It never seems to fail; I go on vacation and the Connecticut Supreme Court issues one of the few employment law decisions it issues every year during that week.

Fortunately for all of us, it concerns the fluctuating work week method of overtime computation which most employers in the state consciously either avoid or try not to understand.  (In very basic terms, the formula calculates a pay rate based on the number of hours an employee actually works in a particular weeks.)

I’ve previously discussed the “perils of trying to rely on a fluctuating work week.” As recently as 2012, I said that “while it can provide some benefit for employers, it must be done properly and must not be raised after the fact.”  And I noted way back in 2008 that employers have to jump through a variety of hoops to make sure they are compliant.

Add to this cautionary tale the latest Connecticut Supreme Court case of Williams v. General Nutrition Centers, Inc. 

The court held that overtime pay for retail employees who receive commission cannot be calculated using the federal fluctuating workweek formula.

And beyond that, the court raised two important principles.  

First, it said that Connecticut law does not prohibit the use of the fluctuating method in general. Thus, for most employers and most employees, the use of the fluctuating work week is definitely in play.

Second, and perhaps most critical here, the Court said that Connecticut Department of Labor regulations that govern overtime pay for retail employees do prohibit the use of the fluctuating method for those employees:

By setting forth its own formula for mercantile employers to use when computing overtime pay, one that requires them to divide pay by the usual hours worked to calculate the regular hourly rate, the wage [regulation] leaves no room for an alternative calculation method….The wage order’s command to use a divide by usual hours method therefore precludes use of the fluctuating method’s divide by actual hours method, except, of course, when an employee’s actual hours match his usual hours.

It should be noted as well that while the case concerned retail employees, the regulation at issue applies to all businesses in the “mercantile trade.”

For employers that rely on the fluctuating workweek method of calculating overtime in Connecticut, this case is a good reminder to revisit those practices now to make sure they comply with this new Connecticut case. Seeking the advice of your trusted counsel to look at your particular circumstances is critical given the court’s decision.

Continuing a look back at some “basics” posts you might have missed, back in 2009, I tackled an exemption that may be overlooked when it comes to employment laws.  

Connecticut has a proud history of farms. Many, like Lyman Orchards, have been passed down for many generations. (And if you’ve never visited Lyman Orchards, don’t miss out on their Corn Maze and apple orchards. I visited it recently and highly recommend stopping by.)

For many of these farms, the growing season is short, which is why some of the wage & hour rules for farms are a bit different.  Indeed, overtime rules in Connecticut specifically do not apply to “agricultural” employees.  (Conn. Gen. Stat. Sec. 31-76i(k) is the specific provision if you’re looking for it.)

But what exactly is “agriculture”?

Turns out, it’s probably much broader than you think.  In fact, you have to look elsewhere in the statutes for thatdefinition.  It is found in the very first statute, Conn. Gen. Stat. 1-1(q), which states, in part:

[T]he words “agriculture” and “farming” shall include cultivation of the soil, dairying, forestry, raising or harvesting any agricultural or horticultural commodity, including the raising, shearing, feeding, caring for, training and management of livestock, including horses, bees, poultry, fur-bearing animals and wildlife, and the raising or harvesting of oysters, clams, mussels, other molluscan shellfish or fish; the operation, management, conservation, improvement or maintenance of a farm and its buildings, tools and equipment, or salvaging timber or cleared land of brush or other debris left by a storm, as an incident to such farming operations; the production or harvesting of maple syrup or maple sugar, or any agricultural commodity, including lumber, as an incident to ordinary farming operations or the harvesting of mushrooms, the hatching of poultry, or the construction, operation or maintenance of ditches, canals, reservoirs or waterways used exclusively for farming purposes; handling, planting, drying, packing, packaging, processing, freezing, grading, storing or delivering to storage or to market, or to a carrier for transportation to market, or for direct sale any agricultural or horticultural commodity as an incident to ordinary farming operations, or, in the case of fruits and vegetables, as an incident to the preparation of such fruits or vegetables for market or for direct sale.

So, under this broad definition, everyone from horse breeders, to maple sugar houses (you know about places like the Lamothe Sugar House, right?) to those who freeze blueberries from local farms, are exempt from paying workers overtime.

Thus, whenever agriculture is implicated in your business, be sure to see if the overtime rules actually apply to your workers.

Throw out the release?
Throw out the release?

Yesterday, I had the opportunity to talk at the Connecticut Legal Conference about employment law issues. My talk focused on free speech rights in the workplace — a topic I’ve covered well in some prior posts here and here, for example.

One of the other topics of our discussion was the Cheeks v. Freeport Pancake House case — a recent case by the Second Circuit discussing wage & hour claim settlements under the Fair Labor Standards Act.

