Connecticut Employment Lawyer & Attorney : Daniel Schwartz : Stamford, Hartford New Haven, CT

Continuing a very busy Wednesday in employment law (where were all these cases earlier this month?), the Connecticut Supreme Court issued a noteworthy decision on a few different wage issues. Because of time limitations, I'll address the case in a few separate posts.

The case, Ravetto v. Triton Thalassic Technologies, Inc. et al. , was argued to the Court in February 2007 (that is not a typo) and finally released on Wednesday (though it won't be "official" until March 4, 2008). 

There are lots of interesting employment issues in the case, but what immediately jumps out at me is the court's holding that an employee who is provided advances on commissions, does not need repay those advances when that employee's employment ends, even if the actual commissions did not amount to the advances.  The Court's ruling assumes that the employment agreement in place is silent on the issue of repayment.

The Court, in a 4-1 decision, adopts a view in a majority of other states that says that simply using the words "draw" or "advance" in an employment agreement is insufficient to establish a contractual obligation to repay those advances upon the end of employment.

We agree with the majority of courts that the mere use of the terms ‘‘draw’’ or ‘‘advance’’ in an employment agreement is not sufficient to establish the parties’ intent that the employee is obligated to repay the excess advances.

In arriving at the general rule that an employer may not recover excess advances unless an express or implied agreement to repay is established, many courts have reasoned that because the employer usually drafts the employment agreement, it easily may include language in the agreement obligating the employee to repay any advances that exceed commissions. ...

We therefore agree with the majority of jurisdictions that ‘‘absent a contractual provision expressly holding [an employee] personally liable for advances, [an
employer] must show that [the employee], by his [or her] conduct, exhibited an intent to be held personally liable for the repayment of the advances.’’ ...This rule is consistent with the ‘‘well settled judicial reluctance to cause a forfeiture of money already received unless it convincingly appears that such a result was intended by the parties. . . .’’

This decision has the potential to have a significant impact for employers in Connecticut.  What the court appears to be saying is that it is fine for an employer to say explicitly in an offer letter or employment agreement that the employee must repay the advances on commissions upon termination of employment, but in the absence of that provision, the employee is not obligated to do so. 

For employers in Connecticut, the case suggests an obvious course of action as well. Employers may want to consider having an explicit "repayment" provision in their offer letters and employment agreement for those employees who receive an advance or draw on commission.  Does this mean that existing agreements should be modified to add this provision? It may be something to consider.

There's more to this topic, and the decision in general. And, when time permits, I'll provide some additional thoughts.

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The Connecticut Supreme Court, in a decision released today, ruled today that an order denying class certification is not an appealable final judgment.  The case, Palmer v. Friendly Ice Cream Corporation, gives employers and other defendants in class actions, an important arrow in their quiver of defending against class action cases. 

In Palmer, thirty-seven waiters or waitresses employed by Friendly's, sought certification as a class to pursue their claims that their employer had ‘‘failed to pay servers the hourly, minimum wage mandated by General Statutes § 31-60 because the defendant unlawfully deducted ‘tip credits’
from servers’ wages’’ for work that was ‘‘non-service’’ in nature. The potential class included ‘‘all current or former servers’’ at the defendant’s forty-eight restaurants in Connecticut ‘‘against whose wages tip credits were subtracted.’’

 According to the Court:

The plaintiffs’ complaint arose from the defendant’s alleged violation of § 31-62-E4 of the Regulations of Connecticut State Agencies, which governs the payment
of minimum wage for ‘‘[d]iversified employment within the restaurant industry . . . .’ The complaint
alleges that the defendant ‘‘failed to definitely segregate all of the time spent performing ‘non-service’ duties and nevertheless took a ‘tip credit’ with respect to most of the hours worked by [the plaintiffs] and the class members and failed to compensate them at the required full minimum wage for their entire shift.’

The Superior Court denied certification of the class and the Appellate Court found that such a ruling was non-appealable -- a decision affirmed by the Connecticut Supreme Court.

I'll look at the underlying wage issue another day, but for now, the Supreme Court's decision will be applicable in all sorts of employment-type class actions filed in state court. 

For employers, plaintiffs will not be able to use the threat of an immediate appeal for settlement purposes, while the employers will also have an extra incentive for defeating class certification. If that decision cannot be appealed until much later (including a verdict), much of the "value" of the class action will be diminished.

