the
corporation) may decrease, the shareholders are not personally
liable for the debts and liabilities of the corporation.
Centralized management through a board of directors, perpetual
existence, and limited liability of shareholders have
made the corporation a preferred entity for raising investment
capital.
However, there are some drawbacks to forming a corporation.
First, a corporation is costlier and more difficult
to create. Unless the corporation elects "S"
status (described below) for tax treatment, corporations
are subject to double taxation, meaning that they are
taxed both on profits and on dividends paid to the owners.
To form a corporation in Pennsylvania, one must file
an Articles of Incorporation with the Corporation Bureau,
Pennsylvania Department of State, accompanied by a docketing
statement. A foreign (out of state) corporation
must submit an application for a Certificate of Authority
accompanied by a docketing statement. Contact
our office for assistance.
All Pennsylvania corporations are C corporations
(Subchapter C of the Internal Revenue Code) unless
they opt to take advantage of a provision in both the
federal and state tax laws to become S corporations
(Subchapter S of the Internal Revenue Code).
An eligible domestic corporation can greatly reduce
its tax liability by electing to be taxed as a federal
or state S corporation. Only closely held
corporations may elect to be taxed as federal or state
S corporations, which permit shareholders to pay
taxes on corporate net income as individuals, as in
a partnership. To qualify as a closely held corporation
for Pennsylvania, there may be no more than seventy-five (75)
shareholders.
The first step to becoming an S corporation is
to obtain federal S status. Becoming a federal
S corporation does not automatically make a company
a Pennsylvania S corporation. Corporations
must file the appropriate forms separately for Pennsylvania.
Importantly, a Pennsylvania corporation cannot elect
to be an S corporation unless it has applied for
federal S status. Corporations that have approved
Pennsylvania S status do not pay PA Corporate Net Income
Tax, but are responsible for filing a Corporate Net
Income Tax Return. Shareholders are taxed individually,
similar to partnerships. Pennsylvania also has
a Capital Stock and Foreign Franchise Tax, which all
Pennsylvania corporations are required to pay regardless
of status as an S or C corporation.
To apply for Pennsylvania S status, one must file the
form REV-1640 with the Pennsylvania Department of Revenue
within 75 days of the beginning of your fiscal
year. When you receive a copy of your federal
notification of approval from the IRS, you must then
furnish a copy to the Pennsylvania Department of Revenue.
- The Pennsylvania Limited Liability Company Act created
three types of limited liability companies: Registered
Limited Liability Partnership (RLLP), Limited Liability
Companies (LLC), and Restricted Professional Companies
(RPC).
An RLLP is a general or limited partnership that registers
with the Pennsylvania Department of State. A partner
in an RLLP is not individually liable for the debts
and obligations of the partnership that arise from any
negligent or wrongful act or misconduct committed by
another partner or representative of the partnership.
A partner in an RLLP remains liable individually for
any wrongful or negligent acts or misconduct committed
by him/her or by any person under his/her direct supervision
and control and for any debts or obligations of the
partnership. There are strict statutory requirements
for this limited liability status. An RLLP is
generally taxed the same for federal and state income
purposes as its underlying entity, either a general
or limited partnership.
Limited liability companies (LLCs) have recently emerged
as an alternative to corporations and partnership.
An LLC can conduct any lawful business other than banking
or insurance. The members of an LLC conduct business
and establish the rules of the relationship between
or among themselves under an operating agreement.
Generally, an LLC can be taxed as a partnership for
federal purposes and for Pennsylvania tax purposes.
LLCs offer the limited liability of corporations, but
allow conduit treatment of the tax attributes to avoid
the double taxation of C corporations. As
an alternative to the S corporation, the LLC offers
the same limited liability and conduit tax treatment,
but without the strict limitations on ownership.
As an alternative to a partnership, the LLC offers limited
liability to all owners, compared with limited liability
for only the limited partners of a limited partnership.
Members and a manager of an LLC are not liable by reason
of being a member or manager for the debts or liabilities
of the LLC or the acts or omissions of other members
or managers of the LLC. However members who are
in a profession have no greater immunity from liability
than they would have in a professional corporation.
An LLC can be created by filing a Certificate of Organization
with the Corporation Bureau, Pennsylvania Department
of State accompanied by a docketing statement.
Contact our office for assistance.
Additionally, a Restricted Professional Company (RPC)
is a separate type of LLC. An RPC must be in the
business of exclusively performing certain professional
services and must pay an annual fee to the Commonwealth
(currently $330 per member).
