Trying to follow both state and federal wage and hour laws isn’t that hard.

But it isn’t that easy either.

Let’s say you’re a restaurant with a waitstaff.  Like most restaurants nowadays, your customers pay by credit card and you, the employer, have to pay the credit card company a percentage on each sale.

You know there are rules regarding deductions of the wages to employees. But what about tips? Can you take out the percentage of fees being charged by the credit card company on the tips?

According to the U.S. Department of Labor: Yes.

In its fact sheet, the USDOL makes it plain that such actions by an employer do not violate federal law, so long as they are limited to the fees on the tips themselves.

Where tips are charged on a credit card and the employer must pay the credit card company a percentage on each sale, the employer may pay the employee the tip, less that percentage. For example, where a credit card company charges an employer 3 percent on all sales charged to its credit service, the employer may pay the tipped employee 97 percent of the tips without violating the FLSA.

The DOL also has 2006 opinion letter bolstering its views here. Even Connecticut, in an unofficial guidance, permits the practice.

While that aspect is clear, the remaining aspects of tip pooling are still very much being debated.  According to a DOL Field Bulletin this spring, in the Conolidated Appropriations Act, 2018, the Act provided that certain other portions of DOL regulations that barred tip pooling when employers pay tipped employees at least the full FLSA minimum wage and do not claim a tip credit no long have further force or effect.

As a result, according to the DOL, “employers who pay the full FLSA minimum wage are no longer prohibited from allowing employees who are not customarily and regularly tipped—such as cooks and dishwashers—to participate in tip pools.”

And if that weren’t confusing enough, employers in Connecticut also need to comply with the Wage Order drafted by the Connecticut Department of Labor that has additional guidance on tip pooling.

Employers must continue to tread cautiously in the area of wages. Minefields continue to be ever present — and the impact of a failure to comply with the law can be costly.

 

On “Survivor”, one of my favorite broadcast TV shows (or, as my YouTube/Netflix watching teens might say — “what’s that?”) the notion of “immunity” plays a central role in the outcome of an episode.

And in a decision released last week by the Connecticut Supreme Court, whether or not to grant immunity again plays a pivotal role for religious employers. In its unanimous decision, the court refused to grant outright immunity to a religious institution from an employment discrimination claim.  The case, Trinity Christian School v. CHRO, can be downloaded here.

For religious institutions, the case serves as reminder that while the employment discrimination laws may be more limited in their impact (more on that in a second), seeking “immunity” from such claims is a step too far for the courts.

In doing so, it’s helpful to note that the U.S. Supreme Court decided earlier this decade that the “ministerial exception” under federal anti-discrimination law only served as an “affirmative defense” against such claims.  That has important implications on the procedural posturing of a case and prevents appeals early on in the case on “jurisdictional grounds”.

Here, the court said that an additional state statute on the subject did not purport to confer on religious institutions immunity from employment discrimination actions.  That statute, § 52-571b (d), was intended to operate as a rule of construction for § 52-571b as a whole rather than a grant of immunity.  The effect of § 52-571b (d) was to retain the determination of the United States Supreme Court that the ministerial exception to employment discrimination laws, which requires secular institutions to defer to the decisions of religious institutions concerning their employment of religious employees, serves as an affirmative defense to an otherwise cognizable employment discrimination claim.

In doing so, the court notes that its prior decision, Dayner v. Archdiocese of Hartford, has now been explicitly overturned by the U.S. Supreme Court’s pronouncement on the subject. “hat decision, of course, was short-lived in light of the United States Supreme Court’s holding in Hosanna-Tabor that the
exception operates as an affirmative defense to an otherwise cognizable employment discrimination claim rather than a jurisdictional bar.”

 

Like a lot of people, I’ve got the summer bug and, given the choice between a walk outside and a blog post — well, you can figure out what has been winning.

But I’ve got a few posts lined back up the next few weeks.  In the interim, I want to share with you one of the most meaningful and amazing speeches I’ve ever heard in person.

