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.

You’ve agonized over firing an employee.  You hired her over a year ago and it just isn’t working out.  The employee is kind, conscientious and punctual, but just doesn’t have the skills needed for the particular position.

But you’ve made up your mind. You’re firing her at a meeting this afternoon.

In that meeting, the employee stops you part way to say that she too has been thinking the job hasn’t been a good fit and asks if she can resign instead.

Can you still accept the employee’s resignation?

It may seem obvious, but I’ve had more than a few discussions with employers who are caught offguard with such a request.  (In some other circumstances, the employer may ask if they can allow the employee to resign in lieu of termination. Gets to the same point.)

The answer is yes, you can allow the employee to resign. Even if you originally were firing them.

There’s no law that requires employers to stick with a decision that they are having second thoughts. You can withdraw a termination, you can change the termination to a resignation. It’s really up to you and the employee.

But here’s a related question. Can the employee still collect unemployment benefits if they “resign”?

Again, the answer is yes.  Mostly.

As the Department of Labor notes, the “general  rule  is  that  a  person who  voluntarily  leaves  suitable  work without good cause attributable to the employer is not eligible for benefits.”

But an employer who indicates that it is going to fire an employee and “allows” the employee to resign, is probably establishing the “good cause to be attributable to the employer” because it relates to the wages, hours or working conditions of the job.

There are exceptions, of course, but employers who contest unemployment of an employee that they “allowed” to resign in lieu of termination, should really be thinking long and hard about such a decision.

And, as another blog post reminds, “forcing” an employee to resign isn’t going to fly in many instances either.

Firing an employee isn’t easy. It shouldn’t be. But doing it the right way isn’t that hard either.

GA2Today is the last day of the Connecticut General Assembly regular session.  So it’s a good time to take a look at some of the bills pending or passed.  Strangely, things seem pretty quiet on the employment law front.  But after the dust settles, I’ll have another update. Here is where we stand as of early this morning (Wednesday).

  • Last night, the Senate approved of the measure (House Bill 6668) expanding protections in the workplace for workers who are pregnant.  It was previously passed by the House.   I’ve covered the bill in depth before but it now goes on to the Governor for his signature.  The bill, if signed, would become effective October 1, 2017.
  • The House also passed a measure last night (H.B. 6907) that exempts certain professional drivers from coverage under the state’s unemployment law.. The exemption applies to drivers under a contract with another party if the driver meets certain conditions. The measure moves to the Senate but given the backlog of bills today, final passage is definitely unclear.
  • The Senate last night passed a measure (H.B. 7132) that streamlines procedures for filing workers compensation claims.  Currently, the law generally requires private-sector employees seeking workers’ compensation benefits to submit a written notice of claim for compensation to either a workers’ compensation commissioner or their employer’s last known residence or place of business. This bill requires private-sector employees who mail the notice to their employer to do so by certified mail. It also allows employers, except the state and municipalities, to post a copy of where employees must send the notice (presumably a specific address). The posting must be in a workplace location where other labor law posters required by the labor department are prominently displayed.  Under the bill, employers who opt to post such an address must also forward it to the Workers’ Compensation Commission, which must post the address on its website. Employers are responsible for verifying that the information posted at the workplace location is consistent with the information posted on the commission’s website.By law, within 28 days after receiving an employee’s written notice of claim, an employer must either (1) file a notice contesting liability with the compensation commissioner or (2) begin paying workers’ compensation benefits to the injured employee (and retain the ability to contest the claim for up to a year). Employers who do neither of these within 28 days of receiving the notice are conclusively presumed to have accepted the claim’s compensability. Under the bill, if an employer posts an address where employees must send a notice of claim, the countdown to the 28-day deadline begins on the date that the employer receives the notice at the posted address.The bill now moves to the Governor for his review and approval.
  • The General Assembly is also continuing to review a possible Paid Family and Medical Leave insurance scheme.  This bill (S.B. 1) is definitely one to watch over the next day and over any special session as well.
  • Senate Bill 929 would expand whistleblower protections under 31-51m. It has passed the Senate and is awaiting a vote in the House.  Existing law prohibits employers from discharging, disciplining, or otherwise penalizing an employee for certain whistleblowing activities, including reporting suspected illegal conduct to a public body.  This bill additionally prohibits employers from taking such actions against an employee for objecting or refusing to participate in an activity that the employee reasonably believes is illegal. Specifically, it applies to such beliefs about violations or suspected violations of state or federal laws or regulations, municipal ordinances or regulations, or court orders. The bill also (1) extends the time an employee has to file such a lawsuit and (2) adds to the possible remedies available to employees, including punitive damages in certain circumstances.