Business Name
Generally, any proprietorship, partnership, corporation
or other form of entity that conducts business using a fictitious
name must register the fictitious name with the Corporation
Bureau in the Pennsylvania Department of State. A
fictitious name is any assumed name, style, or designation
other than the proper name of the person or entity using
the name. The surname of a person, standing alone,
or coupled with words that describe the business, is not
a fictitious name and need not be registered. For
partnerships, the last name of all partners must be listed
or a fictitious name should be registered. The inclusion
of words that suggest additional owners, such as "company"
or "associates," creates a fictitious name.
A corporation's fictitious name must not be the same as
or confusingly similar to the name of any other domestic
or foreign corporation or any domestic or foreign limited
partnership authorized to do business in Pennsylvania.
However, registration of a fictitious name or a trademark
does not give the entity registering the name any exclusive
or other rights in the name. Therefore, when creating
a new business entity, a name/trademark search should be
conducted to ensure that conflicts do not arise later.
An entity conducting business with an unregistered fictitious
name may not use the courts of Pennsylvania to enforce a
contract entered into using the fictitious name. Such
contract would not become void, but rather unenforceable
until proper registration.
Licenses and Permits
The Commonwealth and local government units may require
businesses to obtain licenses, permits and pay annual fees
depending upon the nature of the enterprise. Home-based
businesses may be subject to special license fees and their
operation may be prohibited or restricted through local
zoning ordinances. Licenses and permits may also be
required in order to engage in special activities, such
as construction contracting, hazardous activities, and practice
of certain occupations and professions.
Taxes
Tax effects are a critical component of a business's profitability
and should receive careful analysis in the planning process.
The tax treatments for the various business structures are
discussed above in the Business Structure section.
Identification Numbers
Every employer subject to employment taxes is required
to have an Employer Identification Number (EIN) to identify
the business with the Internal Revenue Service and the Social
Security Administration. This federal EIN will also
be used as your Pennsylvania Employer Identification Number.
This taxpayer identification number must be shown on all
returns and other documents sent to the Internal Revenue
Service and the Pennsylvania Department of Revenue.
To apply for an EIN, one must obtain Form SS-4 from
the Internal Revenue Service by calling the Forms Hotline
at 1-800-TAX-FORM or downloading from the Internal Revenue
Service's official web site at
www.irs.gov.
Personal Income Tax
The Pennsylvania Personal Income Tax is levied against
the taxable income of resident and nonresident individuals,
estates, and trusts. As a business owner, you may
be required to make estimated quarterly Personal Income
Tax payments on your anticipated income. If the business
has employees, you are required to withhold Personal Income
Tax from employee wages. The rate of Personal Income
Tax is 2.8% of gross taxable wages.
Pennsylvania taxes eight classes of income: (1) compensation;
(2) interest; (3) dividends; (4) net profits
from the operation of a business, profession, or farm; (5) net
gains or income less losses from dispositions of property;
(6) net gains or income from rents, royalties, patents,
and copyrights; (7) net gains or income derived through
estates or trusts; and (8) gambling and lottery winnings
(except Pennsylvania Lottery winnings won on or after July 21,
1983). The Commonwealth employs three primary methods
for collecting Personal Income Taxes: (1) estimated
and final payments from individuals; (2) employer withholding;
and (3) withholding from nonresident partners or shareholders
by partnerships and S corporations.
For more information on the income tax, obtain the Employers
Handbook for Withholding Taxes (REV-415) by contacting the
Department of Revenue's 24-hour forms ordering number at
1-800-362-2050.
Local Requirements
Local property, income, or business privilege taxes may
affect your business. The taxes and rate of tax vary
depending upon the county, city, borough, township, or local
school district in which the business is located.
Many political subdivisions in Pennsylvania require a mercantile
license. The municipality in which you operate your
business will probably require you to register as a resident
business and employer. There may also be wage and
occupational privilege taxes that employers are required
to withhold from employee's paychecks. You may contact
our office to assist you with identifying the local municipal
government and the applicable regulations and taxes.
Zoning is also regulated at the local level. Before
purchasing or renting any land or buildings for commercial
purposes, we recommend that you contact our office so that
we may assist you in identifying local zoning requirements.
Filing Requirements
After you are registered for a tax, you are required to
file the returns on time. If you owe no tax, you still
must file a return or risk incurring a penalty for failing
to file. The Pennsylvania Department of Revenue has
the right to charge both penalty and interest on tax payments
that are not made in full or on time. The amount of
penalty varies according to the type of tax.
