Later today, I’ll be speaking to the next group of startups chosen to participate in the Accelerator for Biosciences in Connecticut, or ABCT. 

ABCT is a Branford-based program spearheaded by Design Technologies LLC, which supports Connecticut’s aim of being a bioscience hub.

It’s an exciting time for new businesses in Connecticut like those chosen to participate in the program.

But employment law issues are often an after-thought for startups.  They shouldn’t be.

I’ll be talking in more detail to the startups in my presentation but here are three things I’ll be talking about for startups and new business ventures:

  1. Startups should document the relationships with new employees.  Offer letters or, in some instances, contracts should be set up so that new employees know the terms and conditions of their employment.  Even more important, the documentation should detail all forms of compensation — whether salary, bonus, equity etc.  And at-will disclaimers are crucial.
  2. Startups also need to consider protecting the intellectual property of the company from the outset.  After all, if a new employee can just take the knowledge and set up shop across the street, how valuable is the company? Thus, having Non-Disclosure Agreements or other restrictive covenants in place when employees or consultants start is critical to making sure a company’s intellectual property is protected.
  3. Lastly, just because the business is a startup, doesn’t mean there’s an exception to paying employees their wages.  Those businesses must comply with all the rules regarding weekly payment of wages.  Failure to do so can result in significant legal exposure and, worse for some, an investigation from the federal or state department of labor.  Startups should make sure they have the cash flow necessary to make payroll.  If you can’t afford to pay your employees, don’t hire them.

Obviously, there are other questions startups should ask themselves too: Are you going to use a PEO? (or perhaps, What is a PEO?) Are you going to use independent contractors? If so, how is that relationship documented and is it proper? Are employees classified as exempt vs. non-exempt? Are the employees even authorized to work in the United States?

If all these questions give startups some concerns — they should.  Employment law issues are an important part of building a company’s foundation.  Ignore them, and the business that you build might be the proverbial house of cards.

Sometime soon, your e-mail inboxes are going to be bombarded from attorneys telling you that you need to pay attention NOW to new overtime rules by the U.S. Department of Labor.  ROFL.  

At least based on what we know now, it’s best taking a lesson from my teenagers and ignoring the messages and hype (and all the text abbreviations too.)  SMH. 

Late last week, Bloomberg news reported that the DOL is considering changing the rules regarding who is eligible to receive overtime by increasing the salary threshold from about $24,000/year to $35,000. IKR?

In plain English, employees who make less than $35,000 would have to be paid overtime on any hours worked over 40 — no matter what their duties are.   MEGO. 

If all this sounds vaguely familiar, you may recall that the Obama-era proposed rules were enjoined by a court before implementation and then we had an election.  Those proposed rules would have set the bar even higher to approximately $47,000.  RIP.

But here’s the thing – we don’t have anything yet. And when released, the proposed rules will be just that — proposed.  They are still very much subject to change.  And even then, there will likely be a significant period of time before implementation.  My guess — and it’s just that — would be late 2019 or early 2020 at the earliest.  SWAG.

For now, here’s the one thing to think about: If you have any exempt employees that are paid about $35,000 or less, keep in mind that you may need to start paying them overtime…at some point.  MEH.

But remember: Just because you are paying employees a salary does not mean you’re following the law. Employees must also have “duties” that are exempt — typically, professional, executive or administrative.  

BOL.  

It seems likely that some type of paid Family and Medical Leave (otherwise known as “Paid FMLA”) bill is going to pass the General Assembly.

CBIA recently posted about the pitfalls that await employers with passage with one CBIA staff testifying that “small businesses are terrified of this proposal.”  

But the “paid” aspect of the bill is only one part. I’m not going to cover that in this post, but there are plenty of resources already on what it might mean.

What hasn’t been widely reported is that the bill would allow nearly all employees at nearly all companies in Connecticut to take protected family and medical leave — a monumental shift from the limits that are currently in place.  But in another way, it would expand the ability of employees to take unpaid leave too.

A caveat – there are various versions of the bill floating around.  For purposes of clarity, Bill No. 1 – which has already passed the Labor & Public Employees Committee – is the one that I’m going to discuss.

Here are four areas to focus on:

  1. Eligible Employee: Currently, to be eligible for state FMLA leave, the employee had to work for 12 months and 1000 hours. The bill would change that to simply that the employee must have earned at least $2325 from one or more employers. Theoretically, you could start taking leave from Day 1 of a new job.
  2. Employers: Currently, only employers with 75 or more employees are covered. The bill would change that to one or more.
  3. Amount of Leave: Currently, employees get 16 weeks of leave over 2 years. The bill would change that to 12 weeks over one year (consistent with federal FMLA rules).  One caveat: Employees could take two additional weeks due to a “serious health condition during a pregnancy that results in incapacitation”.  No definition of incapacitation is given.
  4. Reason for Leave: Currently, eligible employees can take leave to care for spouses, children or parents with a serious health condition. The bill greatly expands that to siblings, grandparents, and grandchildren. It expands the definition of a parent to include in-laws and “individuals who stood in loco parentis to the eligible employee when the employee as a child”.  If that wasn’t broad enough, employees could also take leave to care for “any other individual related by blood or whose close relationship with the employee is the equivalent of a family member”.

