GA2Yesterday, the Connecticut House of Representatives voted to pass legislation that would promote pay equity among men and women. However, the bill lacks a key provision that would have barred prospective employers from inquiring into an applicant’s salary history.

The CT Mirror and Hartford Business Journal do a good job reporting on the developments. The bill would:

  • “Ban employers from using a worker’s previously earned wages as a defense against a charge of pay inequity;
  • Protect employees from losing seniority based on time spent on maternity or other family or medical leave;
  • Strengthen the requirement that employers provide “comparable” pay for workers performing similar duties;
  • Clarify the state Commission on Human Rights and Opportunities’ ability to investigate complaints of discrimination when wages are involved.”

The Senate remains split along party lines, but the changes made to the bill make passage much more likely now.

The bill, House Bill 5591, can be downloaded here.

It’s unclear how much of an impact the bill will have. For example, the bill changes Conn. Gen. Stat. 31-75 that bars discrimination for work performed under “comparable” working conditions. Previously, the standard was “similar”.

But even the Office of Legislative Research was skeptical about this change noting “It is unclear whether this change has any legal effect.” After all, one definition of comparable is “(of a person or thing) able to be likened to another; similar”.

Moreover, many employers do not base pay on a “seniority system” but instead focus on merit instead. Thus, any changes to the statute on the “seniority system” will have minimal impact.

In any event, before employers act, it’s wise to wait to see what happens in the Senate. Any changes to the law would be effective October 1, 2017.  

 

 

As I continue to reflect this week on nine years of blogging, it’s hard to recall that I started this before the Great Recession hit.  Since that time, all businesses have become more cost-conscious and creative in how they are structured and how they compensate their employees.  Non-profit organizations are no exception to that.  But how can these workplaces continue to “do good” while rewarding their employees?

Today, I’m pleased to share this post from Marc Kroll, Managing Partner at Comp360 LLC.  Marc talks total about how non-profits can implement a “Total Rewards” strategy and earn a return on their investment. 

And what is “Total Rewards”? As the Houston Chronicle described it in a recent article: “Formerly referred to as simply compensation and benefits, total rewards takes on a more creative and broad definition of the ways employees receive compensation, benefits, perks and other valuable options. Total rewards include everything the employee perceives to be of value resulting from the employment relationship.”

Having a well-thought out compensation system is a key component to reducing liability and, hopefully, ensuring happy, productive employees.  If you’re looking for ways to avoid dealing with employment lawyers on issues, getting ahead of issues like this is a natural step in the right direction.  My thanks to Marc for his insights.  

Kroll_MarcAs a result of the slow growth economy, non-profit organizations are facing decreased funding due to federal and states’ fiscal deficits as well as a significant shift with grant-makers who are increasingly funding awards on a performance/return on investment basis.  In addition, the soaring costs of healthcare insurance are adding significant pressure to operating costs.

Without new revenue growth, many non-profits are looking for ways to measure and increase the value/return on their social mission and investments.

Consistent with these changes, some non-profits are responding by trying to increase the “return” on their services and programs in terms of program execution, utilization, and measurable results.  Given this environment, non-profits are being forced to examine the viability of their highest cost centers, most particularly, employee compensation and benefits for value against performance as well as market competitiveness.

Non-profit Boards and senior management are questioning what the appropriate compensation and benefit programs should be, at what levels they should be funded, and how to drive accountability and performance in the employee workforce.

While non-profit organizations have predominantly been about social service and charity with their cultures reflecting a “do-good” environment and a concern for employee welfare, present conditions have forced many to consider a culture shift toward performance and accountability as well as changes in their Total Rewards programs.  This delicate balancing act between affordability and the ability to attract and retain a stable and talented workforce presents challenges in nonprofits’ capacity to assure effective organizational culture, management practices, labor market relevance, and strategic/operational priorities.

To help navigate this challenge, the following insights to six key questions provide a prescription for change in Total Rewards:

  1. What should your Total Rewards strategy be?

This is a statement developed by your Board or management committee on how the organization’s compensation and benefits programs will support and relate to your operational objectives, culture, management practices, and employee performance.  It also describes both the labor market within which the organization wishes to compete and the level at which both compensation and benefit programs will be set and funded.