That seems to be it so far. A lot can change though today and employers should continue to be mindful of the shifting landscape. Even bills that appear “mostly dead” sometimes come back to life at the end — and particularly in special session as well. So stay tuned.

justiceI’m back with news of a relatively big decision today from the Connecticut Supreme Court.

In the decision, the Court clarified an important question that the Connecticut Department of Labor had been pushing hard.  It will be welcome news for businesses in the state.

The issue was this: If an independent contractor (and his or her business) works ONLY with one company, can that person still be an independent contractor?

The Court said yes, that person CAN be. But it is important to note that it does not mean that the person will ALWAYS be an independent contractor. Instead, the court will continue to apply the ABC test — balancing several factors. (I’ve discussed the test in a prior post here.)

The case, Southwest Appraisal Group v. Administrator, Unemployment Compensation Act can be downloaded here.  Note that it will not be “officially released” until March 21, 2017.

The only issue in the case was whether the putative employee was “customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.”

How to make that determination? By looking at the “totality of the circumstances” which also include another series of tests.

Here, the court at least is helpful in setting up what those factors are.   According to the Court, “factors to consider in evaluating the totality of the circumstances under part
C include:

  1. the existence of state licensure or specialized skills;
  2. whether the putative employee holds himself or herself out as an independent business through the existence of business cards, printed invoices, or advertising;
  3. the existence of a place of business separate from that of the putative employer;
  4. the putative employee’s capital investment in the independent business, such as vehicles and equipment;
  5. whether the putative employee manages risk byandling his or her own liability insurance;
  6. whether services are performed under the individual’s own name as opposed to the putative employer;
  7. whether the putative employee employs or subcontracts others;
  8. whether the putative employee has a saleable business or going concern with the existence of an established clientele;
  9. whether the individual performs services for more than one entity;
  10. and whether the performance of services affects the goodwill of the putative employee rather than the employer.

The court does add some additional guidance here noting that, “We emphasize that particular caution is necessary in considering the relative size or success of the putative employee’s otherwise independent business in connection with the totality of the circumstances analysis under part C.”

This is a big decision for employers who also use independent contractors.  Businesses should again review their relationships with these independent contractors to try to satisfy as many of the factors outlined above.

Governor Malloy with current CTDOL Commissioner Sharon Palmer

You’ve no doubt heard lots about how the U.S. Department of Labor is cracking down on independent contractors.  I’ve recapped it before and my former colleague, Jonathan Orleans, has a new post regarding Uber & electricians.

But in my view, there is a larger, more important battle now being fought in Connecticut and you may not be aware of it.  I touched on it briefly in a post in July but it’s worth digging a little deeper.  Disappointingly, I have not seen anything written about this in the press (legal or mainstream).

A case recently transferred to the Connecticut Supreme Court docket threatens to cause lots of havoc to company usage of independent contractors in Connecticut. The Connecticut Department of Labor has taken an aggressive stance in the case which is leading to this big battle.

The case is Standard Oil of Connecticut v. Administrator, Unemployment Compensation Act and is awaiting oral argument.  You can download the state’s brief here and the employer’s brief here.  The employer’s reply brief is also here.

The employer (Standard Oil) argues in the case that it uses contractors (called “installers/technicians”) to install heating oil and alarm systems and repair and service heating systems at times of peak demand.  The state reclassified the installers/technicians as employees and assessed taxes and interest.  At issue is the application of the ABC Test which is used in Connecticut to determine if these people are employees or independent contractors.

As explained by the CTDOL:

The ABC Test applies three factors (A, B, and C) for determining a worker’s employment status. To be considered an “independent contractor,” an individual must meet all three of the following factors:
A. The individual must be free from direction and control (work independently) in connection with the performance of the service, both under his or her contract of hire and in fact;
B. The individual’s service must be performed either outside the usual course of business of the employer or outside all the employer’s places of business; and
C. The individual must be customarily engaged in an independently established trade, occupation, profession or business of the same nature as the service performed

In the Standard Oil case, the employer is challenging the findings on various elements of this test. One of them – Part B , the “places of business” — is potentially far-reaching, according to the briefs filed in the case.  The issue is whether the customers’ homes are “places of business”; if they are, then the consultant cannot be said to be performing services “outside” the employer’s places of business.  The employer argued that viewing customers’ homes as places of business “does nothing to further the Act’s purpose and its practical implications are damning to Connecticut industry….”

Indeed, the employer argues that “it will be impossible for [the employer]-or any Connecticut business–to ever utilize the services of an independent contractor.”

Continue Reading The Real Battle over Independent Contractors and the ABC Test In Connecticut

generalassemblyThe dust has finally settled from the close of the Connecticut General Assembly on Wednesday.  And it’s time to take a look at the last few days to see what employment law bills passed.

