GA2It’s been a long-time coming but the General Assembly finally approved of a measure that would allow employers to pay employees on a bi-weekly basis without receiving prior CTDOL approval.

The provision, part of a set of “technical” revisions to various Department of Labor matters, is long overdue.

Several employers had moved to a bi-weekly payroll scheme without realizing that they needed approval from the CTDOL beforehand.  That approval won’t be required anymore (assuming this bill is approved by the governor).

I’ve previously discussed the requirement so now employers who have been wary about seeking such approval, can just move ahead on their own.

Senate Bill 220 also makes lots of technical changes to the unemployment compensation scheme and even to drug testing (getting rid of the suggesting that the DOL develop some regulations in this area).  These probably won’t be of interest to most employers, but it’s worth a look through the bill summary to see if something else touches on your industry.

The measure will become effective when the Governor signs the overall bill.  (Other provisions in the bill go into effect October 1, 2016.)

generalassemblyPayroll cards are finally here.

The General Assembly finished their regular session last night with several employment law bills getting passed, including some that have been kicking around for years.

One of them is Senate Bill 211, which authorizes employers to use payroll cards — instead of checks or direct deposit — to pay their employees.

But there are a number of conditions that must be met before this happens and there are a number of restrictions as well.  The bill will become effective October 1, 2016 — assuming the governor signs the measure, which is expected.

The Office of Legislative Research has done a thorough recap, which I’ll liberally borrow from here.

In order to use the card, an employee must “voluntarily and expressly authorize, in writing or electronically, that he or she wishes to be paid with a card without any intimidation, coercion, or fear of discharge or reprisal from the employer. No employer can require payment through a card as a condition of employment or for receiving any benefits or other type of remuneration.”

In addition, as noted by the OLR report:

  1. employers must give employees the option to be paid by check or through direct deposit,
  2. the card must be associated with an ATM network that ensures the availability of a substantial number of in-network ATMs in the state,
  3. employees must be able to make at least three free withdrawals per pay period, and
  4. none of the employer’s costs for using payroll cards can be passed on to employees.

Under the bill, a “payroll card” is a stored value card (similar to a bank account debit card) or other device, but not a gift certificate, that allows an employee to access wages from a payroll card account. The employee can choose to redeem it at multiple unaffiliated merchants or service providers, bank branches, or ATMs. A “payroll card account” is a bank or credit union account (1) established through an employer to transfer an employee’s wages, salary, or other compensation (pay); (2) accessed through a payroll card; and (3) subject to federal consumer protection regulations on electronic fund transfers.

Another big change, according to the OLR report: The bill also allows employers, regardless of how they pay their employees, to provide them with an electronic record of their hours worked, gross earnings, deductions, and net earnings (i.e., pay stub). To do so, the (1) employee must explicitly consent; (2) employer must provide a way for the employee to access and print the record securely, privately, and conveniently; and (3) employer must incorporate reasonable safeguards to protect the confidentiality of the employee’s personal information.

Lastly, current law allows employers to pay employees through direct deposit only on an employee’s written request. The bill allows an employee’s request for direct deposit to also be an electronic request.

An amendment, which also passed, (1) changes the timeframe in which an employer must switch an employee from a payroll card to direct deposit or check; (2) specifies that the limit on fees or interest charged for the first two declined transactions each month applies to calendar months; and (3) requires the cards to be associated with ATM networks that ensure, rather than assure, the availability of in-network ATMs in the state.

Overall, this is a big boost for both employers and employees.  The CBIA had supported the measure and it had received “cautious” support from the AFL-CIO as well.

In a post last week, I pointed out that New York amended its laws to allow for some deductions by employers from an employee wages.  I joked that Connecticut could do the same as some of Connecticut’s rules are a bit dated themselves.  

A nice note from a Connecticut Department of Labor official suggested that I point readers to the page where the deductions are allowed.  Its actually something I’ve covered before and I’m happy to do so again. 

Connecticut has an online form for employers to send to the Connecticut Department of Labor for approval.  What types of items may be deducted with approval?

  • Life Insurance Premium;
  • Loan;
  • Employee Purchases;
  • Pension Plan Employee Contribution;
  • Payroll Savings Plan;
  • United Way Contribution; and
  • Christmas/Hanukkah Club. 

I’ll leave aside the Christmas/Hanukkah Club for the moment (are there any employers still using that?) and merely note that the list is not exclusive. (Update: Indeed, the DOL has indicated to me since this was published that they have approved other types of deductions as well.) As noted on the CTDOL website: “IF YOU WISH TO USE IT TO AUTHORIZE ANY ITEMS LISTED FOR PAYROLL DEDUCTION, PLEASE COMPLETE THE INFORMATION IMMEDIATELY BELOW AND YOUR COMPANY WILL BE CONSIDERED FOR APPROVAL AND NOTIFIED BY MAIL. A REQUEST FOR ANY ADDITIONAL PAYROLL DEDUCTION ITEMS MUST BE SUBMITTED SEPARATELY.”

There’s more information available on the CTDOL website here.    And if you’re interested in the corresponding state statute it can be found at Conn. Gen. Stat. 31-71e.

The Connecticut General Assembly is in full swing which means the Labor & Public Employee committee is in hearing mode. Several bills have already gotten a hearing, and several more are scheduled for a hearing on February 24th.  No bills have yet been voted out of the committee.  

You can track all the bills on the committee’s "Bill Record Book" available here. 

