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.  

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.

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.

Three years ago, I floated the idea that perhaps an agency could come up with a modest “amnesty” program that would give employers a chance to get into compliance with FLSA laws, without facing the draconian consequences such an admission might entail.

Now, late yesterday, the United States Department of Labor announced its own pilot program doing exactly this. 

It’s being called the “PAID” program (Payroll Audit Independent Determination), and is designed to expedite “resolution of inadvertent overtime and minimum wage violations under the FLSA.”

According to a press release:

Employees will receive 100 percent of the back wages paid, without having to pay any litigation expenses, attorneys’ fees, or other costs that may be applicable to private actions.

The PAID program facilitates resolution of potential violations, without litigation, and ensures employees promptly receive the wages they are owed.  Under this program, the Wage and Hour Division will oversee resolution of the potential violations by assessing the amount of wages due and supervising their payment to employees.

The Division will not impose penalties or liquidated damages to finalize a settlement for employers who choose to participate in the PAID program and proactively work with the Division to fix and resolve their potential compensation errors.

But there will be limits.  Employers who are in litigation or currently under investigation are excluded, for example.  Moreover, it is a one-time use; employers can’t keep coming back under it.  And it will require employers to take other steps as well.

The pilot program is being run nationwide for approximately six months, after which the Department will evaluate the pilot program and consider future options.

Employers and their counsel are going to need to do a crash course to learn about its availability.  Some FAQ are available on the DOL website but there’s still more that needs to be filled in.

It’s clear, for example, that this won’t necessarily prevent a private lawsuit from flowing or from employees who might reject this and seek out their own counsel.

And for employers in Connecticut, a word of extreme caution:  There will still be the issue of STATE law violations that aren’t addressed by this program.

Indeed, when I floated this idea with a CT Department of Labor official years ago, he noted that legislation would have to be written because the CTDOL didn’t have the ability to create such a program.

I will continue to monitor this as well as my firm but if you have any interest in FLSA issues, you’ll want to contact your employment counsel to stay up to date on this very important development.

 

 

Sometimes, government is thought of as the enforcer of rules.  But sometimes, the government is also in the business of helping businesses too.

The latest example of this is an Employer Resource Guide put out a few weeks ago by the Connecticut Department of Labor. You can download it directly here.  

According to its introduction:

This employer resource guide was created to educate all employers on the wide array of programs, services, and incentives available in Connecticut. This guide will be  periodically updated, and automatically emailed to all registered employers in CTHires, ( www.cthires.com), the Department of Labor’s no cost online job bank. In addition, a link to the resource guide will be available on the Department of Labor’s website, http://www.ctdol.state.ct.us/employerresourceguide.pdf.

For some larger employers, much of the information contained here may not be news. But for others, there are programs that the government runs that may be helpful. For example, if you are struggling financially and may need to do layoffs, the Department’s Rapid Response Team can provide some assistance. There are also shared work programs, which I’ve talked about before, which allow employers to maintain some staff on reduced hours, while affording the employees the opportunity to collect unemployment compensation too.

Overall, the guide provides some very useful materials on programs that sometimes fall below the radar.  If you haven’t taken a look recently at the Department of Labor’s offerings, it’s well worth a few minutes of your time to see if there is a program that matches your company’s needs.

Last week I talked about the new state law regarding pregnancy discrimination that is going into effect on October 1, 2017.  In that post, I mentioned a new notice that was required to comply with the law.

Although there is no set form that is required to be used, the Connecticut Department of Labor has created one that is available for employers to use that will comply with the state law.  It is free to download here.  

Because the content is useful, I’m using it down below so that employers can cut and paste it into a handbook or into a notice to be given to employee upon starting work too.  One can quibble with some of the word phrasings that are used, but overall — and stating the obvious — if you use this, you’ll be in compliance according to the state.

Covered Employers

Each employer with more than 3 employees must comply with these anti-discrimination and reasonable accommodation laws related to an employee or job applicant’s pregnancy, childbirth or related conditions, including lactation.