It’s from last week when I attended the American Bar Association Annual Meeting in Chicago, where I serve as the State Delegate for Connecticut (and on the ABA Nominating Committee as well).  At that meeting, the ABA presented it’s ABA Medal (it’s highest honor for exceptionally distinguished service by a lawyer to the cause of American jurisprudence) to Bryan Stevenson.

Stevenson is the founder and executive director of the Equal Justice Initiative. During a 40 minute speech (which you really must listen to), he called on attendees to do four important tasks:

  1. Get close to people who live in the margins of society
  2. Change the narrative
  3. Stay hopeful
  4. Do things that are inconvenient and uncomfortable

Sounds straightforward enough. But with Stevenson’s brilliant oratory, he encouraged all of us to find meaning in the work we do through this and allow all of us to strive towards justice.

You may not even agree with him that those convicted of the death penalty deserve mercy. His book on “Just Mercy”  has won numerous awards.  But there is little denying that Stevenson is a voice well worth listening to.

For employers, no doubt Stevenson would encourage employers to considering hiring those who have been convicted of a crime to a second chance after they are released from prison.  It might be doing what Bear’s Smokehouse does — looking at individuals and not judging them solely by their past. As Jamie McDonald, the owner of Bear’s recently said, “Sometimes all they need is somebody to believe in them and give them that chance.”

There may be other times when Stevenson’s advice might apply too; suppose you have an employee who failed to show up for work for three days in a row.  You might just fire them immediately for job abandonment.  But there might be circumstances where you should also try to understand the reasons behind the absence.  Sometimes there will be a good excuse behind it.

If you can find time to listen to Stevenson’s speech, you won’t be disappointed. For those of us who attended the ABA Annual Meeting, it was one that we will never forget.

Typically, in our court system, we operate under the “American Rule” which means that parties have to pay their own attorneys’ fees in cases, regardless of whether they win or lose.  (Contrast that with the English Rule which is a “loser pays” system.)

But there is one big exception to the American Rule — and it can be found in lots of employment law cases.   In several instances, the governing statute allows the prevailing party (or, in some instances, just the Plaintiff — read “employee”) to collect attorneys fees.

This is often seen in wage & hour claims, where an overtime claim may get dwarfed by a claim for attorneys’ fees.  One blog pointed out a few years ago in an FLSA case on “how attorney’s fees can grow to be the tail that wags the dog.”

A recent case out of the District Court of Connecticut also shows the impact in employment discrimination cases too.

The decision flows from a jury trial that awarded damages in an employment discrimination case to an individual suing a major employer.  Afterwards, both parties engaged in extensive post-trial litigation concerning attorneys’ fees, damages and more.  Ultimately, the court issued a ruling and then a final ruling after both parties asked for reconsideration.

The court awarded the Plaintiff in the discrimination claim the following:

  • Compensatory damages: $125,000
  • Punitive damages: $175,000
  • Economic damages (back pay): $ $243,711.89
  • Pre-judgment interest (on back pay): $15,665.37
  • Reinstatement

So, ultimately, the verdict is a little more than $550,000.

But the court also awarded attorneys’ fees.  And these fees far exceeded the verdict itself.

Grand total?  $973,083.50 in attorney’s fees and $30,960.24 in costs.

Such awards make employment cases unique animals in the law.  They provide extraordinary incentives to attorneys to not only take such cases, but pursue them.

For employers, the case is a difficult reminder that even when you value the case as somewhat small based on damages, the award of attorneys’ fees can add a substantial amount to what a case is worth.

 

The U.S. Supreme Court this morning in Janus v. AFSCME (download here) reversed 40 years of labor law precedent and concluded that  requiring public employees to pay “agency fees” for labor unions that they don’t want to belong to violates the First Amendment of the U.S. Constitution.

Previously, prior cases have banned forcing public sector employees from joining a union and paying union dues. But a number of states permitted union contracts that required employees to still pay an “agency fee” to cover the costs of collective bargaining.