I’ve talked about this issue in prior posts as well but the general takeaway from the discussion yesterday was a renewed emphasis on receiving approval from either a federal court or the U.S. Department of Labor on any wage/hour claim settlements.

In most employment law cases filed in federal court, when a settlement is reached, the parties typically stipulate to the dismissal of the claim under a rule of civil procedure (Rule 41).

In Cheeks, the Second Circuit said that wasn’t good enough due to the unique nature of wage/hour claims and that employees were particularly susceptible to bad settlements:

We conclude that the cases discussed above, read in light of the unique policy considerations underlying the FLSA, place the FLSA within Rule 41’s “applicable federal statute” exception. Thus, Rule 41(a)(1)(A)(ii) stipulated dismissals settling FLSA claims with prejudice require the approval of the district court or the DOL to take effect. Requiring judicial or DOL approval of such settlements is consistent with what both the Supreme Court and our Court have long recognized as the FLSA’s underlying purpose: “to extend the frontiers of social progress by insuring to all our able-bodied working men and women a fair day’s pay for a fair day’s work.”

The Court pointed out settlements in other cases which might be troubling.

In [one case], the proposed settlement agreement included (1) “a battery of highly restrictive confidentiality provisions ․ in strong tension with the remedial purposes of the FLSA;” (2) an overbroad release that would “waive practically any possible claim against the defendants, including unknown claims and claims that have no relationship whatsoever to wage-and-hour issues;” and (3) a provision that would set the fee for plaintiff’s attorney at “between 40 and 43.6 percent of the total settlement payment” without adequate documentation to support such a fee award….. In [another case], the district court rejected a proposed FLSA settlement in part because it contained a pledge by plaintiff’s attorney not to “represent any person bringing similar claims against Defendants.” … “Such a provision raises the specter of defendants settling FLSA claims with plaintiffs, perhaps at a premium, in order to avoid a collective action or individual lawsuits from other employees whose rights have been similarly violated.”

Would these apply to claims that were not filed in federal court to begin with? The speakers said the decision left that open a bit but still recommended that parties seek USDOL approval or even file the suit in federal court and seek judicial approval at the same time.

While the court noted that this might be difficult, “the burdens…must be balanced against the FLSA’s primary remedial purpose: to prevent abuses by unscrupulous employers, and remedy the disparate bargaining power between employers and employees.”

Note: These same rules do not apply to settlements under the state wage/hour laws and if you’re not covered by the FLSA, there isn’t much of a need to follow that — at least until the issue is raised in state courts.

But suffice to say that if you get a claim by a current or former employee regarding, say, past overtime wages, be wary of settling the claim without receiving outside approval.

Making Lemonade Out of Lemons
Making Lemonade Out of Lemons

Are you tired of lawyers commenting already on the new overtime rules?

(The answer should be no, of course, since you’re reading this blog and thus have room for one more view.)

But I think it’s fair to say that we haven’t seen a feeding frenzy like this on employment law in many, many years.  And with the massive publicity of this rule comes an opportunity, as I’ll explain too.

So, dear readers, deep breath time.   We’ll get through it together.

There’s already been lots of pixels spilled about how employers can “solve” their overtime issues that will arise under this rule by making various changes in their workplace.

For example, employers can increase an employee’s salary to $47,476 annually if that employee otherwise meets the duties test, to keep an employee “exempt” from overtime.

Or the employer can limit the overtime that the employee can work, explaining that it is concerned with controlling costs.

But in all the analysis, I think one big thing has been overlooked: Employers can use this announcement as an opportunity to review and re-classify all sorts of employees — even if they are not directly impacted by the new rule.

Too often, employers who discover that they have misclassified employees believe that they are in a conundrum. Keep their head down and hope no one notices, or properly classify the employee and keep their fingers crossed that they don’t get sued for back pay.  Neither option is a great one for employers who need to get into compliance. (I once proposed an amnesty proposal to solve this dilemma.)   Sometimes, employers have legitimate reasons why an employee has been classified as non-exempt but wants to avoid any future issues. Perhaps in other situations the employee isn’t working overtime anyways.

But here is where the opportunity comes in: As I highlighted at the start, the new overtime rule has received unprecedented amounts of publicity in the workplace. No doubt most of your employees have now heard something about it.  So, some won’t be surprised if they are notified that things are changing for their position as a result of the new rule.

While the rule doesn’t provide amnesty for employers who make such changes, the new rule does remove some of the suspicions employees may have about the changes — even when those changes are perfectly legal.  Employees may be more understanding.  Employers can explain truthfully that the new rule has required them to review the classification of all of its employees and the changes are as a result of the rule.

