Connecticut Employment Law Blog

Insight on Labor & Employment Developments for Connecticut Businesses

Are You a Joint Employer? It May Depend on the Court’s Test

Posted in Highlight, Human Resources (HR) Compliance, Litigation, Wage & Hour

Can an employee work for more than one employer at the same time? Under a theory of law called “joint employment”, the answer is yes.

But how do you make that determination?

Suppose a private bus company provides services all over Connecticut. It’s largest customer happens to be a very large private university in the state. The company provides both interstate and intrastate service for the university, as well as shuttle bus service for the campus.

Are the bus drivers employees of both the bus company and the university?  A recent case in the federal court in Connecticut set forth the various tests that the courts in Connecticut use to make that determination.

(Ultimately, the court denied the drivers’ claims that they were employees of the university.)

The court’s decision in Velez v. New Haven Bus Service can be downloaded here.

The Tests

Where a plaintiff claims multiple simultaneous employers, or “joint employers” under the FLSA, “the overarching concern is whether the alleged employer possessed the power to control the workers in question . . . with an eye to the economic reality presented by the facts of each case.”  In this so-called “economic reality” test, a court must first evaluate whether the alleged joint employer exercised formal control over a plaintiff’s employment.

The Second Circuit has recognized a four-factor joint-employer test to establish formal control, which asks whether an employer: (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.

Simple enough, right?

Well, not exactly.  In fact, the Second Circuit ”did not hold . . . that those [four] factors are necessary to establish an employment relationship” as the court said in another case (Zheng v. Liberty Apparel Co.).  That decision applied a “functional control” test.

In doing so, a court may also consider the following factors:

(1) whether [the putative employer’s] premises and equipment were used for the plaintiffs’ work; (2) whether [the direct employer] had a business that could or did shift as a unit from one putative joint employer to another; (3) the extent to which plaintiffs performed a discrete line-job that was integral to [the putative employer’s] process of production; (4) whether responsibility under the contracts [between the direct and putative employers] could pass from one [entity] to another without material changes; (5) the degree to which the [putative employers or its] agents supervised plaintiffs’ work; and (6) whether plaintiffs worked exclusively or predominately for the [putative employer].

As the District Court recognized in the Velez case, the Second Circuit has not announced a definitive set of factors to establish functional control, recognizing that there will be “different sets of relevant factors based on the factual challenges posed by particular cases.”

How many of those factors will need to be met to satisfy a claim? That’s still unclear, but in the Velez case, two was not enough to establish joint employment.

The Takeaway?

Of course, longtime readers will know that this is not a new topic. 

Employers should always be vigilant in making it clear who is and is not an employee of theirs. If you contract out certain work (food service, for example), make sure that you are not crossing the lines that seem like you are more their employer than a customer. For example, if you set these contractors’ hours and discipline them and they only worked for you, that might be closer to the joint employment relationship than you may have intended.

Contracts may help, but as you can see from the above, the courts will look past the language and look to either the “economic realities” or the “functional control” to make that final determination.

Julia Roberts Would Not Be Impressed: Mystic Pizza Cited for Wage/Hour Violations

Posted in Human Resources (HR) Compliance, Laws and Regulations, Wage & Hour

Oh, Mystic Pizza!

In Connecticut, we all know that Mystic Pizza isn’t the best pizza in the state.  (I’m not even going to get into the argument about Pepe’s, Sally’s, or Modern in New Haven.)  One of my favorites is actually Harry’s Bishops Corner.

But Mystic Pizza still has a place in many of our hearts in the state due to a film in 1988 of the same name. After all, how many movies before it were filmed in Connecticut?  (Turns out there are 81 films total. Who knew?)

And better still, it starred Julia Roberts, right before she really hit it big in Pretty Woman.  And so, Julia Roberts, became one of us.

Sure, when you visited the real Mystic Pizza, it was nothing like the romanticized version in the movie. But still, it was MYSTIC PIZZA!

Alas, I was distressed to read that the famous pizza place was recently cited for wage & hour violations. Specifically, 110 employees will be paid a total of $105,000 because, the state Department of Labor found, they were paid less than minimum wage or did not receive overtime.

Unfortunately, it’s a scenario that gets played out too often and could easily be remedied.

But perhaps, I should not be too distressed. Maybe Julia Roberts can star in a sequel about an owner who takes over Mystic Pizza and hires a prominent employment law attorney to help make the place a big success again.