What’s on tap next week?  Various "Miscellaneous" bills including:

  • S.B. No. 363 AN ACT ALLOWING MINORS TO WORK IN FAMILY BUSINESSES
  • S.B. No. 949 AN ACT CONCERNING PENSION OFFSETS UNDER THE WORKER’S COMPENSATION ACT
  • S.B. No. 986 AN ACT CONCERNING ADDITIONAL REQUIREMENTS FOR AN EMPLOYER’S NOTICE TO DISPUTE CERTAIN CARE DEEMED REASONABLE FOR AN EMPLOYEE UNDER THE WORKERS’ COMPENSATION ACT.
  • H.B. No. 6406 AN ACT CONCERNING EMPLOYER’S RESPONSIBILITIES AND EMPLOYEE RIGHTS.
  • H.B. No. 6407 AN ACT ALLOWING EMPLOYERS TO PAY WAGES USING PAYROLL CARDS.
  • H.B. No. 6408 AN ACT CONCERNING POST-TRAUMATIC STRESS DISORDER AND THE WORKERS’ COMPENSATION ACT.

Other bills that have received a hearing include the anti-bullying in state workplaces bill which has been brought up in past years.  

What else? Well, a new bill would require employers to provide an employee who is going to work more than 8 hours of overtime in a pay period with "notice" of the mandatory overtime at least 24 hours before hand. Another bill would prohibit the use of credit reports in employment decisions.  

Stay tuned to find out what makes it out of committee and which bills will have to wait until the next term.  

Finishing up the summer series of some of the basics of Connecticut employment law, I turn back to a wage & hour topic that comes up much more than you might think.

Connecticut’s wage payment laws (including Conn. Gen. Stat. 31-71b) are quite clear: Employees must be paid wages on a weekly basis.  In addition, the employees must be paid within 8 days of the close of a pay period.

In practice, this means that employers typically have a pay period that runs either Sunday to Saturday or Monday to Sunday.

Upon the close of the pay period, the employer collects the time sheets, calculates overtime, and then "runs" the payroll.  For many employers, they can they make payments on Thursday or Friday (for the prior week.)

While that is the general rule, the law also allows employers to apply for a waiver of that requirement with the Department of Labor (Conn. Gen. Stat. 31-71i)

For approval of a bi-weekly payroll system, the Department has an easy online form that employers can fill out here

For anything further, a letter is required.  Semi-monthly and monthly payment of wages are not looked on favorably by the Department of Labor so employers must make a fairly compelling reason for that request.  

And what is you’re one of those employers that hasn’t been following the rules to date? Work with an attorney or the Department of Labor to get into compliance as soon as possible.  That may mean asking for approval retroactively or changing the system of pay that you already have.

Remember a Connecticut appellate decision a few weeks ago that suggested that a bonus allegedly promised to an associate could be "wages" under Connecticut’s wage statutes? Indeed, a fellow Connecticut blogger suggested that 2008 was shaping to be a banner ynot public domain - see original link at morgue fileear for employees.

Well, not so fast. A new Connecticut Supreme Court decision today (and officially released on December 30, 2008) suggests new limits on whether bonuses are really wages.  Employers in Connecticut can and should breathe a huge sigh of relief that Connecticut’s wage statutes are not going to continue to be interpreted in an extreme manner.

The decision in Weems v. Citigroup, Inc.(download here) arises from a federal case in Massachusetts that certified a question to the Connecticut Supreme Court. (For those unfamiliar with the process, a federal court can ask a state’s highest court to clarify state law if it needs it).  

The decision has a few points which I will followup in the upcoming days, but the most important part for employers is the conclusion of the court that the bonuses given to employees here were not wages.  In particular, the Court found that because the bonuses were awarded on a discretionary basis and not linked to the "ascertainable efforts of a particular employee", the bonuses are NOT wages.

The court though isn’t through.  The court found that the terms of a regular and branch manager bonus in this case were also not wages even though the Plaintiffs claimed that they had to meet certain goals: 

Although the plaintiffs argue that the branch managers had to achieve ‘‘specific goals’’ to receive the bonuses, thus rendering them compensation for services rendered, a review of the bonus plans cited in the parties’ joint appendix, as well as the deposition of…[the] human resources director…., indicate that the bonus awards are tied to subjective factors such as diversity within a branch, and the profitability of the particular branches, which are factors not entirely predictable or within the control of the specific employee. Thus, we conclude that the bonus and branch
manager programs are not wages contemplated by § 31-71a (3), and, therefore, the wage statutes are inapplicable to these particular claims.

Thus, what the Court is suggesting is that even if a department manager’s goal is to increase revenue by 10%, any bonus tied to that revenue increase is not a "wage" because is not within the control of the specific branch manager.  (If you’re curious, the Court simply ignores the Ziotas v. Reardon Law Firm decision.) 

Again, look for a followup post soon on the other portion of the case in which the Court considers whether the forfeiture provisions of three different capital accumulation plans have offered to their
employees through a voluntary payroll deduction violate Connecticut’s wage statutes.  The court also concludes that forfeiture provisions do not violate Connecticut law either.  

For employers in Connecticut, the immediate takeway is to review your bonus plans to look at the discretionary portion of it and to also determine whether the bonus is tied to a particular employee’s performance. Bonuses still could be wages in another case, but structured correctly, employers can limit their liability and give them discretion to reward employees for work done well.