(I’ll tackle the changes that have been made to the CHRO in a post later today.)

As I’ve noted in prior posts (here, here and here), several employment law-related bills had already passed including: a bill regarding online privacy rights of employees (signed by Governor); a bill allowing double damages in wage/hour cases awaiting Governor’s signature); a bill protecting interns from discrimination and harassment (same); and a bill introducing labor history into school curriculum (same).

In the last days, however, a closely-watched bill that prohibits employers from enacting rules that prevent employees from sharing information about their wages, passed. It also awaits the Governor’s signature.

The bill has been amended since it was first introduced but still places additional restrictions on employers. As a result, employers should consider updating their policies and revisiting their approach to salary discussions.

As recapped by the General Assembly, the bill accomplishes the following:

This bill prohibits employers, including the state and municipalities, from taking certain steps to limit their employees’ ability to share information about their wages. Under the bill, such sharing consists of employees under the same employer (1) disclosing or discussing the amount of their own wages or other employees’ voluntarily disclosed wages or (2) asking about other employees’ wages. Specifically, the bill bans employers from (1) prohibiting their employees from such sharing; (2) requiring employees to sign a waiver or document that denies their right to such sharing; and (3) discharging, disciplining, discriminating or retaliating against, or otherwise penalizing employees for such sharing.

The bill allows employees to bring a lawsuit to redress a violation of its provisions in any court of competent jurisdiction. The suit must be brought within two years after an alleged violation. Employers can be found liable for compensatory damages, attorney’s fees and costs, punitive damages, and any legal and equitable relief the court deems just and proper.

The amendment to the bill that was passed limits an employee’s sharing of another employee’s wage information to information that (1) is about another of the employer’s employees and (2) was voluntarily disclosed by the other employee.

I’ve noted before that I think many of the provisions are duplicative of federal law and a concern that there isn’t a big public policy need to create a new cause of action here.

But it’s a bit too late for that. The Governor proposed this bill so he is very likely to sign it.  The provisions go into effect on July 1, 2015.  (Contrast that with other bills that go into effect on October 1, 2015.)

Another bill that passed in the closing days was House Bill 6707 which allows employers to fire employees for failing some off-duty drug tests without impacting their unemployment rating.  It awaits the Governor’s signature.  As recapped by the General Assembly:

This bill expands the circumstances under which a private-sector employer can discharge or suspend an employee without affecting the employer’s unemployment taxes. It creates a “non-charge” against an employer’s experience rate for employees discharged or suspended because they failed a drug or alcohol test while off duty and subsequently lost a driver’s license needed to perform the work for which they had been hired. (The law disqualifies a person from operating a commercial motor vehicle for one year if he or she is convicted of driving under the influence (DUI.)) In effect, this allows the discharged or suspended employee to collect unemployment benefits without increasing the employer’s unemployment taxes.

Several other bills failed in the final days including a low wage penalty, paid family & medical leave, a minimum work week for janitors, limits on criminal background checks and on credit reports,

Overall, it was a busy year for the legislature. For employers, the next few months should keep you busy with a review of your existing policies and procedures to ensure compliance with these new laws.

When I made predictions/wishes for 2015 at the end of last year, I offered up one on what the Connecticut General Assembly might do:

My Prediction: We’ll see a new rule or two, but with all the mandates that have been passed in the last four years, I expect there to be more bluster from politicians, but that we’ll actually see a bit less interference when all is said and done — at least for now.

There still some time left in the legislative session, but I’m getting increasingly pessimistic on this one.

generalassemblyIndeed, if anything, it seems from the bills being proposed that even more legislation is on the horizon that could take Connecticut into places no state has gone before. (Cue the Star Trek theme.)

For employers, this should be a major cause for concern. Because if you think that the amount of regulations and wage pressures that the state has been placing has been overbearing, the bills being proposed suggest that you haven’t seen anything yet.

Let’s go through some of them:

Legislation backed by labor advocates this year seeks to fine big corporations like Wal-Mart $1 per hour for each employee paid $15 per hour or less. The fiscal note estimates that about 146,710 of the 743,328 employees who work for companies with at least 500 employees would be covered under the bill. The bill would result in a revenue gain to the state of up to $152.6 million in 2016 and $305.1 million in future years.

A similar bill is up for consideration in the House, reports to the CBIA.

  • Employers have often being paying unemployment taxes that seemingly go into an abyss. Indeed, already they pay some of the highest taxes in the nation in this area.  As my colleague, Henry Zaccardi pointed out during his testimony at the legislature, reforms are needed.  But we’ve seen this before and unfortunately, it seems unlikely that such reforms will be adopted which would make the trust funds more solvent.  As he testified:

I understand the need for a safety net like a UC Trust Fund, but when it goes broke and employers are leaving the state, we need to do a better job of balancing [the methods we use to keep the safety net from breaking].