V. EMPLOYEE-RELATED
MATTERS
This section discusses employee protection laws, provides
information on the workers' compensation law, occupational
and industrial safety, and unemployment compensation law.
Employment At Will Rule
Pennsylvania retains the rule that an employment relationship
is terminable at any time by either party, unless the employer
and employee have reached a specific agreement specifying
an employment term.
Occupational Safety and Health Administration (OSHA)
OSHA imposes a general duty to provide a safe workplace,
plus specific standards on businesses that affect commerce.
Standards include emergency exists and fire protection plans,
ventilation, protective equipment requirements and first
aid. Inspectors may make unannounced routine or follow-up
inspections and issue citations for violations. OSHA
also requires employers to develop a written hazard communications
program, supply a material safety data sheet (MSDS) for
each hazardous chemical to employees, contractors, and contract
employees who have contact with the chemical, provide training
in the proper handling of the chemicals, label containers
of hazardous chemicals, and take other measures to provide
warnings.
Law and Regulations
The Pennsylvania Department of Labor and Industry, Bureau
of Labor Law compliance is responsible for administering
various employment-related laws. The Bureau conducts
routine and complaint investigations, as well as mediates
disputes and litigates unresolved issues. Listed below
are various employee protection laws that may affect your
business enterprise:
- Equal Pay Law: The Pennsylvania Equal Pay Law
prohibits discrimination in rate of pay between employees
on the basis of gender for work under equal conditions
on jobs which require equal skills. Businesses are
required to post the Abstract of the Equal Pay Law.
- Human Relations Act: The Pennsylvania Human Relations
Act, which applies to certain independent contractors
as well as employees, prohibits discrimination based on
race, color, familial status, religious creed, ancestry,
age, sex, national origin, handicap or disability, or
use of guide or support animals. The Pennsylvania
Human Relations Commission investigates upon filing of
a written complaint.
- Industrial Home Work Law: The Pennsylvania Industrial
Home Work Law prohibits industrial work in the home, with
a limited number of exceptions. Individuals and
establishments interested in engaging in industrial home
work in Pennsylvania must obtain permits and certificates
from the Bureau of Labor Law Compliance (BLLC).
- Medical Pay Act: The Pennsylvania Medical Pay
Act requires employers to pay for the medical examination
fee where such examination is a condition of employment.
- Minimum Wage Act: The Pennsylvania Minimum Wage
Act establishes a minimum wage of $5.15 per hour for full-time
and part-time employees, effective September 1, 1997.
It also establishes an overtime rate for employees of
one and one half times (1.5) the regular rate of pay after
forty (40) hours worked in a week. Employers
may be eligible to take a credit in determining the hourly
wage of employees who receive tips.
The issue of special licenses and certificates for
payment of sub-minimum wages are allowed for learners,
students, and individuals that are impaired by physical
or mental deficiency. Employers subject to the
Minimum Wage Law must maintain an accurate record of
each employee's earnings and hours worked. Establishments
are required to post the Minimum Wage Act Poster and
Fact Sheet.
- Wage Payment and Collection Law: The Pennsylvania
Wage Payment and Collection Law requires that all wages
due employees be paid on regular paydays designated in
advance by the employer. Each employee must be notified
at the time of hiring and place of payment of wages, the
rate of pay, and any fringe benefits. Statutory
liquidated damages and penalties may be assessed against
employers for failure to pay wages.
- Personnel File Inspection Act: The Pennsylvania
Personnel File Act permits employees in Pennsylvania to
inspect documents in their personnel files, with certain
exceptions.
- Prevailing Wage Act: The Prevailing Wage Division,
Bureau of Labor Law Compliance, determines prevailing
wage rates for the construction industry and enforces
the rates and classifications under heavy, highway and
building construction projects of $25,000 or more when
public funds are involved. Presently, the Pennsylvania
Department of Labor and Industry determines the prevailing
minimum wage rates and employee benefits for specific
localities and classifications. The Prevailing Wage
Regulations allow the Secretary of Labor and Industry
to consider collective bargaining agreements and other
types of data for purposes of determining the wage rates.
- Seasonal Farm Labor Act: The Pennsylvania Seasonal
Farm Labor Act regulates minimum wages and provides for
hours of labor of seasonal farm workers in Pennsylvania.
The Pennsylvania Seasonal Farmers Labor Act also requires
farm labor contractors to obtain certificates of regulation.
The Pennsylvania Department of Agriculture inspects the
seasonal farm labor camps.
