Manufacturer & Business Association

Legal Services FAQs

I think I have an employee who is committing workers' compensation fraud. What should I do?

Under Pennsylvania law, it is an act of fraud for an individual receiving workers' compensation to:

  • fake an injury in order to get paid time off;
  • exaggerate the severity of a legitimate injury to extend time away from work;
  • claim an injury occurred on the job when it actually occurred elsewhere; or
  • obtain another job while lying to the insurance company about being unable to return to work (collect two paychecks).

If you believe that your employee is committing one of these acts, I recommend that you speak to your claims adjuster, and that you report the matter to the Attorney General's office. Reports of these types of fraud should be directed to the Pennsylvania Insurance Fraud Prevention Authority at 1-888-565-IFPA.

An injured employee has told me he will get money for his "pain and suffering" from his worker's compensation case. Is this true?

No. In Pennsylvania, a claimant is not entitled to an award based upon "pain and suffering." In fact, Pennsylvania's Workers' Compensation system allows for only the following types of benefits:

  • Replacement of lost wages. A portion of the worker's salary up to a maximum amount provided by law is paid for the time lost from work as a result of a work-related disability, if the disability lasts longer than seven calendar days. These payments are tax free. Partial disability benefits consisting of two-thirds of the gross difference in wage loss for up to 500 weeks are paid to employees who suffer a partial disability resulting from a work-related injury or disease. Benefits can possibly be subject to other reductions or offsets.
  • Payment of medical expenses. Reasonable and necessary work-related medical expenses are paid regardless of the duration of required treatment and apply even though the employee may not have lost time from work.
  • Specific loss benefits. Benefits are payable if a work-related injury results in loss of vision, hearing and/or the use of limbs (including fingers and toes). Specific loss benefits are paid without regard to the amount of time lost from work. A separate healing period also is defined for each loss.
  • Disfigurement benefits. Benefits are payable if there is a serious, permanent disfigurement of the head, face or neck.
  • Death benefits. The employee's dependents may claim benefits if a work-related injury or disease results in the employee's death. Also, reasonable burial expenses are payable to a maximum amount set by law.
  • Subsequent injuries. Additional compensation may be available through the Subsequent Injury Fund, administered by the Commonwealth.

When we close our plant, or go on layoff status, we sometimes end up working one day a week. For salaried employees, can we only pay them for the one day that they work?

No. Under the federal Fair Labor Standards Act, a salaried employee is entitled to their full salary for a workweek in which they perform any work – with very limited exceptions.

Therefore, if a salaried employee works one day for your company, they are entitled to receive their full salary for that week.

Treating a salaried employee differently risks them being seen by federal or state wage and hour investigators as really an hourly employee – and may expose your company to civil and criminal claims for unpaid overtime.

I have an employee who plays by their own rules — she comes in late, leaves early and is often a "no show’ for weekly staff meetings. The problem is she is, by far and away, my best performer. What is your advice on managing this employee?

There are several ways you could address this issue. One school of thought holds that you should go by the book on this one and use whatever discipline you would use with any other employee. Usually, that means going through some sort of progressive discipline and counseling, but if none of that works, you have to consider terminating the employee. The thought behind this is that if your firm is going to have rules then you have to insist that everyone follows them, no matter what the performance level is. To do otherwise is just asking for a lot of trouble when dealing with employees in general.

Another school of thought is that you may be able to curb this behavior by making punctuality a performance issue. In other words, it would be one of the performance measures you would use to measure this employee.

Another alternative is to counsel and coach the employee, and if infractions continue, ask the employee to sign a ‘last chance’ agreement whereby they promise to refrain from rule infractions or suffer significant discipline, like terminations.

I want to set up an nonprofit organization. Can a nonprofit pay its staff?

Yes. State law (which governs your nonprofit incorporation) and the Internal Revenue Service (which governs your tax-exempt status) allow a nonprofit to pay reasonable salaries to directors, officers, employees, or agents for services rendered to further the nonprofit corporation's tax-exempt purposes.

Are the services that I offer through my nonprofit required to be free?

No. 501 (c) (3) charitable organizations are not required to offer services or products free or at cost. Nonetheless, providing such services or products at a substantial discount from their commercial rates can help persuade the IRS that your group is a real charitable organization with charitable intentions. Charging full prices for services or products does not usually create a benefit to the public.

When do I need to apply for 501 (c) (3) tax-exempt status?

In order to receive a tax-exemption dating from the date of your incorporation, you need to file IRS Form 1023 within 27 months of your incorporation.

If you file after 27 months, your exemption will only be effective from the application's postmark date.

You can file for an extension of the 27-month deadline by attaching to your 1023 a statement providing the reasons why you failed to complete the 1023 application process within the 27-month period after your incorporation. You can find the acceptable reasons in the instructions for 1023. They include bad advice and information from a lawyer, accountant, or IRS employee.

NOTE: Three groups are not required to file Form 1023: churches, public charities that do not have gross receipts of more than $5000 in each year, and subordinate organizations exempt under a group exemption letter.