In its 5-4 decision, the U.S. Supreme Court rejected this — leaving public sector unions, particularly in states like Connecticut, to potentially lose significant funds from employees who say that they want no part of their salary to go towards unions.

Given that this blog covers more employment law than labor law, and focuses more on private-sector than public sector, I’m not going to do a deep-dive today into the case. The SCOTUSBlog is one good resource. 

But my labor law colleagues at my firm have spending the morning looking into this.  Here’s the quick recap posted this morning on the Employment Law Letter blog and the impact to Connecticut public-sector employers.:

The immediate effect of the Court’s decision is that agency fee (or “fair share” fee) provisions in collective bargaining agreements are invalid. The Court specifically states that agency fees and similar payments may not be deducted from an employee’s pay unless the employee has expressly consented to the deduction.

This statement suggests that employers should stop deducting agency fees unless and until an employee has affirmatively consented.

Because Connecticut law requires express employee consent for payroll deductions, Connecticut public sector employees have likely already consented to the deduction of agency fees.

However, public sector employers should be prepared for employees approaching them and requesting that the agency fee deductions be stopped, effectively withdrawing their consent.

Justice Alito’s decision is emphatic in this point and the significant dollars at stake:

We recognize that the loss of payments from nonmembers may cause unions to experience unpleasant transition costs in the short term, and may require unions to make adjustments in order to attract and retain members. But we must weigh these disadvantages against the considerable windfall that unions have received under Abood for the past 41 years. It is hard to estimate how many billions of dollars have been taken from nonmembers and transferred to public-sector unions in violation of the First Amendment. Those unconstitutional exactions cannot be allowed to continue indefinitely.

Watch my firm’s blog for more details on this critical decision in the public-sector.

Cars. Lots of really fancy cars.

That about sums up my Sunday in which I went to the Concorso Ferrari & Friends car event in West Hartford Center.  It has one of the biggest collections of ultra-expensive cars in the state — all to benefit the Connecticut Children’s Medical Center.

What I wouldn’t do to commute in the Pagani supercar! (Anyone have an extra $3 million lying around?)

Now, the odds on you commuting in a supercar and wondering if you’re getting paid by your employer are probably about the same as winning Powerball, but it’s still worth asking the question: Why don’t you get paid for commuting to work?

The answer lies in the law and something called the Portal-to-Portal Act. 

The Act states that employers are not required to pay for the time employees spend on activities occurring before or after (“preliminary or postliminary”) they perform the principal activities for which they are employed.

Thus, compensable working time generally does not include time spent:

  • Traveling to or from work.
  • Engaged in incidental activities before or after work.

A few years ago, an argument was made that state law ought to allow for some compensable travel time to and from work if the employee was travelling with tools.

The Connecticut Supreme Court rejected that interpretation saying such laws were pre-empted by the Portal-to-Portal Act.

And yet, the Connecticut Department of Labor continues to advance a regulation on travel time that, according to same court, “was not promulgated pursuant to any formal rule-making procedures or articulated pursuant to any adjudicatory procedures, has not been time-tested or subject to judicial review in this state.”

In any event, commuting with a supercar might be fun — but it doesn’t change whether you get paid for it under the law.

It was the last semester of my senior year in college – right after Spring Break – when I heard the news that would forever shape my views on mental illness.

A friend and fellow editor of the college newspaper I worked for, Steven Ochs jumped to his death from one of the many bridges near his hometown in Pittsburgh, PA.

A group of us ended up driving out there across the fields of Pennsylvania to mourn his passing. It was the first time I was a pallbearer at a funeral and I knew then that was something I never wanted to be for a friend again.

Steven was a remarkable young adult.

I wish you could’ve known him.  He wrote amazing columns for our college paper and editorials nearly every weekday.  Thanks to the internet, you can still read a few here.

I can still remember sitting in his newspaper office couch and hearing him talk; he was always a few steps ahead of me.  I thought he had a promising future.