So, yes, the rule may be difficult to comply with. But don’t miss out on the opportunities that may arise from this rule as well.  Full compliance with the law will be so much cheaper than paying for a massive wage-and-hour suit.  And as I’ve said before, compliance is the ultimate goal. You should not be looking for ways to circumvent the law.

So ultimately, perhaps you’ll view the new overtime rule as more about lemonade than lemons, as the saying goes.

Photo Courtesy Library of Congress c. 1943
Photo Courtesy Library of Congress c. 1943

It’s hard getting excited about joint employment.

In fact, it’s pretty yawn-inducing.  (Seriously, get a cup of coffee before reading this.)

But a few weeks back, the Department of Labor issued some new guidance on the topic that has been making the rounds of the employment law blogs.

Now, you might be asking — what is joint employment? Well, I can dispel with the notion that it has to do with medical marijuana. Rather, the DOL has described two types of relationships and how the administrative interpretation (AI) plays into it:

Horizontal joint employment exists where the employee has employment relationships with two or more employers and the employers are sufficiently associated or related with respect to the employee such that they jointly employ the employee. The analysis focuses on the relationship of the employers to each other. ….

Vertical joint employment exists where the employee has an employment relationship with one employer (typically a staffing agency, subcontractor, labor provider, or other intermediary employer) and the economic realities show that he or she is economically dependent on, and thus employed by, another entity involved in the work. This other employer, who typically contracts with the intermediary employer to receive the benefit of the employee’s labor, would be the potential joint employer. Where there is potential vertical joint employment, the analysis focuses on the economic realities of the working relationship between the employee and the potential joint employer.

For the vast majority of employers, this guidance will have little impact. If you use mainly full or even part time staff, you may not have to worry about joint employer issues — you ARE the employer.

In some industries, like construction, hospitality, agriculture and janitorial work, there could be an impact.  In some instances, a larger firm could be liable if a subcontractor did not pay its employees minimum wage or unemployment benefits.  If you subcontract out a lot of work, the decision is a good reminder to review your agreements and review the tests that a court may use to rule on the issue.

Various law firms have been issuing guidance on this. One alert states:

The issuance of this AI should serve as a reminder to businesses that they need to think carefully about whether they may be viewed as joint employers over workers they do not consider to be their employees, even workers over whom they have little control. If they are likely to be considered joint employers, they need to consider whether they want to take steps to decrease this likelihood. For example, if two closely related entities concurrently make use of the services of certain employees, they may want to consider ending that approach. On the other hand, they may choose to accept the fact that they will be viewed as joint employers, identify the potential risks and liabilities that may result from joint employment, and decide in advance how they intend to minimize and allocate those risks, such as through an indemnification agreement.

Companies involved in intermediary worker engagements (e.g., staffing companies, subcontractors, and other intermediaries) will want to ensure, to the extent feasible, that they are not considered employers of each other’s employees.

I think that’s important to keep in mind.  But remember that this isn’t exactly a new issue. I’ve been talking about joint employer issues for years — it’s just that we’re seeing some more publicity about it now.

You might need a calculator
You might need a calculator

For yet another year, Connecticut’s minimum wage is on the increase.

Effective January 1, 2016, the Connecticut minimum wage will be raised to $9.60 per hour effective January 1, 2016.

Although the federal minimum wage is $7.25, Connecticut employers must pay the higher rate under state law. The updated wage and hour law poster, including the minimum wage rate for this year is available here.

This notice is required to be posted wherever covered workers are employed, and employers should make sure that the posting is up prior to January 1.

In addition, remember that the minimum wage will increase once again on January 1, 2017 to $10.10 per hour.  All of these changes were mandated as part of Public Act No. 14-1, which was passed in 2014.

Of course, the minimum wage isn’t applicable in all circumstances. In some limited areas, a sub-minimum wage can be used. And for waiters and bartenders, a still different minimum wage can be used too.

In any event, review your payroll now so whatever changes that need to be made can go into effect in a few weeks.

bbolSo, you remember February 2009, right?

We were all aflutter over Liam Neeson in Taken (ok, I still haven’t seen it).  And we were listening to “My Life Would Suck Without You” by Kelly Clarkson (still a good song.)

And I had a Blackberry Bold and loved it. (I know; even lawyers can plead temporary insanity).

How do I remember this? Because I wrote about my mobile device back then.  (We called these devices “PDA”s.) 

Now you might be asking the next question: Why? Because I suggested that employers needed to get on top of the issue of employees using these devices outside the office.

At that time I said: “questions have been raised about the use of these devices by non-exempt employees — in other words, those employees who are eligible to receive overtime. If these employees are reviewing their messages outside of work, do they need to be compensated for that time?”

But enough people still hadn’t gotten the message, so I repeated that cautionary tale in 2012.  I even talked about best practices.

