Human Resources (HR) Compliance

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.

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.

The holidays are here and you know what that means: New Year’s Resolutions. I recently caught up with Attorney Sarah Poriss who I’ve known for many years and realized she had an interesting perspective for employers and how to start the year off right. Sarah runs her own small firm focusing, in part, on foreclosures for individuals.  Recently, she’s been handling matters for homeowners impacted by the crumbling foundation crisis happening in eastern Connecticut.  What follows is an edited online conversation we had following my meeting with her and continues a long-running (if rarely repeated) series I’ve done conducting interviews with people outside my firm.  I hope you enjoy.

Dan: So, before we talk about crumbling foundations, you had mentioned that you’ve gotten a great appreciation for an employer’s perspective by running your own business. What have you seen?

Sarah: Now that I am an employer, I have begun to appreciate the value of a focused and efficient staff.  It can be distracting enough when something good or exciting happens in the life of one of my staff; it’s even worse when they experience something stressful or tragic.

My goal is to provide a workplace that allows time for their family and personal needs, but I can only go so far when it comes to ensuring they are not distracted by the stress of financial issues.

I’ve had staff with debts in collection, or who are working on their credit with a goal of buying their first home, or who have unexpected expenses due to illness of a parent or child or unemployment of a spouse.

Dan: With that in mind, what’s do you try to achieve?

Sarah: Whenever I’m dealing with my staff (and clients) who present with these issues – I really do try to work with the aim of providing some peace of mind so we can all get back to work (I actually feel like I’m more of a sleep specialist than a lawyer at times).

Dan: For those of us used to paying a mortgage each month, I confess it’s tough to know what to say to someone (like an employee) who is facing not being able to make their mortgage payment.  What’s some general recommendations you make to those people?

Continue Reading Five Questions With… Sarah Poriss: Crumbling Foundations and Employers

Now that Thanksgiving is in the past, it’s time to look forward to the future.

Well, not before getting a recap of everything that transpired in employment law in the last year. Or at least everything that we can fit in an hour long seminar.

The webinar that broke attendance records last year is back again on December 4, 2018 at noon ET.

This year, five employment law bloggers are presenting the “Best-Ever Year-End Employment Law Review that Five Employment Law Bloggers Have Ever Presented” webinar.  Registration is just $25 and it’s eligible for CLE/SHRM/HRCI credit.

All that is needed is to sign up here. 

The presenters this year are:

  • Robin Shea, Constangy, Brooks, Smith & Prophete
  • Kate Bischoff, tHRive Law & Consulting
  • Jon Hyman, Meyers Roman
  • Eric Meyer, FisherBroyles
  • Jeff Nowak, Franczek Radelet
  • Daniel Schwartz, Shipman & Goodwin

Among the topics that you can surely expect to hear about: #MeToo, LGBT discrimination, Data Privacy and Security, Wage & Hour issues, and FMLA.

Be sure to sign up; it promises to be the best ever. (At least until next year.)

Today, Massachusetts started retail sales of marijuana at two locations. Perhaps no location is closer to the population centers of Connecticut than Northampton — just 30 miles up the road from Enfield.  It’s the first store east of the Mississippi River.

And lest you think that this is a Massachusetts-only affair, you need only watch the news reports from today to understand that there are plenty of Connecticut residents lining up seeking to avoid the restrictions in place in the Constitution State.   And Governor-Elect Lamont has indicated he’s in favor of it. 

This is going to cause headaches and some choices for employers in Connecticut.

Small amounts of marijuana have been de-criminalized in Connecticut but recreational use and possession is still prohibited. Moreover, employers are still free to discipline employees for recreational use on the job or even off.

But Connecticut has, for several years now, permitted medical marijuana users (who have registered with the state) to have some limited job protections.  On-the-job marijuana use can still be prohibited as well as showing up under the influence.

The City of Waterbury recently announced a policy that testing positive for any amount of marijuana may subject employees to discipline.  As a news article notes, that policy is likely to be challenged in arbitration and the courts.  

So what can a private employer do when it drug tests employees in Connecticut and the results show up as “positive” for marijuana? Well, employers are going to first want to know if the employee is a medical marijuana patient, in which case further inquiries may be needed.  Otherwise, the employer may have the ability to still discipline or terminate that employee’s employment.

Beyond the “Can We Fire…” question, the newer question is going to be “Should We Fire….”

With legal sales just miles away from employers here, the line as to what should be permitted or not gets, if you permit the pun, hazier and hazier.  No doubt, some employers are going to try to draw lines in the sand and say that any drug use is not permitted — particularly if there are additional legal obligations that they need to follow. But some others may have a more permissive attitude and treat marijuana use as they do alcohol use — it’s fine so long as it doesn’t impact work and so long as it isn’t done at work.

The start of retail sales in Massachusetts is not the end of the story here; Connecticut may very well start to reconsider its own laws now that one New England state has taken the plunge. Regardless, employers should continue to talk with their counsel to navigate this ever-changing area of law.

From time to time, I take a look back at a prior post that may have particular relevance now. With Halloween knocking on our doorstep and sexual harassment claims on the rise, this post from 2010 has just as much meaning today.

