Employers who want to (or need to) use independent contractors often scratch their heads at a disconnect – how do you determine who is an independent contractor?  I recall at one speaking engagement years ago, an employer who came up to me and asked: “So are you saying that there are TWO tests to determining if someone is an independent contractor?”

Yes, that’s exactly what I was saying.

The Connecticut Department of Labor and the Connecticut Department of Revenue Services (the state equivalent to the IRS) have each developed tests for determining if someone is an employee vs. an independent contractor.

And they are not the same.

I’ve looked at this before, but my colleagues at Shipman & Goodwin — who now host a terrific new little blog on tax law (www.cttaxalert.com) — have posted about it too — but this time from the perspective of tax lawyers. 

Worth your time.

Yesterday, I tackled the bills floating around the Senate-side of the Connecticut General Assembly,  In today’s post, let’s look at the House side to see what bills are under consideration there:

  • House Bill 5003 is the mirror-image bill of Senate Bill 1 on Paid Family & Medical Leave.  Yesterday’s post gave the highlights, which apply equally to this bill too.
  • Similarly, proposed House Bill 5004 would raise the minimum wage in the state. The details are still to be drafted, but the CBIA has been asking for the raise to $15/hour to be scheduled over multiple years.  Some version of this is very likely to happen; it’s just a matter of timing of increases from the current $10.10 rate.  $15 per hour seems to be the prevailing wisdom.
  • Proposed House Bill 5053 would create a task force to look for employment opportunities for persons recovering from substance abuse. The details are to be drafted by the Labor & Public Employees committee and the bill will be up for discussion at a public hearing on February 14, 2019.
  • Proposed House Bill 5271 would re-introduce requirements that would broaden sexual harassment prevention training for employers.  The details, again, are still lacking but at a press conference last week, several legislators reintroduced a so-called “Time’s Up Act”.  This is definitely going to be subject to negotiation and change. While the 2018 died in session, it seems likely we’ll see something coming up again later this spring.
  • Proposed House Bill 6111 would allow employers to require employees participate in a direct deposit program for paychecks.  This bill is up for a public hearing on February 14, 2019.
  • Proposed House Bill 6113 is one that I don’t think we’ve seen much before. It would prohibit asking about an applicant’s date of birth or date of graduation on employment applications to “reduce age discrimination”.   Many employers have already taken those questions off their job applications to avoid even the impression that age is a consideration in their decisions; this bill would make that more explicit.  A hearing on this bill is set for February 14, 2019 as well — looks to be a busy hearing.
  • Proposed House Bill 6913 would prohibit “certain employees” from being required to sign “unfair” non-compete agreements.  Who those employees are and what terms would be “unfair” is likely to be the subject of the public hearing on this proposed bill on February 14th as well.  Proposed House Bill 6914 would create a similar ban on non-compete agreements for employees below a certain salary threshold.
  • Proposed House Bill 6936 would take a look at deductions for union dues, seemingly in direct response to the Janus decision. The details are still TBD but this is one that still merits an eye on.
  • Proposed House Bill 7043 would dictate certain requirements for lactation rooms in the workplace.  Rooms should be private, should contain or be near a refrigerator, and include access to a power outlet.  The bill also would make employers provide “breastfeeding support” for up to three years after childbirth.  The details of this bill are still TBD and this bill will be up for discussion at the February 14th hearing.  

To be clear, these are only the list of bills coming out of the Labor & Public Employees committee.  Each year, bills from other committees (including Judiciary) also have a tendency to impact employers.  There is plenty for employers to keep an eye on this year.

The Connecticut General Assembly is already busy with a full compliment of employment law bills under consideration.  At this point, it seems likely that several will pass in one form or another and thus employers should be playing close attention to the developments.

Here are a few of the Senate ones that I’m watching (I’ll tackle the House bills in tomorrow’s post – now available here):

  • Senate Bill 1 – This is the Paid Family and Medical Leave bill that has been kicking around for a few years.  Late last week, the Labor & Public Employees Committee issued a new draft.  There are a LOT of details to this but in essence, the bill would have two major changes. First, it would create a new paid family leave insurance program that would take contributions from employees and distribute those contributions to employees who need to take paid leave — similar to a workers’ compensation program.  Second, the bill would make significant changes to the existing Connecticut Family Leave law, to broaden the law’s application to all types of employers and broaden when an employee may take the leave as well.  More to come as this bill progresses.  A hearing on the bill is scheduled for February 14, 2019.
  • Proposed Senate Bill 64 – This is a rehash of a bill that would limit so-called “captive audience” meetings.  The details are still in flux but the Labor & Public Employee committee voted to draft the bill on February 7, 2019.  I’ve discussed prior versions of the bill here, including the Attorney General’s concern that such a bill may not be legal.
  • Proposed Senate Bill 358 – This proposed bill would provide employees with time off to vote in elections.  The committee voted to draft the bill late last month but there’s no indication yet whether this would apply to all local elections (such as a town budget referendum) or just broad state elections.
  • Proposed Senate Bill 697 – This proposed bill, which is scheduled for a hearing on February 14, 2019 and is lacking details as of yet, would “place restrictions on workplace nondisclosure agreements to prohibit the silencing of victims in the workplace and to prevent sexual harassment by repeat offenders.”  This would seem to go further than the recent federal law which limited tax deductions for confidential sexual harassment settlements.
  • Proposed Senate Bill 700 – This bill would allow for electronic signatures by employees in the restaurant industry when distinguishing between service and non-service duties. This bill is also scheduled for a hearing on February 14th.  It would be a small but significant help to small employers who have trouble keeping up with the record-keeping requirements in this area.
  • Proposed Senate Bill 764 – This bill would prohibit on-call shift scheduling — something that has been under attack in prior sessions as well.  Specifically, the bill would “prohibit the employment practice of requiring an employee to call an employer prior to a scheduled shift to confirm that the employee is needed for the shift, and to require employers to give an employee at least twenty-four hours prior notice if the employee is not needed to work a scheduled shift.” The Labor & Public Employee committee voted to draft this proposal so watch for a full-fledged bill soon.
  • Proposed Senate Bill 765 – And then there’s this proposed bill scheduled for a hearing on February 14, 2019.  Right now, it states that the law would ensure all employees “receive fair and equal pay for equal work”.  What that means for employers is anyone’s guess right now.