What’s the Takeaway?

If you’re an employer that has less than 50 employees, you’ve likely never had to deal with FMLA claims at the federal or state level.  That may change very soon and dealing with the FMLA is not necessarily intuitive.

Suffice to say that this bill is a massive expansion of FMLA. Small employers are simply not equipped to deal with this and having employees out on leave — even from Day 1 — is going to present a significant challenge for employers, small ones in particular.

The bill is still being crafted and it’s quite possible that we’ll see changes as this progresses.  But Governor Lamont has indicated support for a bill of this kind.

For now, employers should talk with their legislators if this is something of interest to them and share their concerns.  And stay tuned. This is a bill that all businesses are going to want to follow closely.

Employers who want to (or need to) use independent contractors often scratch their heads at a disconnect – how do you determine who is an independent contractor?  I recall at one speaking engagement years ago, an employer who came up to me and asked: “So are you saying that there are TWO tests to determining if someone is an independent contractor?”

Yes, that’s exactly what I was saying.

The Connecticut Department of Labor and the Connecticut Department of Revenue Services (the state equivalent to the IRS) have each developed tests for determining if someone is an employee vs. an independent contractor.

And they are not the same.

I’ve looked at this before, but my colleagues at Shipman & Goodwin — who now host a terrific new little blog on tax law (www.cttaxalert.com) — have posted about it too — but this time from the perspective of tax lawyers. 

Worth your time.

Yesterday, I tackled the bills floating around the Senate-side of the Connecticut General Assembly,  In today’s post, let’s look at the House side to see what bills are under consideration there:

  • House Bill 5003 is the mirror-image bill of Senate Bill 1 on Paid Family & Medical Leave.  Yesterday’s post gave the highlights, which apply equally to this bill too.
  • Similarly, proposed House Bill 5004 would raise the minimum wage in the state. The details are still to be drafted, but the CBIA has been asking for the raise to $15/hour to be scheduled over multiple years.  Some version of this is very likely to happen; it’s just a matter of timing of increases from the current $10.10 rate.  $15 per hour seems to be the prevailing wisdom.
  • Proposed House Bill 5053 would create a task force to look for employment opportunities for persons recovering from substance abuse. The details are to be drafted by the Labor & Public Employees committee and the bill will be up for discussion at a public hearing on February 14, 2019.
  • Proposed House Bill 5271 would re-introduce requirements that would broaden sexual harassment prevention training for employers.  The details, again, are still lacking but at a press conference last week, several legislators reintroduced a so-called “Time’s Up Act”.  This is definitely going to be subject to negotiation and change. While the 2018 died in session, it seems likely we’ll see something coming up again later this spring.
  • Proposed House Bill 6111 would allow employers to require employees participate in a direct deposit program for paychecks.  This bill is up for a public hearing on February 14, 2019.
  • Proposed House Bill 6113 is one that I don’t think we’ve seen much before. It would prohibit asking about an applicant’s date of birth or date of graduation on employment applications to “reduce age discrimination”.   Many employers have already taken those questions off their job applications to avoid even the impression that age is a consideration in their decisions; this bill would make that more explicit.  A hearing on this bill is set for February 14, 2019 as well — looks to be a busy hearing.
  • Proposed House Bill 6913 would prohibit “certain employees” from being required to sign “unfair” non-compete agreements.  Who those employees are and what terms would be “unfair” is likely to be the subject of the public hearing on this proposed bill on February 14th as well.  Proposed House Bill 6914 would create a similar ban on non-compete agreements for employees below a certain salary threshold.
  • Proposed House Bill 6936 would take a look at deductions for union dues, seemingly in direct response to the Janus decision. The details are still TBD but this is one that still merits an eye on.
  • Proposed House Bill 7043 would dictate certain requirements for lactation rooms in the workplace.  Rooms should be private, should contain or be near a refrigerator, and include access to a power outlet.  The bill also would make employers provide “breastfeeding support” for up to three years after childbirth.  The details of this bill are still TBD and this bill will be up for discussion at the February 14th hearing.  

To be clear, these are only the list of bills coming out of the Labor & Public Employees committee.  Each year, bills from other committees (including Judiciary) also have a tendency to impact employers.  There is plenty for employers to keep an eye on this year.