Continue Reading Guest Post: Getting The Most Out of Employees At Non-Profit Organizations – A “Total Rewards” Strategy

Having this blog for nearly eight years, it’s fair to say that I’ve covered quite a few topics. But every once in a while, a never-before-discussed issue makes it way to the forefront. Today is one of those days.

My colleague, Gary Starr, has a post today about a recent Connecticut Appellate Court decision (CHRO v. Echo Hose Ambulance) that analyzed whether a volunteer could be an “employee” under the state’s anti-discrimination laws and how courts are to make that determination. For additional background, the Connecticut Law Tribune has this article. starr

Volunteers are essential in supporting some public services and supplementing the work force of many not-for-profit organizations. But suppose a volunteer has a complaint about how he or she is being treated.

Perhaps that person even believes that he or she is being harassed.

When a volunteer believes he/she has been mistreated,  is he/she protected by the Connecticut Fair Employment Practices Act (FEPA), even though the volunteer is not “employed”?

What other avenues does the person have except to stop volunteering?

Or, put another way, when that person is carrying out important functions related to the mission of the agency and acting under the direct supervision of the leadership of the agency, can claims of discrimination be brought to and be resolved by the CHRO?

A recent appellate court decision, in a case of first-impression in Connecticut, better defined how a person can make a claim that he or she was an “employee”.

In doing so, the court first held that it does not matter whether the agency controls or directs the volunteer’s services or defines the methods or means by which the services are provided.  What matters instead is whether and how the volunteer is remunerated.

Does the volunteer receive job-related benefits and, if so, how great are such benefits?  This means that the volunteer must allege and prove that he/she receives benefits far greater than a thank you commendation and a party celebrating his/her service.

The volunteer must establish that he or she receives such benefits as health insurance, vacation and sick pay, eligibility for a disability pension, group life insurance or other significant remuneration, which are the type of benefits employees are provided. The court said it is not enough to be given training, a uniform, equipment for carrying out an assignment, or even a modest payment.

Simply put, volunteers are volunteers and not employees, unless and until the “employer” provides significant benefits which will make the volunteer look like an employee and therefore will need to be treated like an employee.

When an organization starts providing tangible compensation or benefits to its volunteers in meaningful ways, the person who was willing to help out from “the goodness of her heart” may be transformed into an “employee” under state law and then has an avenue for objecting to discriminatory treatment.

For employers and organizations, the decision provides a notable reminder to review the status of your volunteers to ensure that you haven’t transformed any of them into “employees”.

My colleague, Chris Engler, is back today with post getting into the ins and outs of the willful misconduct standard at the Connecticut Department of Labor. Last week, we had a senior CTDOL official speak to our Labor & Employment seminar about this and other pressing topics of interest to employers. 

The bottom line: When you fire an employee, the employee is probably going to get unemployment compensation unless you can show “wilful misconduct”.  Here’s how:

You have caught an employee red-handed engaged in some misconduct.  Or perhaps the employee has violated some rule on numerous occasions or in a particularly problematic manner.  Either way, you investigate and decide to fire the employee. 

Barring some sort of lawsuit for wrongful discharge, your ties with the employee are cut, right?

Wrong.  You might still be on the hook for unemployment benefits.

Employers often assume that having a good reason for firing someone is enough to ensure that the employee doesn’t receive benefits. 

But the law requires something more than just a good reason.  (Dan discussed an example of this last year.)

The standard is “wilful misconduct.”  (Yes, the regulations use “wilful” with only two Ls.) 

This term has three subspecies: (1) deliberate misconduct in wilful disregard of the employer’s interest, (2) a single knowing violation of a reasonable and uniformly enforced rule or policy, and (3) absenteeism without good cause. 

Of course, each of these subspecies has detailed definitions, but the terms are already fairly self-explanatory.

Although these terms might seem very legalistic, the Unemployment Board of Review (which reviews decisions of unemployment eligibility) employs a fairly fact-specific analysis.

In tomorrow’s post, we’ll look at five cases and see if we can draw any lessons from each.

Back from a long holiday weekend, my colleague Chris Parkin this morning takes a look at a new Connecticut Appellate Court case about employee compensation.  