Now, over six years later, Blackberrys have almost disappeared (and the new iPhones are getting announced next month, right Siri?) but the issue of mobile device usage by non-exempt employees has not.

In fact, earlier this month, the U.S. Department of Labor indicated that it will seek public comment as to the after-hours usage of mobile devices by employees and its impact on wage & hour enforcement laws.

The Pennsylvania Labor & Employment Law Blog has a good recap here, but the essence of what the post says is similar to what I also said six years ago:

Determine whether and to what extent the operational benefits offered by giving off-hours access to work e-mail and telephone systems by non-exempt employees exceed the potential costs of class-based claims for unpaid overtime….[And h]ave in place a policy for non-exempt employees that addresses working remotely and outside of normal work hours.

I expect you will continue to hear a lot more about this as this becomes a priority for the USDOL.

Just don’t say I didn’t warn you.  It’s been an issue many years in the making.

capitolWe’re nearly at the end of the legislative session and the bills are coming fast and furious.

Late Friday, the General Assembly passed a bill (Senate Bill 914) that mandates (rather than allows) double damages to be granted in instances where an employer failed to pay an employee the proper minimum wage or overtime pay.

Courts will still have discretion to determine what may be “allowed” for costs and “reasonable attorney’s fees.”

The bill creates one exception: Under the bill, the double-damage requirement does not apply to employers who establish a good-faith belief that their underpayments were legal. Such employers must, however, pay full damages, plus court costs and attorney’s fees, as those fees are determined by the court.

The bill, if signed by the governor (which is expected), will go into effect October 1, 2015.

I previously discussed this bill back in March here.

As to what else is out there (as of late Sunday evening):

As I said before, the notion that this might be a quiet year for employment law legislation at the Connecticut General Assembly has long since left the train station.

Indeed, we’ve appear to be swinging completely in the opposite direction. Anything and everything appears up discussion and possible passage this year — including items that really stood no chance in prior years.

GA2I’ll leave it for the political pundits to analyze the why and the politics of it all. But for employers, some of these proposals are going to be very challenging, at best, if passed.

One such bill, which appeared this week on the “GO” list (meaning its ready for considering by both houses) is House Bill 6850, titled “An Act on Pay Equity and Fairness”.  Of course, you won’t find those words in the bill itself which is odd.  There is nothing about pay equity in the bill; indeed, it is much much broader than that.

It stands in contrast to, say, the Lilly Ledbetter Fair Pay Act, which tried to tackle gender discrimination in pay directly.

This bill would make it illegal for employers to do three things. If passed, no employer (no matter how big or small) could:

  • Prohibit an employee from disclosing, inquiring about or discussing the amount of his or her wages or the wages of another employee;
  • Require an employee to sign a waiver or other document that purports to deny the employee his or her right to disclose, inquire 1about or discuss the amount of his or her wages or the wages of  another employee; or
  • Discharge, discipline, discriminate against, retaliate against or otherwise penalize any employee who discloses, inquires about or discusses the amount of his or her wages or the wages of another employee.

You might be wondering: Isn’t this first bill duplicative of federal law? And the answer is yes, and then it goes beyond it.  Federal labor law (the National Labor Relations Act) already protects two or more employees discussing improving their pay as a “protected concerted activity”.  It’s been on the books for nearly 80 years. So, as noted in an NPR article:

Under a nearly 80-year-old federal labor law, employees already can talk about their salaries at work, and employers are generally prohibited from imposing “pay secrecy” policies, whether or not they do business with the federal government.

This provision goes beyond that by making it improper for an employer to prohibit an employee from even disclosing another employee’s pay.

Continue Reading “Pay Secrecy” Bill Goes Above and Beyond Other Proposals

Walter Olson, who has been blogging at Overlawyered longer than just about anyone, has a very notable story about the Obama administration’s efforts to expand wage & hour law and intensify its enforcement.

In so doing, the U.S. Department of Labor has invoked a little known provision under the Fair Labor Standards Act called a “hot goods” order, “which freezes the physical output of an employer that it suspects of having violated wage & hour law.”

Walter tracks an Oregon case in which the Labor Department labeled an estimated $5 million worth of fresh blueberries as forbidden to enter the commerce stream.  The growers were offered a deal: “fork over a demanded cash settlement [and] this is the kicker — agree not to appeal.”  Given that blueberries are a perishable crop, the growers took the deal and agreed to pay $240,000.

But a federal court threw out that settlement ruling that the government had overstepped its power.   And last month, the government dropped the case against the growers.

The Department of Labor has released its own fact sheet though on the subject, as of October 2014.   In doing so, it has put employers on notice that this is still in play.

While this provision isn’t likely to be used often against employers, it’s worth reading Walter’s post about it.