Prohibition of Discrimination

No employer may discriminate against an employee or job applicant because of her pregnancy, childbirth or other related conditions (e.g., breastfeeding or expressing milk at work).

Prohibited discriminatory conduct includes:

  • Terminating employment because of pregnancy, childbirth or related condition
  • Denying reasonable leave of absence for disability due to pregnancy (e.g., doctor prescribed bed rest during 6-8 week recovery period after birth)*
  • Denying disability or leave benefits accrued under plans maintained by the employer
  • Failing to reinstate employee to original job or equivalent position after leave
  • Limiting, segregating or classifying the employee in a way that would deprive her of employment opportunities
  • Discriminating against her in the terms or conditions of employment

    *Note: There is no requirement that the employee be employed for a certain length of time prior to being granted job protected leave of absence under this law.

Reasonable Accommodation

An employer must provide a reasonable accommodation to an Employee or job applicant due to her pregnancy, childbirth or needing to breastfeed or express milk at work.

Reasonable accommodations include, but are not limited to:

  • Being permitted to sit while working
  • More frequent or longer breaks
  • Periodic rest
  • Assistance with manual labor
  • Job restructuring
  • Light duty assignments
  • Modified work schedules
  • Temporary transfers to less strenuous or less hazardous work
  • Time off to recover from childbirth (prescribed by a Doctor, typically 6-8 weeks)
  • Break time and appropriate facilities (not a bathroom) for expressing milk

Denial of Reasonable Accommodation

No employer may discriminate against employee or job applicant by denying a reasonable accommodation due to pregnancy.

Prohibited discriminatory conduct includes:

  • Failing to make reasonable accommodation (and is not an undue hardship)**
  • Denying job opportunities to employee or job applicant because of request for reasonable accommodation
  • Forcing employee or job applicant to accept a reasonable accommodation when she has no known limitation related to pregnancy or the accommodation is not required to perform the essential duties of job
  • Requiring employee to take a leave of absence where a reasonable accommodation could have been made instead
    ** Note: To demonstrate an undue hardship, the employer must show that the accommodation would require a significant difficulty or expense in light of its circumstances.

Prohibition of Retaliation

Employers are prohibited from retaliating against an employee because of a request for reasonable accommodation.

Notice Requirements

Employers must post and provide this notice to all existing employees by January 28,2018; to an existing employee within 10 days after she notifies the employer of her pregnancy or related conditions; and to new employees upon commencing employment.

Complaint Process

CHRO:

Any employee aggrieved by a violation of these statutes may file a complaint with the Connecticut Commission on Human Rights and Opportunities (CHRO). Complainants have 180 days from the date of the alleged act of discrimination, or from the time that you reasonably became aware of the discrimination, in which to file a complaint. It is illegal for anyone to retaliate against you for filing a complaint. CHRO main number: 860-541-3400 CHRO website: www.ct.gov/chro/site/default.asp CHRO link “How to File a Discrimination Complaint”: http://www.ct.gov/chro/taxonomy/v4_taxonomy.asp? DLN=45570&chroNav=|45570|

DOL:

Additionally, women who are denied the right to breastfeed or express milk at work, or are discriminated or retaliated against for doing so, may also file a complaint with the Connecticut Department of Labor (DOL). DOL phone number: 860-263-6791 DOL complaint form: For English: http://www.ctdol.state.ct.us/wgwkstnd/forms/DOL-80%20fillable.doc For Spanish: http://www.ctdol.state.ct.us/wgwkstnd/forms/DOL-80S%20fillable-Spa.doc

As Connecticut employers of a certain size know, Connecticut implemented Paid Sick Leave recently which affords employees up to five days off a year.   Now, federal contractors (including those in Connecticut) have another layer to deal with. As my colleague Ashley Marshall explains below, paid sick leave will now be a requirement later this year.  Thanks too to my partner Gary Starr who helped pull this together today on short notice.

marshall If we travel back in time to September 2015, President Obama signed Executive Order 13706 (EO) which established a mandate on federal contractors to give their employees up to 56 hours (7 days) of paid sick leave each year.