- Worker's Compensation Law: Worker's compensation
law provides benefits for employees in Pennsylvania who
are injured or contract a disease caused or worsened by
work. The requirement to insure your workers' compensation
liability is mandatory for any employer who employs at
least one full or part-time employee who could be injured
while on the job or develop a work-related disease.
This includes employee family members, one-person corporations,
and corporate officers.
The Act protects employers from liability for work-related
injuries and disease to employees. Therefore,
an employer is not subject to tort liability for lawsuits
brought by an employee who has a work-related injury
or disease.
The Bureau of Worker's Compensation administers the
provisions of the Act, including its rules and regulations.
- Occupational and Industrial Safety: The Pennsylvania
Department of Labor and Industry, Bureau of Occupational
and Industrial Safety administers a variety of laws related
to the safety of the public and employees. The Bureau
accomplishes enforcement through promulgation of regulations,
field inspections, issuance of licenses and responding
to complaints for possible violations.
- Pennsylvania Unemployment Compensation Law: The
Department of Labor and Industry is responsible for administering
the Pennsylvania Unemployment Compensation Law which requires
employers to pay contributions into a pooled reserve known
as the Unemployment Compensation Fund. This fund
pays benefits to employees who become unemployed through
involuntary causes. The amount of contributions
an employer owes is determined by multiplying an assigned
contribution rate, determined yearly, to the wages paid
to employees. If you employ one or more persons,
you may be liable for the state unemployment compensation
tax and must register with the Bureau of Employer Tax
Operations by completing a Pennsylvania Combined Registration
Form Pa-100.
- Collective Bargaining: Collective bargaining
is circumscribed by federal and state statutes and regulations,
including the National Labor Relations Act and the Pennsylvania
Labor Relations Act.
- Worker Adjustment and Retraining Notification Act:
This Act requires 60 days prior written notice of
plant closings and mass layoffs.
VI. PRIVACY LEGISLATION
The Electronic Communications Privacy Act (ECPA)
sets out the provisions for access, use, disclosure, interception
and privacy protections of electronic communications.
This federal law was enacted in 1986 and covers various
forms of wire and electronic communications including any
transfer of signals, signs, writings, images, sounds, data,
or intelligence of any nature transmitted in whole or in
part by a wire, radio, electromagnetic, photo electronic
or photo optical system that affects interstate or foreign
commerce. ECPA prohibits unlawful access and certain
disclosures of communication contents. Additionally,
the law prevents government entities from requiring disclosure
of electronic communications from a provider without proper
procedure.
The Gramm-Leach-Bliley Act requires the Securities
and Exchange Commission (SEC) and other federal agencies
to adopt rules implementing notice requirements and restrictions
on a financial institution's' ability to disclose nonpublic
personal information about customers. Under the Gramm-Leach-Bliley
Act, a financial institution must provide its customers
with a notice of its privacy policies and practices, and
must not disclose nonpublic personal information about a
customer to a nonaffiliated third party unless the institution
provides certain information to the customer and the customer
has not elected to opt out of the disclosure. The
Act also requires the SEC to establish appropriate standards
for financial institutions to protect customer information.
It is the policy of the Congress that each financial institution
has an affirmative and continuing obligation to respect
the privacy of its customers and to protect the security
and confidentiality of those customers' nonpublic personal
information. The objectives of this Act are to insure
the security and confidentiality of customer records and
information; to protect against any anticipated threats
or hazards to the security or integrity of such records;
and to protect against unauthorized access to or use of
such records or information which could result in substantial
harm or inconvenience to any customer.
The Health Insurance Portability and Accountability
Act of 1996 (HIPAA) deals with issues of privacy and
the protection of individually identifiable health information.
The Administrative Simplification provisions of HIPAA require
the Department of Health and Human Services to establish
national standards for electronic health care transactions
and national identifiers for providers, health plans, and
employers. It also addresses the security and privacy
of health data.
Pennsylvania has also promulgated regulations dealing with
the Privacy of Consumer Health Information.
The purpose of these regulations is to govern the treatment
of all nonpublic personal health information about individuals
by various licensees of the Insurance Department.
These regulations also describe the conditions under which
a licensee may disclose nonpublic personal health information
about consumers to a third party and require licensees to
obtain the affirmative consent of consumers prior to disclosing
nonpublic personal health information.
VII. TECHNOLOGY DEVELOPMENT
Pennsylvania has made a commitment to make technology investments
that will extend across numerous technologies as well as
all of Pennsylvania's communities. The investment
initiatives include public/private partnerships to allow
businesses in Pennsylvania to leverage the benefits of technology.