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The latest news trend has been to report that wage & hour claims are the new "in" lawsuit filed by employment attorneys.  However, the cost of bringing such a lawsuit may still be onerous for some employees.

That's where the state's legal services organizations routinely fill the gap by offering their services free to people in need of an attorney.  Two new federal lawsuits filed on the same day last week by two different legal services groups in the state, show that these groups are not afraid to tackle employment issues and are doing so with increased frequency. 

(As always, readers are cautioned that the complaints contain mere allegations, not proven facts.)

In Morales v. Cancun Charlie's Restaurant, the Jerome N. Frank Legal Services represents a kitchen worker for a popular Milford restaurant.  (The Jerome N. Frank Legal Services organization is run by the Yale Law School.)  The Complaint alleges that the employee regularly worked over 100 hours per week and did not receive overtime.  The Complaint also alleges that he did not receive the appropriate minimum wage.  No response has yet been filed.

This is not a one-time gig for the Yale Law School legal services group.  For example, last month, the group brought a nearly identical claim against another Connecticut restaurant, the Mianus River Tavern, on behalf of two workers. Although the restaurant closed earlier this year, the Complaint alleged that these two workers did not receive any overtime for their work over the years. 

The Complaint in Godoy v. D&S Remodeling, LLC contains very similiar allegations as well and was also filed last week. Brought by Connecticut Legal Services , on behalf of 12 employees, the lawsuit alleges that these laborers for a construction company did not receive their wages as promised by the employer. The complaint also alleges that overtime and minimum wages were not paid for these individuals at various times.  No response by the employer has been filed yet either.

Will the employers raise as a defense the possible undocumented status of the employees? (The Complaints are silent as to whether these workers were authorized to work -- though no inference should be drawn on this without additional facts.)  The law on this is far from resolved. In 2002, the Supreme Court in Hoffman Plastic Compounds, Inc. v. NLRB (U.S., No. 00-1595, 3/27/02), determined that the National Labor Relations Board ("NLRB") could not award backpay to undocumented aliens for violation of the National Labor Relations Act ("NLRA") But the Department of Labor and other groups have suggested the the law is different for violations of federal discrimination laws and the Fair Labor Standards Act ("FLSA"). 

In any event, these new lawsuits should continue to serve as a cautionary tale for service industry companies in Connecticut such as restaurants and constructuion companies.  The overtime laws are, what they say they are.  Ensuring strict complaince with the law will remove lots of headaches down the road.  Keep good records, treat employees fairly and fix past mistakes where necessary.

While lawsuits involving the Legal Services groups may not "feel" like the typical employee-side attorney, they have the resources and the energy to ensure that these cases proceed like an ordinary lawsuit. These lawsuits should not be taken lightly. 

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For employment lawyers and HR professionals, it's "old" news that overtime lawsuits are a major concern.  Business Week picks up on that trend in next week's Cover Story entitled: "Wage Wars: Does your Boss Owe You Overtime". 

According to the article:

No one tracks precise figures, but lawyers on both sides estimate that over the last few years companies have collectively paid out more than $1 billion annually to resolve these claims, which are usually brought on behalf of large groups of employees.

Yes, you read that right. A BILLION dollars. 

Is this estimate true? Who knows.  But considering that the Labor Department estimates that 86 percent of the workforce is subject to overtime rules, that number suggests that there may still be lots of other potential lawsuits out there.  Connecticut has had no shortage of these lawsuits either. 

What's an employer to do? Clearly, some pro-active steps are always in order. 

• Audit your exempt employees.  Go over job descriptions and compare that with actual duties.  Sometimes "managers" are just glorified sales workers.
• Take seriously any complaints by employees about their overtime.  If there is a problem, odds are the complaining employee isn't the only one with the problem.  And that means the potential for a class action case. 
  
• Educate your Human Resource personnel and, even better, your payroll people about the overtime rules.  In particular, even if people are receiving overtime, make sure its calculated correctly.
• When in doubt, get advice.  These issues never get "better" overtime. If anything, when overtime issues are allowed to fester, the risk for companies increases substantially.  Working with an attorney and payroll personnel to comply with the law with ensure that the little issues don't turn into big ones. 
  

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