A new case that will be officially released tomorrow reminds employers to take care with their words and promises when it comes to employee compensation.

The facts of the case are fairly straightforward:

A 20-year employee for a major financial firm had been rewarded handsomely with generous six-figure bonuses that typically exceeded his annual base pay.  The financial crisis hit the employer hard.  Bonuses paid in early 2008 were down appreciably compared to prior years.  By 2009, the employer had been infused with cash from the United Kingdom government to maintain stability.

The tenuous financial position caused the employer to alter its bonus system.  In January 2009, bonus eligible employees were advised that they would be subject to a “deferral program.”  This program called for the bonuses to be paid as bonds with vesting dates over a three year period.  The full amount of the bond would only be owed if the employee was still employed by the employer at the end of the three year term.

The employee resigned before the first vesting date and the employer determined that he forfeited his right to payment on the bonus bond. The employee sued, alleging that he was entitled to his bonus as a matter of contract.

Who wins?

The lower court said that there was no contractual obligation to pay a bonus because the employee was never guaranteed a bonus but rather was simply eligible for one in the discretion of his employer.

On appeal, the Appellate Court agreed, noting that while, “all employer-employee relationships not governed by express contracts involve some type of implied contract of employment,” there was no contractual obligation to pay a bonus here.

The Court’s analysis in Burns v. RBS Securities, Inc. (download here).  hinged on the fact that no evidence was introduced to suggest that the employee was ever guaranteed a bonus.  His supervisor testified that the employee had only been told he was “eligible” for a bonus and the employee handbook clearly conditioned the payment of any bonus on discretionary factors including the health of the company.  There was also undisputed evidence that the financial health of the employer was “abysmal” at the time.

The one argument available to the employee was that he was entitled to the bonus because an implied obligation arose over the course of years of generous annual bonus payments.  The court flatly rejected this argument noting that “the mere practice or custom of an employer does not, by itself, create a contractual obligation.”

This decision is, of course, good news for employers who are careful not to make promises about bonus payments.  Managers should be trained not to make any promises about bonuses unless there is absolute certainty that the company will make such payments.  Handbooks should similarly be drafted to prevent the creation of an implied contract to pay a bonus.

The Appellate Court underscored this advice by distinguishing another matter, Ziotas v. Reardon Law Firm, P.C. (which was covered here back in 2010).  In Ziotas, the court said the employer was obligated to pay a bonus because it made a verbal promise that “this has been a very successful year for the firm, and for you, and… you’re going to get a bonus that fairly reflects that.”

It may not sound like much, but the difference between, “you’re getting a bonus” and “you’re eligible for a bonus” could be costly.

So, remember back in February where I noted that employers ought to “consider having an attorney review some of your [employment] agreements … [because sometimes,] poor drafting can sometimes be avoided by having an attorney involved”?

We have another appellate court case that emphasizes that point quiet well in Stratford v. Winterbottom.

The case involves a town and one of its employees.  The town gave the employee an employment agreement that stated:

Based upon the annual performance evaluation, and at the [m]ayor’s sole discretion and recommendation, the base salary may be increased on July 1 of each fiscal year, subject to the approval of the [council], which by Charter fixes the salaries of all mayoral appointees.

The issue? The town reduced the employee’s salary.  The question for the Appellate Court was whether the town had permission to do so.

No way, says the Appellate Court.  By including increases but not mentioning decreases, the employer is reading too much into the agreement; it simply does not have the power to do so.

Yes, the court acknowledged, the employee was at-will but that at-will clause was never used by the employer and the employee never consented to the change in salary.

Ken Adams of Adams on Contract Drafting, did a quick post about this from a contract drafting perspective last night after I mentioned it on Twitter.  I recommend the whole post, but here’s the key point:

A grant of discretion to do one thing doesn’t necessarily equal a prohibition against doing other things. If a mother tells her son that he may play video games, it wouldn’t necessarily follow that she’s thereby forbidding him from engaging in any alternative activity.

