Doing
Business in Northwest pennsylvania
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. |