Today, the Secretary of Labor has issued regulations to implement President Obama’s Executive Order that established a mandate on federal contractors to give their employees up to 56 hours (7 days) of paid sick leave each year.  The regulation goes into effect on November 29, 2016.

Here are some of the highlights:

  1. The Final Rule covers new contracts and replacements for expiring contracts with the fdoctorederal government that result from solicitations on or after January 1, 2017.
  2. Employees will accrue 1 hour of paid sick leave for every 30 hours worked on or in connection with a covered federal contract.
  3. Paid sick leave is capped at 56 hours (7 days) in a year.
  4. Employees may use paid sick leave for their own illnesses or other health care needs, for the care of a loved one who is ill, for preventive health care for themselves or a loved one, for purposes resulting from being the victim of domestic violence, sexual assault, or stalking, or to assist a loved one who is such a victim.
  5. The Final Rule allows for coordination with existing paid time off policies and labor agreements
  6. Employers may require that employees using paid sick leave provide certification from a health care provider of the employee’s need for leave if they use 3 or more days of leave consecutively.

A few other tidbits:

  • Whether an employee has to work a certain number of hours  for coverage depends on whether they work “on” a covered contract or “in connection” with a covered contract.
  • Employees that work “on” a covered contract are those that are performing the specific services called for by the contract. They are covered, regardless of the number of hours worked in a year and regardless of whether they are full or part time.
  • Employees that work “in connection” with a covered contract are  those that perform work activities that are necessary to the performance of the contract, but are not directly engaged in the specific services called for in the contract.  An employee who spends less than 20% of his or her hours working “in connection” with a covered contract in a particular workweek is not covered.

As with many new benefits, employees may try to take advantage of the new regulation, particularly since no medical excuse needs to be provided until the employee is out of work 3 or more days.  Employers are going to need to be vigilant against abuse.

The Final Rule will be published in the Federal Register September 30, 2016, and will go into effect exactly 60 days after its publication. More information can be found on the U.S. Department of Labor’s website in its Fact Sheet and Overview.

starrAs I return from some time off, my colleagues, Gary Starr and Chris Engler, have dug a bit deeper into the Connecticut Supreme Court decision from last week and issued this alert which we have also sent to clients. 

A deeply divided Connecticut Supreme Court recently issued a long-awaited decision, Standard Oil v. Administrator, regarding who is an independent contractor.  The reason this is significant is that companies that utilize the services of independent contractors are not responsible for, among other taxes, unemployment compensation contributions.  The Board of Review of the Employment Security Appeals Division has long interpreted the statute liberally and in this case concluded that the first two prongs of the “ABC” test required that the workers be treated as employees.  The Connecticut Supreme Court overturned that ruling, finding that the workers were indeed independent contractors.

(For background on the cases, see my prior posts here and here.)

The ABC test requires a company seeking an exemption from the tax to meet all aspects of the statute.

  • Part A focuses on the company’s direction and control over the workers.
  • Part B looks at whether the work was performed at the company’s place of business or whether the work performed is integral to the company’s business.
  • Part C, which was not at issue in the case, is focused on whether during and after providing services to the company, the independent contractor held himself out as offering the same services to others and has continued in the business of providing the same services.

Installers/technicians performed installation and repair work on oil furnaces and security systems that were sold by Standard Oil.  Standard Oil treated them as independent contractors.

The Connecticut Supreme Court found that the installers/technicians owned their own tools and vehicles, were licensed and certified, and were not supervised at their worksites by a representative of Standard Oil.  The work of the installers/technicians was not inspected by the company, either during or after the work.  The installers/inspectors were allowed to hire their own assistants.  The installers/technicians were free to accept or reject any assignment without adverse consequences and determined when they were available to work, but once they accepted an assignment, they had to perform the work within the time frame set by the customer and the company.  The installers/technicians performed the same work as part of their own businesses.  The company provided no employee benefits.  The installers/technicians were not required to be trained by the company nor were they required to display the company’s logo on their clothing or vehicles.  They were not paid by the hour.  Each signed an independent contractor agreement.  Based on these factors the Court concluded that the company satisfied the exemption under Part A.