I thought about Steve a bunch last week, when the celebrity suicides of Kate Spade and Anthony Boudrain became headlines.

Those people, along with Steve, seemingly had everything that would want.

And yet.

As anyone who has had a friend or relative commit suicide, there’s a certain amount of second guessing that goes on. What signals did I miss? What could I have done differently? Was I a good enough friend? Why didn’t he ask for help?

And a lot times, it just comes down to a simple question too: Why?

Every suicide of a employee impacts the workplace as well.  And sometimes it is at the workplace itself – but regardless, suicides have been on the rise the last several years. As a Wall Street Journal article from earlier this year noted:

Nationwide, the numbers are small but striking. According to the Bureau of Labor Statistics, suicides at workplaces totaled 291 in 2016, the most recent year of data and the highest number since the government began tallying such events 25 years ago. U.S. suicides overall totaled nearly 45,000 in 2016, a 35% increase compared with 10 years earlier, according to the Centers for Disease Control and Prevention’s National Center for Health Statistics.

Who is most at risk? According to the BLS study, 45- to 54-year-old males had the highest likelihood of committing workplace suicide. And workers in the public sector had a higher propensity for workplace suicide while workers in the private sector suffered the majority of these fatalities. The private industry sectors with the highest propensities for workplace suicide were finance and insurance; professional, scientific and technical services; and health care and social
assistance.

The solutions are far more complex than a simple employment law blog post can capture.  Some of them are rooted in society.  But discussions regarding mental health — and bringing those discussions in the workplace — is often seen as one important step that can be done.  A renewed emphasis on making sure employees know about and use Employee Assistance Programs is also another important step.

HR staff can sometimes be at the front lines.  Figuring out that an employee might need help can be a part of a solution but as we all know, it might still not be enough.

We can only hope that as we raise awareness of this, that we can stop some suicides from occurring so that 25 years from now, someone else isn’t writing a blog post about one of their friends as well.

 

 

With Memorial Day coming up this weekend, it’s often a time (or it ought to be a time) to reflect on the sacrifices made by our military.  And at the same time, consider how we, as a society, treat our veterans.

This issue was highlighted for me many years ago.  During a court proceeding in which fraudulent behavior of the witness was being discussed, the witness brought up his past military service, perhaps as a way to seek leniency from the court.

To my surprise, rather than dismiss the comment as outright pandering to the court, the judge took a few minutes to express appreciation to the witness for his service and to note that the judicial system should be sensitive to the needs of veterans.

The court didn’t rule in favor of the witness but I was still struck by the judge’s sensitivity.  It was a learning moment for me that all of us involved in the legal system ought to treat veterans in a similar way — with, at a minimum, recognition for their service and respect.  It didn’t matter at that time whether the veteran was honorably discharged or not; it was their service that mattered.

It is with that background in mind that employers should consider the new guidance from the Commission on Human Rights and Opportunities (CHRO) entitled “Guide to the Nondiscrimination in Hiring and Employing Connecticut Veterans”.

In it, the CHRO reminds us that employment discrimination on the basis of “status as a veteran” became illegal effective October 1, 2017.

And what is a “veteran”? Anyone who served? Actually no.

According to the statute, “veteran” means “any person honorably discharged from, or released under honorable conditions from active service in, the armed forces.”

Thus, by its own terms, employers cannot discriminate against veterans who received an “honorable discharge” or a discharge “under honorable conditions”.

But the CHRO guidance addresses whether employers can make hiring decisions regarding veterans who have received discharges under the three other primary designations:  “other-than-honorable discharge, bad conduct discharge, and dishonorable discharge.”

The CHRO calls these designations (along with the discharge under honorable conditions) as “less-than-honorable” or “bad paper” discharges.

The CHRO’s guidance suggests that discrimination against someone who received these “bad paper” discharges might also violate the law because of their “disparate impact on veterans of color, LGBT veterans, and veterans with disabilities”.