Did I mention I’m available?

The Telegraph Is No More. And Neither Is the Law Regarding Telegraphs.

Posted in Legislative Developments, Wage & Hour

A year ago, I called on the legislature to update its employment laws to reflect modern realities.  (It’s actually something I’ve done for a number of years, but who’s counting?)

One of the laws I highlighted restricted “telegraph” companies from distributing goods or messages in the overnight hours.  Because the telegraph no longer is used in the United States, it just seemed to me that it was time the legislature do something about that law.

Thanks to a tip from Attorney Jay Wolman, I’m happy to report that earlier this year, the legislature deleted the provision regarding telegraphs in a bill entitled, properly, “AN ACT CONCERNING TECHNICAL AND MINOR REVISIONS TO AND REPEAL OF OBSOLETE PROVISIONS OF ENERGY AND TECHNOLOGY STATUTES.”

And there, in section 36, is the deletion of the word “telegraph” from Section 31-16 of the Connecticut General Statutes.

Let us all mourn the telegraph.

But just in case you rely on that provision, note that messenger services still have some restrictions.  But with all the modern day inventions (did someone say Amazon “drones”?), will that too see some revision in the upcoming decades?

Can an Employer Ever Win at the CHRO?

Posted in CHRO & EEOC, Discrimination & Harassment, Litigation

I sometimes lament that employers get the short end of the stick when it comes to matters before the Commission on Human Rights and Opportunities.  There’s little doubt, as I’ve said before, that more cases are being retained for investigation.

But what happens after an investigation has concluded that there is “reasonable cause” to believe that discrimination occurred? How do employers fare at a public hearing stage which is supposed to be a “clean slate”?

It’s hard to judge because there aren’t easily identifiable statistics to work from. Instead, you have to piece together a few recent decisions.

In one case this past summer, the employer (the state Judicial Branch) successfully defended itself against a claim of race discrimination. In doing so, the presiding human rights referee found that the evidence was insufficient to support a claim.  (From a legal perspective, there isn’t much to be gleaned from the fact-specific analysis.)

In another case, the employer also successfully defended itself against a claim of age discrimination. The referee found that the evidence of discrimination to be “tenuous, at best”.  The referee said that “While I do not doubt his personal conviction that the failure to hire him was ill advised, for his discrimination claim to be viable the record must either contain evidence sufficient to prove that Respondent harbored and acted with discriminatory animus, intentionally taking Complainant’s age into account in failing to consider him for a…position, or evidence of pretext.”

That burden was not met here.

But in another case, the employer (the state’s Joint Committee on Legislative Management), the presiding human rights referee found that the employer did not provide reasonable accommodations to the employee and discriminated against him on the basis of her disability.  In doing so, the hearing officer awarded over $177,000 in back pay damages and ordered the employer to reinstate the employee.

Unfortunately, there just aren’t many more recent cases published by the CHRO’s hearing office to make a determination.  Employers lately seem to win some and lose some.   Others get settled without a disclosed outcome.

All hope isn’t lost for employers at the CHRO. It just may take a while (and a good amount of attorneys fees) to get there.

Followup: Court Dismisses EEOC Lawsuit Challenging CVS Separation Agreement

Posted in CHRO & EEOC, Human Resources (HR) Compliance, Litigation

Back in February, I talked about how a lawsuit brought by the EEOC against CVS challenging the company’s standard separation agreement could be a big deal “if the EEOC prevails”.

But I cautioned about drawing any sweeping conclusions just then stating: ”My gut tells me that the courts are not likely to view the government’s arguments with favor. The arguments just seem too ‘out there’.”

It’s fun to say, “I told you so” every once in a while, which is why the news from late Friday brought a smile to my face.

A federal judge in Illinois dismissed the government’s lawsuit during a status conference last week and indicated that his decision would be forthcoming.

So, right now, we don’t quite know all the logic behind it, but suffice to say that employers who were concerned that they would have to rewrite all of their agreements, should breathe a little easier today.

Of course, it’s quite possible (probable?) that the EEOC will appeal the ruling and it’s not clear whether the EEOC will continue to push this aggressive line of arguments in other cases as well.

56 Million Reasons Why Your HR Department Needs Better Data Security

Posted in Data Privacy, Highlight, Human Resources (HR) Compliance, Social Media

Real hackers are more fearsome than this one.