The Connecticut General Assembly is already busy with a full compliment of employment law bills under consideration.  At this point, it seems likely that several will pass in one form or another and thus employers should be playing close attention to the developments.

Here are a few of the Senate ones that I’m watching (I’ll tackle the House bills in tomorrow’s post – now available here):

  • Senate Bill 1 – This is the Paid Family and Medical Leave bill that has been kicking around for a few years.  Late last week, the Labor & Public Employees Committee issued a new draft.  There are a LOT of details to this but in essence, the bill would have two major changes. First, it would create a new paid family leave insurance program that would take contributions from employees and distribute those contributions to employees who need to take paid leave — similar to a workers’ compensation program.  Second, the bill would make significant changes to the existing Connecticut Family Leave law, to broaden the law’s application to all types of employers and broaden when an employee may take the leave as well.  More to come as this bill progresses.  A hearing on the bill is scheduled for February 14, 2019.
  • Proposed Senate Bill 64 – This is a rehash of a bill that would limit so-called “captive audience” meetings.  The details are still in flux but the Labor & Public Employee committee voted to draft the bill on February 7, 2019.  I’ve discussed prior versions of the bill here, including the Attorney General’s concern that such a bill may not be legal.
  • Proposed Senate Bill 358 – This proposed bill would provide employees with time off to vote in elections.  The committee voted to draft the bill late last month but there’s no indication yet whether this would apply to all local elections (such as a town budget referendum) or just broad state elections.
  • Proposed Senate Bill 697 – This proposed bill, which is scheduled for a hearing on February 14, 2019 and is lacking details as of yet, would “place restrictions on workplace nondisclosure agreements to prohibit the silencing of victims in the workplace and to prevent sexual harassment by repeat offenders.”  This would seem to go further than the recent federal law which limited tax deductions for confidential sexual harassment settlements.
  • Proposed Senate Bill 700 – This bill would allow for electronic signatures by employees in the restaurant industry when distinguishing between service and non-service duties. This bill is also scheduled for a hearing on February 14th.  It would be a small but significant help to small employers who have trouble keeping up with the record-keeping requirements in this area.
  • Proposed Senate Bill 764 – This bill would prohibit on-call shift scheduling — something that has been under attack in prior sessions as well.  Specifically, the bill would “prohibit the employment practice of requiring an employee to call an employer prior to a scheduled shift to confirm that the employee is needed for the shift, and to require employers to give an employee at least twenty-four hours prior notice if the employee is not needed to work a scheduled shift.” The Labor & Public Employee committee voted to draft this proposal so watch for a full-fledged bill soon.
  • Proposed Senate Bill 765 – And then there’s this proposed bill scheduled for a hearing on February 14, 2019.  Right now, it states that the law would ensure all employees “receive fair and equal pay for equal work”.  What that means for employers is anyone’s guess right now.

This is about a busy a listing as you can reasonably expect to see from our part-time legislature.  It’s still early but that’s just the half of it.  I’ll tackle the House bills in my next post.

In my prior post, I wondered aloud whether there were some rough waters ahead for employers.  Apple recently announced that it would not meet it’s earnings estimates in the first quarter of 2019, in part because of soft demand from China. Other companies are expected to announce some similar issues.

Honestly, I’ve had enough conversations in the last few years with HR professionals who just haven’t lived through a major downturn.

Think about this way: For anyone who joined the workforce since 2010 or so, the era of massive layoffs in the financial and automobile sectors had just passed.

But fortunately, there are still a few of us around who remember.

So here are four things to think about:

  • Performance Reviews.   Why? Because when a downturn hits, your company will need to start a selection process as to who stays and who goes.  Inevitably, you will start looking at performance reviews to see about ranking employees.  You know what you might find? They all start looking alike. Everyone is slightly above average.   While I’m not suggesting everyone convert to a forced ranking system, your performance reviews should be honest indicators of how an employee is doing. Take a look at the ones you are doing this quarter.
  • WARN.  The Workers Adjustment and Retraining Notification Act  is one of those federal laws that you might not have even heard about. But if your company has 100 or more employees, you should. It requires that 60 days notice be given in instances of a mass layoff or plant closing. Before you go down the road of layoffs, you may have obligations to notify your workers and the government of the potential for layoffs. Be sure to comply.  Here’s a brief recap.  
  • Consider a Statistical Analysis.  I know — you didn’t like math in high school. But trust me: There is an entire profession of statistical experts available to help you figure out if the proposed layoff may have a disparate impact on a protected class of workers.  How is this done? You look at the class of workers that may be impacted by the proposed reduction in force and have an analysis done to see whether your neutral criteria may not be so neutral after all. Sometimes there are explanations for the disparate impact; but sometimes, the analysis can force employers to take a second look. Regardless, this can be an important step.  Just make sure to use an attorney to help give guidance here.
  • Understand the OWBPA.  It stands for the Older Workers Benefit Protection Act and it’s part of the federal law on age discrimination.  And if you want your employees to sign separation agreements (as I think you should) when you do your layoffs, your agreements better comply with this act.  I did a recap in 2008 that still holds up today.  