But the presumption that a grant of discretion doesn’t also entail prohibition comes up against what this manual refers to as “the expectation of relevance.” (Relevance is a principle of linguistics. According to The Cambridge Grammar of the English Language, at 38, “A central principle in pragmatics . . . is that the addressee of an utterance will expect it to be relevant, and will normally interpret it on that basis.”) The more specific a grant of discretion is, the more likely it is that the reader would conclude that the discretion is limited—otherwise there would be no point in being so specific. And the more likely a court would be to invoke the arbitrary principle of interpretation expressio unius est exclusio alterius—the expression of one thing implies the exclusion of others.

So, what’s an employer to do? Well, a salary clause can be written in a variety of ways. Consider that the employer may “revise” the salary at any time or “change” it. Or perhaps the employer can be more direct that it may “increase or decrease” the salary based on a variety of factors.  Some employers may choose to avoid discussing it altogether which would be an interesting question of contract interpretation then.

Whatever you choose, make sure the agreement accurately reflects what you intend.  Otherwise, you may not have the discretion to change something that thought was implied.

One day, your human resources manager comes to you.  She tells you that an employee lost his commercial driver’s license because he was caught — off the job — driving drunk.

The driver’s license is a requirement for the employee’s job.  Can you fire the employee? Under virtually all circumstances, sure.

But then the employee files for unemployment compensation.  Can he collect?

The Connecticut Supreme Court, in a decision that will be officially released next week, says yes — at least given the facts of this particular case.  The court acknowledges it might come to a different decision if the employee had been caught during a testing program mandated by the employer.

I talked about the case and the implications for employers with WNPR’s Jeff Cohen yesterday and he provides as good a summary as anything.

Hopefully, the legislature will fix this seeming inconsistency in the law in the next term.

 

While the blog takes a few days off, my colleague Mick Lavelle has this update on a notable Connecticut case. 
 
Accidents and injuries are unfortunately a fact of life in the workplace, especially on industrial or construction sites.  But there are rarely any personal injury lawsuits by employees against their employers. 

That is because long ago, workers compensation laws (which originated in the 19th century) created a fundamental trade-off. 

In return for a guarantee of funds provided by insurance to pay for medical bills and continuation of  earnings, employees would have no right the sue their employers in civil court.  Employees gave up the larger damages available in personal injury lawsuits in order to have immediate payment and to be protected against insolvent employers.

This trade-off is known as the exclusivity rule of workers compensation.
 
In a case in the 1990’s called Suarez v. Dickmont Plastics Corporation, the Connecticut Supreme Court held that the exclusivity rule won’t protect an employer who deliberately rigs the workplace to harm an employee, or who may as well have intended to harm an employee  because a lack safety is so egregious that an injury in inevitable.  The employer won those cases, but injured employees still occasionally attempt lawsuits to add personal injury damages to workers comp benefits.
 
The latest case to reached the Supreme Court is Motzer v. Habertli (download here), a case that will be officially released next week.  

In Motzer, an apprentice electrician helping to run some wiring though a floor stuck his finger into a hole just as another apprentice was drilling into the other end, amputating the finger tip.  The employee claimed that turning two apprentices loose with power tools and without adult supervision was  bound to result in an accident, but the Court said that a failure to train or properly supervise does not rise to the level of an intention to harm.  The lack of supervision was not the legal cause of the injury. 

So the exclusivity rule remains viable, although it does not prevent these lawsuits from being attempted from time to time. 

If you should never judge a book by its cover, you can never judge a legislative bill from its title.

After all, you would think that a bill about "Penalties for Violations of Certain Personnel Files Statutes" (H.B. 6185) would actually be a bill about those violations.

While that may have been in the original bill, a Senate amendment to that bill — which passed both chambers yesterday — makes some of the most sweeping changes we have seen in some time to the state’s laws banning employers from discriminating based solely on gender in the amount of compensation paid to employees. (The amendments’ provisions are mainly lifted from Senate Bill 362 (S.B. 362).)

This bill — which now moves on to the Governor for signing — will be effective October 1, 2009 if and when signed.

Summary of Key Provisions

The key provisions of the measure:

  • allow employees to go directly to court to file gender wage claims;
  • expand possible employer defenses against gender wage claims;
  • permit, rather than requires, a court to order awards when an employer is found to violate the law;
  • extend the period to make a claim of discrimination (the statute of limitations) from one to two years following a violation (or in some cases, three years);
  • expand the whistleblower protections to include those who testify or assist in a gender wage proceeding;
  • permit possible compensatory and punitive damages for violations of the whistleblower protections; and

The Office of Legislative Research has a thorough summary here.  Among other provisions that employers may find interesting, the bill also allows employees to ask the court for legal or equitable relief, but the labor commissioner will not have that option. The bill allows employees to seek attorney’s fees and costs (but eliminates the labor commissioner’s ability to seek such fees.) 