Ben Franklin Technology Partners is a broad network
of partners providing venture capital for product development,
coaching, and resources to early-stage technology-based
businesses. See
www.benfranklin.org.
PaPowerPort is Pennsylvania's customer-focused
e-government services web site that is a component
of the Governor's emphasis on maintaining the Commonwealth's
global high-tech leadership. See
www.state.pa.us/PApower and the Business in Pennsylvania
pages offering entrepreneurs access business information,
financial options and forms.
Knowledge Park is a 200-acre research and development
area in Erie, Pennsylvania located on the campus of Penn
State-Erie. Knowledge Park is a joint effort of Penn
State-Erie and the Greater Erie Industrial Development Corporation.
The Park is designed to enable knowledge-based organizations
to take advantage of the resources of Penn State and other
colleges and universities in Northwestern Pennsylvania.
See
www.pserie.psu.edu/kpark/.
VIII. SECURITIES LEGISLATION
The Pennsylvania Securities Act of 1972 regulates securities
within the Commonwealth. This Act relates to securities;
prohibiting fraudulent practices in relation thereto and
requiring the registration of broker-dealers, agents, and
investment advisers. Section 201 of the Pennsylvania
Securities Act of 1972 provides that it is unlawful for
any person to offer or to sell any security in the Commonwealth
of Pennsylvania unless the security is registered under
the Act or the security or transaction is exempt from registration
under another section of the Act. Exemptions are based
either on the nature or type of transaction in which the
security is offered and sold.
The Federal Securities Act of 1933, as amended, prohibits
the offering or sale of any security by the use of the mails
or other means or instruments of interstate commerce, unless
the security or transaction is exempt from registration
or the security is registered in compliance with the Securities
Act. Section 3 of the Securities Act describes
the classes of securities that are exempt from registration
and Section 4 describes transactions that are exempt
from registration.
IX. GET PROFESSIONAL ADVICE
This Guide to Doing Business in Northwestern Pennsylvania
discusses a number of complex issues in a general and summary
format. You should consult with an attorney before
acting or refraining from acting, based upon the information
in this Guide. This Guide is for information purposes
only and is not intended to be and shall not constitute
legal advice. No individual or entity involved in
the preparation or distribution of this Guide accepts any
contractual, tortious or other form of liability for its
content or any consequences arising from its use.
X. KNOX MCLAUGHLIN
GORNALL & SENNETT, P.C.
Knox McLaughlin Gornall & Sennett, P.C. began
as a partnership among William W. Knox, Gerald J.
Weber, Conrad A. Pearson, and John M. McLaughlin
in 1958. The founding attorneys practiced principally
litigation; government and finance law; business and tax
law; and workers' compensation law. A merger with
Magenau and Gornall in 1976 and the addition of numerous
experienced attorneys in other practice areas have contributed
to the growth of the firm.
Today, Knox McLaughlin Gornall & Sennett, P.C.
consists of 39 attorneys, 13 paralegals, and 38
support staff. Practice areas have expanded to include
real estate law; labor and employment law; estate planning
and administration; and bankruptcy and creditors' rights
law. In the 45 years we have been practicing
law, from Northwestern Pennsylvania to the U.S. Supreme
Court, we have become one of the region's largest, most
experienced firms. We've done that by combining our
knowledge of the law with practical business sense, innovative
thinking, talent, and responsiveness.
Knox McLaughlin Gornall & Sennett, P.C. is broad in
knowledge and expertise. The attorneys are skilled
in developing effective legal solutions. We are privileged
to serve many of the region's best-known businesses, institutions
and governments. At Knox McLaughlin Gornall &
Sennett, P.C. we are proud of our commitment to the
Erie community and Northwestern Pennsylvania. We support
many area charitable organizations through personal involvement
and financial contributions. Those benefiting from
this commitment include the Erie Philharmonic, Erie Playhouse,
Hamot Health Foundation, Public Broadcasting, YMCA, Shriners
Hospital for Children, Boys and Girls Club, Mercyhurst College,
Presque Isle State Park, and Rotary International.
For additional information, please contact:
David M. Mosier, Esq.
Knox, McLaughlin, Gornall & Sennett, P.C.
120 West Tenth Street
Erie, Pennsylvania 16501-1461
Telephone (814) 459-2800; Fax (814) 453-4530
E-mail:
dmosier@kmgslaw.com
This Guide and any information in it is not to be reproduced
in whole or in part, in any medium, for use by others without
the prior, express written consent of Knox McLaughlin Gornall
& Sennett, P.C. |
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