Before you have a crisis on your hands, talk internally about what the reasonable expectations for 2019 are going to be. If a possible cutback to personnel is even being discussed, now is the time to get ahead of things.

You do a blog long enough and everything comes full circle.  Back in January 2008, I took out my crystal ball and suggested that reductions in force (RIFs) and lawsuits would soon follow.

We all know what happened next. The economy crashed and discrimination claims at the EEOC peaked at their highest levels in more than 20 years.  

So here we are 11 years later.  A whole generation of HR professionals have never experienced a significant downturn.  Are we headed there again in 2019?

I’ll leave that to the economists and politicians.  Two weeks ago, the stock market was topsy-turvy. Now, we seem pre-occupied with the partial government shutdown.  And at least in Connecticut, new Governor Ned Lamont has a plan for growth, growth, growth.

But it’s worth considering whether your company is even prepared for a downturn, even if it still is many months away.

Again, we can first look to history. As I said back in 2008:

What is a reduction in force? Really, just a lawyerly way of saying “layoff”. Back in the early to mid 1990s, lots of companies went through them.  And the number of lawsuits arising from those reductions went through a major peak in 1995 or so.

But these types of lawsuits rise and fall with the economy.  When the economy is good, lawsuits go down. When it’s not so good, they go up. One reason is that when people can find another job quickly (i.e. the unemployment rate is low), then tend not to sue as much.

And even back in 2008, I noted that things might be different for employers and indeed they were.  The rise of the internet-fueled lawsuits have been a reality. Here was my prediction back then:

One more factor suggests to me that more lawsuits are on the horizon — it’s much easier for a few employees to band together than in the past. Previously, people would have to use their existing networks to find laid off employees to hear their stories (indeed, outplacement firms were a good source for employees looking to talk with other laid off workers). But now, with the rise of social networking sites, it seems only a matter of time before a group of employees will form a Facebook or MySpace page to compare experiences.  Employees from around the country can share information instantly, making it much easier to figure out if there are trends associated with the layoff that may give rise to a lawsuit.

Just as Uber or the employers in Connecticut facing class action lawsuits that one firm puts on their website have found out.

What’s an employer to do? I’ll tackle that in my next post.

It’s sometimes easy to forget that the government shutdown has very real-world implications. Case in point? The Equal Employment Opportunity Commission.

As of now, it’s closed.  The agency has even posted a notice about it on its’ website. 

That doesn’t mean that the time limits for filing a charge have been extended.   Generally, federal claims must be filed within 300 days of the alleged discrimination. As noted by the EEOC, “These time limits may not be extended because of the shut-down.”

The EEOC thus encourages employees considering filing claims “within 30 days of your time expiring” or unsure “your time expires”, to not wait to file.

For employers with matters at the EEOC, mediations have been cancelled.  It is unclear from the shutdown notice whether the EEOC will continue to press the time frames for submitting position statements, but given the lack of action on anything pressing, the agency would certainly seem amenable to having those deadlines extended.

Employers with specific questions though should certainly check with their counsel to see if their particular case warrants action.

The bottom line is that the backlog that existed at the EEOC will continue to grow because of this delay; mediations are going to get rescheduled and action is just going to take longer.

Stating the obvious: The longer the shutdown, the longer the delays.

January 1st is typically a time for new laws to kick in and 2019 is no exception.

For employers, the biggest change is one that I discussed way back in May with amendments to Connecticut’s Pay Equity law.

The new law prohibits employers from asking a job applicant his or her wage and salary history. But the prohibition does not apply in two situations:

  • if the prospective employee voluntarily discloses his or her wage and salary history, or;
  • to any actions taken by an employer, employment agency, or its employees or agents under a federal or state law that specifically authorizes the disclosure or verification of salary history for employment purposes.

While salary may not be inquired, the law DOES allow an employer to ask about the other elements of a prospective employee’s compensation structure (e.g., stock options), but the employer may not ask about their value.

The bill has a two year statute of limitations. Employers can be found liable for compensatory damages, attorney’s fees and costs, punitive damages, and any legal and equitable relief the court deems just and proper.  (This bill amends Conn. Gen. Stat. Sec. 31-40z if you’re looking for the pinpoint legal citations.)

Note that this ban on inquiries also applies to applications or other recruiting forms too. So, if your application asks for prior salary history, it’s time to eliminate that.  Employers should inform manager and other employees who conduct interviews about this requirement as well.