For most people, Halloween is a fun and silly holiday.

Yet the holiday has a distinct place in employment law history.  Indeed, for some employers, the holiday has brought more tricks than treats.

  • In Marrero v. Goya of Puerto Rico, 304 F.3d 7 (1st Cir. 2002), a supervisor was alleged to have gone out to buy Halloween presents. Allegedly, he gave the employee “a direct penetrating look with lust,” and said: “I have a little present for you that you’re never going to forget and if you don’t do the things I tell you and order you to do I am going to fire you.”
  • In Grubka v. Department of Treasury, 858 F.2d 1570 (Fed. Cir. 1988), a supervisor appealed his demotion for engaging in alleged acts of misconduct in kissing and embracing two female employees at a Halloween party organized and staged by the employees at a hotel after hours away from their workplace and for their entertainment.  While he prevailed, i’m not quite sure its the type of activity one would put on a resume.
  • In Lester v. Natsios, 290 F. Supp. 2d 11 (D. D.C. 2003), an employee claimed racial harassment after a costume incident that is probably best left to the court’s analysis: “The …incident is best described as silly, although perhaps also somewhat offensive. It involved a supervisor who dressed up for a Halloween party in a costume as a plant, and then snipped scissors at plaintiff in a conference room.” Um, ok.
  • In Richardson v. New York State Dept. of Corr. Ser., 180 F. 3d 426(2d Cir. 1999), an employee claimed that at Halloween, a co-worker said to the plaintiff something to the effect that “all you spooks have a nice Halloween.” According to the court, the Plaintiff “perceived that the word “spooks” was used as a derogatory term for Black people, and recalled that her co-workers all turned to look at her when the remark was made.” The Court ultimately allowed some hostile work environment claims to proceed, though other references to “lynchings” probably had something to do with it too.
  • Then of course, there’s the supervisor who was alleged to have had a frank discussion of what he was going to wear for Halloween. In Caouette v. OfficeMax, Inc., 352 F. Supp. 2d 134 (D. N.H. 2005), a female cashier, alleged that the supervisor “responded to a question about his stated intention to dress as a woman for Halloween by saying that he was a hermaphrodite who menstruated and used to wear a bra.”  The court upheld his termination.

So, as your employees dress up and act silly, keep on the lookout for employees who cross the line.

As these cases show, Halloween is no excuse for harassment.

Back in 2011, I wondered aloud: Might the impact of new arbitration decisions from the U.S. Supreme Court bring about the end to big wage & hour class actions?

At the time, I said it would be premature.

Seven years later – what’s changed?

Well, as it turns out, wage & hour class actions are not dead. Indeed, based on some statistics, they’re as costly as ever.

Earlier this year, the Workplace Class Action Litigation report noted that just the top ten class action settlements totalled over $2.72 billion in 2017. I’d say the class action is still very much alive and well.

Yet there are still signs on the horizon that employers may be able to fight back a bit on these claims.

Late last month, the Ninth Circuit shot down a potential class action against Uber, on the grounds that the arbitration provision barred class actions.  

It’s a significant victory for the company and highlights a way for companies to push back against the threat of class actions.

But the company may still have another obstacle. According to The Verge, counsel for the Uber drivers, are encouraging the drivers to seek arbitration on an individual basis. Indeed, it is seeking thousands of them.  Consider it the “death by a thousand paper cuts” approach.  Will it work?

Stay tuned.  In the meantime, companies ought to still consider arbitration provisions with class action waivers as I noted earlier this year.

In the last few months, I’ve had some inquiries from employers asking about resources for layoffs.

Yawn.

Everyone remembers the layoffs of the recession, right?

Actually no, as it turns out.

In the ten years since the last great round of layoffs, there is a big group of new managers, directors, human resource personnel, lawyers etc that have joined the workforce.  And, as it turns out, they really DON’T remember the layoffs.  Unemployment is low. “Why would I need to worry about a Reduction in Force?

The stock market’s drop yesterday should remind all of us that good times aren’t always going to last.

What’s ironic about this is that back in 2008 — when the unemployment rate was skyrocketing — programs about reductions in force were just taking off and I noted the same concerns about whether employers were sufficiently aware of the issues.

History may repeat itself. Back then, I highlighted a few items that employers had to think about:

  • The WARN Act – If you’re doing a mass layoff, you need to notice affected workers in advance and provide notices to local and state officials.
  • Separation Agreements – If you want employees to sign a separation agreement (and you probably should), you need to give employees who are terminated in a layoff 45 days to consider an agreement and provide additional background information about the layoff itself.
  • Disparate Impact Analysis – With computers, checking your layoff data to ensure that it doesn’t have a disproportionate impact on protected groups (or, if it does, a legitimate business reason why it might) remains important.

Much of this remains valuable advice today.  And for employers who don’t remember this, now would be a good time to start your refresher courses.

Layoffs may not be right around the corner. But employers that are looking ahead in their business plans for 2019, would be wise to ensure that their staff are aware of the obligations that attach if the economy turns cold.