Okay, okay.  I realize the headline is a bit misleading.  But it isn’t every day that you hear about a data breach at Home Depot in which 56 MILLION credit cards may have been hacked. To put that into perspective, that’s 16 million MORE than the infamous Target breach!

But this is an employment law blog, not a shopping one. So, why does this matter to human resources professionals and companies? Because if hackers can access credit card information, they are going to try to hack into your work files.

It isn’t a matter of “if”. It’s a matter of when they will attempt to do so.

Don’t take my word for it. This comes from the head of the military’s cybersecurity division.  Admiral Mike Rogers has been preaching for months of the need for companies to take data privacy and cybersecurity seriously.  A recent news post reported on the importance Rogers has placed on this area for private businesses.

Corporations must successfully deal with cybersecurity threats, because such threats can have direct impacts on business and reputation, Rogers told the business audience.“You have to consider [cybersecurity threats] every bit as foundational as we do in our ability to maneuver forces as a military construct,” he said.

I have little doubt you’ll hear a lot more about this at an upcoming Data Privacy and Cybersecurity Summit that I’ve been helping to put together here at Shipman & Goodwin, in conduction with CT SHRM.

It’s scheduled to be held on October 16, 2014 from 8a to 2p at the Crowne Plaza in Cromwell, CT.

The cost is just $75, which includes continental breakfast, coffee, buffet lunch, and the materials.  Full details as well as registration can be found here.

Speakers include myself, Shipman & Goodwin attorneys Scott Cowperthwait, Cathy Intravia and William Roberts as well as industry experts from Adnet Technologies, the Connecticut Attorney General’s office, ESPN, the FBI, FINEX North America, General Electric Company, JPD Forensic Accounting, Quinnipiac University, United Therapeutics Corporation, and United Technologies Corporation (UTC).

Hope to see you there. Register soon as spots have been filling up over the last week.

“Consider” This Important: Employment Contracts Are a Two-Way Street

Posted in Highlight, Human Resources (HR) Compliance, Litigation, Wage & Hour

My colleague Chris Engler reports today on a new Connecticut Appellate Court case that focuses on a often misunderstood concept in employment contracts — the need for “consideration”.  What was it that Dire Straits’ sang about in the 1980s? Getting “Money for Nothing”?

We’ve all been told that you can’t get something for nothing.  That lesson was reiterated in a new case by the Appellate Court due to be officially released next week. 

The Facts

As told by the Court, the facts of the case,  Thoma v. Oxford Performance Materials, Inc., revolve around the employer’s attempts to attract investors. 

One investment company told the employer, Oxford, that it wanted assurances that key personnel would not leave.  Oxford dutifully entered into employment contracts with various employees, including Lynne Thoma.

The details of the contracts are important.  This first employment contract gave Ms. Thoma a higher salary, job security (termination could only be with 60 days’ notice), and a severance package.  In return, Ms. Thoma promised not to leave during the contract period and not to work for a competitor for six months after leaving.  Ms. Thoma signed this contract.

 At this point, both parties had gotten a benefit, and all seemed well.

But then a second investment company informed Oxford of its dissatisfaction because the employment contract was “too strong.”  So Oxford went back to the drawing board and crafted new contracts.

 Ms. Thoma’s second contract was quite different.  It removed all of the monetary elements, including the salary increase.  The new contract also allowed Oxford to fire Ms. Thoma without notice or cause.  Finally, it prohibited Ms. Thoma from working for a competitor.  (The length of this prohibition was unclear.  If you’re a contract jargon junkie, I recommend reading the court’s analysis in full.) 

Nevertheless, Ms. Thoma went ahead and signed this contract as well.

A year later, Oxford fired Ms. Thoma.  She demanded the benefits from the first contract.  Thus commenceth this case.

Is the Second Contract Enforceable?

Ultimately, both the trial court and the appellate court sided with Ms. Thoma, concluding that she didn’t receive any consideration in exchange for the sacrifices she made in the second contract.  In other words, she gave up some perks without getting anything in return.

Continue Reading

How Long Can You Enforce a Non-Compete Agreement For?

Posted in Highlight, Human Resources (HR) Compliance, Manager & HR Pro’s Resource Center, Wage & Hour

Back in June, I talked about the standard that courts will follow in deciding whether or not to enforce a non-compete agreement between an employer and an employee.  (Go read it here first.)