There are other bills out there too that would also push the influence of labor unions into the school curriculum as well.  Senate Bill 910 is back again, and would require schools to teach about “worker history and law, including organized labor, the collective bargaining process and existing legal protections in the workplace”.

I’ve also heard rumblings, as I’ve noted before, about a proposed bill being floated that would make substantial changes to the CHRO process.

So much for 2015 being a quiet year for employers. Will any or all of these get passed? Stay tuned. The next two months promise to be a wild ride.

In yesterday’s post, my colleague Chris Engler discussed the “wilful” misconduct standard and how it applies when your employee is otherwise eligible to receive unemployment compensation.

Today, Chris returns and has a quick quiz to review some recent cases of how this standard has been applied.

So, you think you know what the “wilful” misconduct standard is. But do you know how it is applied?

Consider a handful of cases decided by the Connecticut Unemployment Board of Review in the last few weeks, and try to guess how they came out under the standards we outlined in yesterday’s post.

Case 1: A box truck driver had signed a last-chance agreement under which he would be terminated if he failed a drug or alcohol test.  The driver, who had admitted to an opiate addiction, later tested positive for cocaine.  Because this violated the last chance agreement, he was fired.

(Decision: not disqualified, because his addiction was the basis for his misconduct.)

Case 2: A cleaner at a gym was fired for repeatedly failing to clean properly and generally being negligent in his duties.  He explained that he did his best and occasionally missed candy wrappers and spills.

(Decision: disqualified, due to his “history of loafing” and “pattern of negligence.”)

Case 3: A nursing facility employee was discharged for allowing a patient to possess cigarettes inside the facility.  The decision does not mention whether the patient ever used the cigarettes.  The facility prohibited possession of cigarettes due to the risk of fire near patients’ oxygen machines, but the employee said that the policy was not usually enforced.

(Decision: disqualified, because the employee knew of the policy and the seriousness of the risk.)

Case 4: An operator of a picker (similar to a forklift) crashed his machine twice in four months – once into another picker and once into a pole.  The employer’s policy called for discharge after two at-fault accidents.

(Decision: not disqualified, because the Board consider the employee merely negligent.)

Case 5: A restaurant server was fired after she engaged in a conversation with a customer and the restaurant’s bartender about the customer’s inability to pay a tip.  The record is not clear whether the server was argumentative with the customer.

(Decision: disqualified, because she was “recklessly indifferent to the employer’s interests.”)

As these cases indicate, it is difficult to identify a pattern or generalize about the outcome of unemployment cases.

However, because the Board of Review’s inquiries are so fact-specific, it is important that the employer properly investigate and document the facts underlying its decision to fire.

That might be the difference between a clean break and an ongoing financial obligation.

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.

One of the better programs run by the Connecticut Department of Labor that gets almost zero publicity is the “Shared Work” program.  For employers, it’s a useful tool when you’re dealing with a temporary slowdown in work.

I talked about it five (!) years ago in the midst of the recession so I’m not going to rehash it here.

But here’s what’s new:

The CTDOL just released new regulations to make the program available to more employers and released a new brochure about the program as well. As the CTDOL stated in a press release this month:

As a result of recent changes to the state’s Shared Work Program, eligibility criteria for employers qualified to participate in this unemployment insurance program has expanded and now offers companies more opportunities to take part in the program and thus avoid laying off skilled workers.

The state’s Shared Work program, administered by the Connecticut Department of Labor, can provide partial unemployment benefits to employees when a company is experiencing a temporary economic downturn and wants to avoid layoffs. The goal is to retain skilled workers so companies can quickly return to full strength when the business climate has improved.

As of July 1, employers now qualify for the program when faced with the need to reduce the hours of its permanent full-time and/or part-time workforce by 10 to 60 percent. Prior to the change, companies could only qualify if work hours were reduced between 20 and 40 percent, and eligible employees were required to be full-time workers.

According to State Labor Commissioner Sharon M. Palmer, the program now allows a company to apply if it has at least two employees affected by the change in hours worked. Prior to the July 1 change, the minimum requirement for eligibility was four employees. In addition, the Labor Department will also be able to provide a dependency allowance to those employees taking part in the program that have qualifying dependents on their unemployment insurance claim.

In other words, if you were interested in the program before but didn’t think your business qualified, you may want to look at it again.

While not widespread, the program does have the involvement of over 100 employers in the state.  For more information about the program, contact your local counsel or contact the Connecticut Department of Labor.