Thus, the CHRO opines, “reliance on discharge status” may still violate Connecticut’s anti-discrimination laws.

What’s the proposed solution from the CHRO? Several suggestions are offered:

  • “Provide individualized consideration to veterans with less-than-honorable discharges. This means you should consider the nature of the discharge (i.e. why the veteran was discharged—was it for a minor infraction or because of behaviors related to a mental health condition?), the time elapsed since the discharge, the nature of the positions sought and how the discharge is in any way related to the position the veteran is applying for.
  • Second, you should provide the veteran-applicant the opportunity to present her case for why the discharge should not be factored into your hiring decision. You might also consider the presence of mitigating circumstances like PTSD if the veteran discloses them to you.
  • Additionally, for those service members who were discharged due to conduct arising from a disability like PTSD, you have an independent obligation under both state and federal law to provide “reasonable accommodations” such as making the physical work environment accessible or providing a flexible work schedule.
  • Finally, if you contract with a consumer reporting agency such as HireRight or TransUnion to conduct background checks and your background check results in the discovery of information about an individual’s discharge status, you are required under the Fair Credit Reporting Act to provide notice to the veteran applicant prior to taking any adverse action….”

Employer Takeaways

The CHRO’s guidance here is reminiscent of guidance issued by the EEOC in the early 2010s regarding the use of criminal background checks and the potential for a racial disparate impact.

At the time, some argued that the agency overstepped its authority because there was nothing that outright prohibited the use of such checks under the law and the reach to “disparate impact” was a step too far.

One could make a similar argument here that the CHRO’s suggestion that discrimination against veterans of all types of discharges might also be covered — after a new law that was passed that prohibited discrimination against only those veterans those who received honorable discharges — might be deemed to be overreach.  The legislature only sought fit to protect veterans with honorable discharges; why can’t employers consider those with “bad paper” discharges as a factor in their hiring decisions?

I’ll leave that for the policy-makers to debate.

For employers, the takeaway should be that the CHRO will be looking at discrimination against veterans who received so-called “bad paper” discharges more closely.  While the law may not outright prohibit it, the CHRO will be looking at whether the employer’s decisions might have a disparate impact on a protected class.

And for employers, making individualized determinations on an applicant based on the applicant’s overall fit and qualifications for the position isn’t a bad practice anyways.

 

 

As I noted earlier this week, the U.S. Supreme Court has approved of the use of class action waivers in arbitration agreements with employees.

My colleague, Gabe Jiran, has a recap of Epic Systems v. Lewis on my firm’s blog, Employment Law Letter, that you can access here.

So, it’s a foregone conclusion that employers of all shapes and sizes will start using arbitration agreements and insert provisions with class action waivers, right?

Not so fast.

As Jon Hyman astutely noted in his Ohio Employer’s Law Blog yesterday, this decision may not be the panacea employers are looking for.

For example, it might end up being more costly for employers because arbitration may be more costly than litigation.

Moreover, these costs only increase if you are arbitrating dozens, or hundreds, or thousands, of individual claims instead of one class or collective action. Don’t think for a second that this decision will end wage and hour litigation. Instead, plaintiffs’ lawyers, who currently have claimants opt-in to FLSA collective actions, will instead merely file a plethora of individual arbitration claims.

It’s a valid point but I’m not sure I buy into this entirely.  Arbitration may be cheaper in many instances.

Moreover, part of the attraction that some lawyers have to wage/hour class actions are the attorneys’ fees that can get added on to the case automatically.  Filing a lot of individual arbitration cases may be good in theory, but in practice? That’s still a lot of work for a plaintiff’s-side attorney to follow.  While some enterprising attorneys will continue, we may see a thinning in the practice area as a result.

That said, I could certainly see unions encouraging this type of action at some workplaces — the death by 1000 paper cuts is something to keep in mind.

Employers may also be wary of entering into arbitration agreements with class action waivers because of the public backlash against forced arbitration, particularly  in sexual harassment matters.