But many employers want to know something more straightforward: How long can I make the restrictive covenant in my agreement; in other words, how long can the non-compete provision be?

The answer, of course, is “it depends” — in general, the higher-ranked the employee, the broader the scope of the non-compete.  And it also depends on other factors, such as the type of businesses the employee would be prevented from working for, and the geographic nature of the restrictions.

Of course, that’s not a satisfying answer either because again, the central questions is, what’s the maximum amount of time that a court will enforce a non-compete agreement?

In Connecticut, two years is seen by some as the typical time period for enforcing a non-compete agreement, as one case ruled back in 1988.

But where the time restriction is accompanied by a narrow geographic or industry restriction, courts have granted non-competes of five years.  Here are some examples:

Can you do something longer? Perhaps. In one reported instance in another state, a ten year non-compete agreement was ruled enforceable! But that’s definitely the exception, rather than the rule.

Indeed, a five-year non-compete isn’t going to work in some (many?) employment agreements.  So before you rewrite all of your agreements to have a broad restrictive covenant, you should check with experienced employment law counsel and figure out if your agreement really is narrowly tailored to meet you needs.  And experienced counsel can also add in certain contract provisions to help in those instances where the courts may have concerns with a broader non-compete.

But if you’ve been wondering if you courts enforce five-year non-compete agreements, the above cases show that it happens — perhaps even with more regularity than you might first think.

Domestic Violence Awareness: Resources for Employers

Posted in Human Resources (HR) Compliance, Manager & HR Pro’s Resource Center, Wage & Hour

This post is not going to discuss, in my view, the NFL’s inadequate response over the years to domestic violence incidents by players in the league.  (If you want to listen to a full take down of the NFL, I recommend Slate’s The Gist podcast from yesterday.)

Rather, I want to talk today about how Connecticut employers can address domestic violence when such incidents have an impact on work.

  • As I talked about in August, the ABA adopted a Model Workplace Policy in Employer Responses to Domestic Violence.  It worth a look at for most employers. An “employer who does adopt it can illustrate that it takes the issues of domestic violence seriously and will encourage employees who are going through the process to speak up. As noted in the materials attached to the resolution, researchers have determined that victimization rates in the workplace are actually higher than in the general population.”\
  • Beyond that though, employers should have updated their policies to provide for the state-mandated domestic violence leave.  The law, which has been in place since 2010, provides for several items including the following: “It requires employers to allow family violence victims to take paid or unpaid leave (including compensatory time, vacation time, personal days, or other time off) during any calendar year in which the leave is reasonably necessary for the following reasons: 1.seek medical care or counseling for physical or psychological injury or disability, 2.obtain services from a victim services organization, 3.relocate due to the family violence, or 4.participate in any civil or criminal proceeding related to or resulting from such family violence.”  Unpaid leave is limited to 12 days per calendar year.
  • There are also plenty of online resources as well, including a toolkit designed to help address these issues further.  While such online resources need to be tailored to your workplace, it is a good place to start if you’re seeking more information.

Domestic violence isn’t just an issue for football players. It has an impact on employers all across the United States.  For employers that want to do something more, these resources are a good place to start.

Seven Years Later….

Posted in Social Media

Can it really be seven years since my first blog post?

But as I look back on my ”Welcome” post (which may or may not have been posted on September 12, 2007, though I was writing before them), there IS proof that I started this little blog seven years ago.

The Welcome post was full of lofty ideas, some of which have lasted, and some of which sounded better in theory than practice.  But I think I’ve been true to my original intent which was to focus on “on new and noteworthy developments in the employment law arena, particularly as they may impact those in Connecticut.”

What I didn’t forsee in that original post is that the blog would grow and become among the most widely read law blogs in the country.  And an ABA Journal “Blawg Hall of Fame” recipient!  Who would’ve thought?

So, to all the readers and all of my colleagues at my law firms who have supported this blog, I say a sincere thanks.

What’s next for the blog?

Well, I think over the next six months, you’ll start to see some significant changes. I’m in the early stages of another redesign, for example.  And, with all the changes in social media over the last seven years, I am looking at how this blog can best fit in.

You may have noticed more “guest” bloggers as well. I suspect those “guests” will become regulars as we look to provide you with the very latest in employment law in Connecticut.

Your suggestions and comments are always appreciated.

Now, let’s go work on another year together, shall we?