There was a significant dispute between the majority and dissent opinions on whether Part B was satisfied.

The focus of the dispute and the critical factor was whether the work was performed at the company’s “place of business.”  This was a matter of statutory interpretation that involved analyzing the plain words, examining the language in the context of the broader statute, and reviewing the legislative history and case law from other states.

The majority’s ultimate conclusion was that “the meaning of ‘places of business’ in the present context should not be extended to the homes in which the installers/technicians worked, unaccompanied by the [company’s] employees and without . . . supervision.”  Thus, the company satisfied the criteria for the exemption under Part B.

This decision is welcome news for companies that use independent contractors.

But while there is euphoria in the ultimate decision, it is important to realize that Part C was not at issue in the case, but may be for other companies who use independent contractors.

Additionally, the Department of Labor may seek to have the statute amended to reverse this decision and to compel companies to pay into the unemployment compensation trust fund.

For companies who use independent contractors it is critical to obtain and follow legal advice to make sure such relationships can hold up under scrutiny of the ABC test, while also recognizing that federal agencies use other criteria in determining whether the worker is an employee or independent contractor.

GavelConnecticut has pretty strict rules that employers must follow if they want to take deductions off of an employee’s salary.  Typically, an employer must seek CTDOL approval for all sorts of deductions, which I covered back in a 2012 post.

But what happens if an employer makes a mistake on a paycheck and overpays an employee. What then?

That situation is not uncommon. Most of the time, employees will note the mistake and return the money to the employer — no questions asked.

But I’ve heard of other instances where the employee cashes the check and then, say, buys a used car with the mistake.  Or the employee just says no. What then?

Well, I’ve received informal indications from the CTDOL that in those cases, the agency allows for the use of deductions to recover clerical errors.  The employer may try to work out an agreement or payment schedule to recover the money in an orderly manner.

I would add that the employer should really be sure that whatever deductions are made from future salary payments leave enough that the employer is really paying minimum wage for the week.  That should avoid any issue with a claim that minimum wage laws aren’t be followed.

In short, employees don’t get to profit from employer paycheck mistakes and employers are free to engage in a bit of self-help to recover the funds … if it’s really necessary.

Sharon Palmer, the Commissioner of the Connecticut Department of Labor, will retire at the end of this year, news that was first reported by the CT Mirror website.

According to CT Mirror:

In an interview, she described her decision to retire as driven by age and circumstance, not politics or a consequence of overseeing the Department of Labor at a difficult juncture. She laughed and added, however, “It’s tired me out, that’s for sure.”

Governor Dannel Malloy issued a press release announcing the retirement and commending the service of Commissioner Palmer:

Governor Dannel P. Malloy today announced that Connecticut Department of Labor Commissioner Sharon M. Palmer has opted to retire from the agency at the end of this year.  Commissioner Palmer began her position as the head of the department in August 2012 and was reappointed earlier this year when the Governor began his second term in office.

“I have always known Sharon to be an advocate for helping others, and have been impressed with her focus on workforce and education issues in our state, because both create good jobs and deliver a strong economy for Connecticut,” Governor Malloy said.  “Under Sharon’s tenure, many successful employment programs and services were developed and launched. I thank her for her unwavering dedication and her service.”

While Palmer’s background was as a teachers’ union president and AFL-CIO offer, her tenure at the CTDOL was marked by the lack of any major new department worker initiatives similar to those announced on a federal level. Instead, the Department has continued to focus on grants and training programs.

Indeed, while the press release says that the department “ramped up efforts to fight misclassification” of workers as independent contractors, we haven’t seen nearly the same publicity or efforts that have been attached to the United States Department of Labor activities.

Malloy said that a search for her successor begins now and presumably one will be named before Palmer’s departure.