This is not new — indeed, there was a Law Tribune editorial in 2014 before #metoo was well-known that suggested legislative reforms in the area.

Employers that are seen as enforcing “coercive” arbitration provisions may face a social media or publicity campaign. Each employer will have to figure out its risk tolerance and how it wants to be seen by its employees and the public before implementing arbitration agreements.

Moreover, in states like California, there are statutes that allow for an employee to sue over workplace violations individually as well as on behalf of others, allowing for “representative suits”, similar to class actions.  These “Private Attorneys General Act” cases may become the norm in California.

Could Connecticut follow?

These are just a few of the considerations that employers ought to be thinking about in light of the Epic Systems decision.  The decision certainly provides employers with another tool in managing their workforce. The question on the table now is whether that tool is useful or not.

In an important 5-4 decision, the U.S. Supreme Court this morning held, for the first time, that class or collective action waivers, particularly in wage/hour cases, and contained in arbitration agreements between employers and employees are valid and enforceable.

Because wage and hour class and collective actions are quite costly for employers to defend against, this decision should cause employers in Connecticut (and nationwide) to re-evaluate their employment relationships with employees and consider enacting wide-ranging arbitration agreements that include class-action and collective action waivers.

The decision in Epic Systems Corp. v. Lewis (download here) was just released at 10 a.m. this morning, so I’ll have more in an upcoming post after I’ve had time to digest it, but here’s the summary from the Supreme Court itself:

In each of these cases, an employer and employee entered into a contract providing for individualized arbitration proceedings to resolve employment disputes between the parties. Each employee nonetheless sought to litigate Fair Labor Standards Act and related state law claims through class or collective actions in federal court. Although the Federal Arbitration Act generally requires courts to enforce arbitration agreements as written, the employees argued that its “saving clause” removes this obligation if an arbitration agreement violates some other federal law and that, by requiring individualized proceedings, the agreements here violated the National Labor Relations Act. The employers countered that the Arbitration Act protects agreements requiring arbitration from judicial interference and that neither the saving clause nor the NLRA demands a different conclusion.

Until recently, courts as well as the National Labor Relations Board’s general counsel agreed that such arbitration agreements are enforceable. In 2012, however, the Board ruled that the NLRA effectively nullifies the Arbitration Act in cases like these, and since then other courts have either agreed with or deferred to the Board’s position.

Held: Congress has instructed in the Arbitration Act that arbitration agreements providing for individualized proceedings must be enforced, and neither the Arbitration Act’s saving clause nor the NLRA suggests otherwise.

In doing so, the court relies on two main arguments. First, the Federal Arbitration Act compels this and notes that the Concepcion decision from a few years back foretold this (which I previously previewed in a prior post).  Second, the National Labor Relations Act doesn’t compel a different result.

Justice Gorsuch writes the majority opinion here and concludes: “The policy may be debatable but the law is clear: Congress
has instructed that arbitration agreements like those before us must be enforced as written. ” He criticizes the dissent for its language suggesting a retreat from modern day labor laws:

In the dissent’s view, today’s decision ushers us back to the  Lochner era when this Court regularly overrode legislative policy judgments. The dissent even suggests we have resurrected the long-dead “yellow dog” contract. … But like most apocalyptic warnings, this one proves a false alarm. … Our decision does nothing to override Congress’s policy judgments.

Justice Ginsburg writes the dissent and concludes:

If these untoward consequences stemmed from legislative choices, I would be obliged to accede to them. But the edict that employees with wage and hours claims may seek relief only one-by-one does not come from Congress. It is the result of take-it-or-leave-it labor contracts harking back to the type called “yellow dog,” and of the readiness of this Court to enforce those unbargained-for agreements. The FAA demands no such suppression of the right of workers to take concerted action for their “mutual aid or protection.”

It’s an “Epic” day at the Supreme Court.   Will this have the same effect for state law claims? How should employers implement these changes? When? For all employees?

Lots of questions but today, at least, the Supreme Court answered one of the biggest employment law questions out there.