Of course, there is still a provision in there about violating the personnel files act. Employers who violate the provisions of that act are subject to a $300 civil penalty for each violation. 

In some ways, the bill is a codification of some of the changes that were made at a federal level under the Ledbetter Fair Pay Act. For example, under this bill, the starting of a statute of limitations period would be relaxed.  It would occur::

when a discriminatory compensation decision or practice is adopted, when an individual is subject to a discriminatory compensation decision or practice, or when an individual is affected by application of a discriminatory compensation decision or practice, and shall be deemed to be a continuing violation each time wages, benefits or other compensation is paid, resulting in whole or in part from such a decision or practice.

What Does This Mean For Employers and What Defenses Are Available?

For employers, the bill is definitely a mixed bag. On the one hand, it greatly expands the type of claim and the time for bringing a claim for employees and adds a great deal more gravitas to the state’s wage discrimination laws. On the other hand, it does provide some additional defenses for employers to use, which, in turn, allows employers to plan their business in a way that is in compliance with the law.

What are those defenses to a claim of wage discrimination? According to the bill, an employer must demonstrate that such differential in pay is made pursuant to "(1) a seniority system; (2) a merit system; (3) a system which measures earnings by quantity or quality of production; or (4) a differential system based upon a bona fide factor other than sex, such as education, training or experience."

The last category of a "bona fide factor defense" will only apply if the employer demonstrates that the factor  (A) is not based upon or derived from a sex-based differential in compensation, and (B) is job-related and consistent with business necessity.

And even then, the employee can overcome the "bona fide factor defense" if he or she can demonstrate that an alternative employment practice exists that would serve the same business purpose without producing such differential and that the employer has refused to adopt such alternative practice.

I’ll continue reviewing the bill (which was just passed in its current form last night) and will post  details on an upcoming program recapping this bill soon.

Earlier this evening, the U.S. Senate — after hours of debate on various amendments this afternoon — passed the Lilly Ledbetter Fair Pay Act of 2009 by a vote of 61-36.  Both Connecticut senators, Dodd and Lieberman, voted in favor of the measure.  You can read the full text of the bill here. 

President Obama has previously indicated that he will sign the bill; tcredit - US Senate Photo Officehe only question now is "when".  On the new White House website, it states:

Fighting for Pay Equity: Despite decades of progress, women still make only 77 cents for every dollar a man makes. Throughout their careers, President Obama and Vice President Biden have championed the right of women to receive equal pay for equal work. In the Illinois State Senate, President Obama cosponsored and voted for the Illinois Equal Pay Act, which provided 330,000 more women protection from pay discrimination. In the U.S. Senate, Obama joined a bipartisan group of Senators to introduce the Fair Pay Restoration Act, a bill to overturn the Supreme Court’s recent 5-4 decision in Ledbetter v. Goodyear Tire & Rubber Company. The bill will restore the clear intent of Congress that workers must have a reasonable time to file a pay discrimination claim after they become victims of discriminatory compensation. The President was also a cosponsor of Senator Tom Harkin’s (D-IA) Fair Pay Act, and President Obama will continue to promote paycheck equity and close the wage gap between men and women.

The details of the bill have been recounted numerous times, but there’s a good new summary up by the Senate that is available here. 

There is one aspect, though, that hasn’t received much press so far and that is the effective date of the Act. Section 6 indicates that it is effective retroactively to Mary 28, 2007 (the day before the U.S. Supreme Court decided the Ledbetter case) and would apply to all compensation discrimination claims pending on or after that date.

An obvious question now arises: What about all of those discrimination claims that have been dismissed between now and then — what happens to those claims? And what happens to the Ledbetter claim itself? 

The answer to those questions will be the subject of a future post. For now, however, employers in Connecticut and nationwide should brush up on their compensation policies and procedures. And for human resources managers — your life just got a lot more…interesting.