This is about a busy a listing as you can reasonably expect to see from our part-time legislature.  It’s still early but that’s just the half of it.  I’ll tackle the House bills in my next post.

You do a blog long enough and everything comes full circle.  Back in January 2008, I took out my crystal ball and suggested that reductions in force (RIFs) and lawsuits would soon follow.

We all know what happened next. The economy crashed and discrimination claims at the EEOC peaked at their highest levels in more than 20 years.  

So here we are 11 years later.  A whole generation of HR professionals have never experienced a significant downturn.  Are we headed there again in 2019?

I’ll leave that to the economists and politicians.  Two weeks ago, the stock market was topsy-turvy. Now, we seem pre-occupied with the partial government shutdown.  And at least in Connecticut, new Governor Ned Lamont has a plan for growth, growth, growth.

But it’s worth considering whether your company is even prepared for a downturn, even if it still is many months away.

Again, we can first look to history. As I said back in 2008:

What is a reduction in force? Really, just a lawyerly way of saying “layoff”. Back in the early to mid 1990s, lots of companies went through them.  And the number of lawsuits arising from those reductions went through a major peak in 1995 or so.

But these types of lawsuits rise and fall with the economy.  When the economy is good, lawsuits go down. When it’s not so good, they go up. One reason is that when people can find another job quickly (i.e. the unemployment rate is low), then tend not to sue as much.

And even back in 2008, I noted that things might be different for employers and indeed they were.  The rise of the internet-fueled lawsuits have been a reality. Here was my prediction back then:

One more factor suggests to me that more lawsuits are on the horizon — it’s much easier for a few employees to band together than in the past. Previously, people would have to use their existing networks to find laid off employees to hear their stories (indeed, outplacement firms were a good source for employees looking to talk with other laid off workers). But now, with the rise of social networking sites, it seems only a matter of time before a group of employees will form a Facebook or MySpace page to compare experiences.  Employees from around the country can share information instantly, making it much easier to figure out if there are trends associated with the layoff that may give rise to a lawsuit.

Just as Uber or the employers in Connecticut facing class action lawsuits that one firm puts on their website have found out.

What’s an employer to do? I’ll tackle that in my next post.

January 1st is typically a time for new laws to kick in and 2019 is no exception.

For employers, the biggest change is one that I discussed way back in May with amendments to Connecticut’s Pay Equity law.

The new law prohibits employers from asking a job applicant his or her wage and salary history. But the prohibition does not apply in two situations:

  • if the prospective employee voluntarily discloses his or her wage and salary history, or;
  • to any actions taken by an employer, employment agency, or its employees or agents under a federal or state law that specifically authorizes the disclosure or verification of salary history for employment purposes.

While salary may not be inquired, the law DOES allow an employer to ask about the other elements of a prospective employee’s compensation structure (e.g., stock options), but the employer may not ask about their value.

The bill has a two year statute of limitations. 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.  (This bill amends Conn. Gen. Stat. Sec. 31-40z if you’re looking for the pinpoint legal citations.)

Note that this ban on inquiries also applies to applications or other recruiting forms too. So, if your application asks for prior salary history, it’s time to eliminate that.  Employers should inform manager and other employees who conduct interviews about this requirement as well.

 

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

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

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

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

All that is needed is to sign up here. 

The presenters this year are:

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

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

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

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

At the time, I said it would be premature.

Seven years later – what’s changed?

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

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

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

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

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

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

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

Trying to follow both state and federal wage and hour laws isn’t that hard.

But it isn’t that easy either.

Let’s say you’re a restaurant with a waitstaff.  Like most restaurants nowadays, your customers pay by credit card and you, the employer, have to pay the credit card company a percentage on each sale.

You know there are rules regarding deductions of the wages to employees. But what about tips? Can you take out the percentage of fees being charged by the credit card company on the tips?

According to the U.S. Department of Labor: Yes.

In its fact sheet, the USDOL makes it plain that such actions by an employer do not violate federal law, so long as they are limited to the fees on the tips themselves.

Where tips are charged on a credit card and the employer must pay the credit card company a percentage on each sale, the employer may pay the employee the tip, less that percentage. For example, where a credit card company charges an employer 3 percent on all sales charged to its credit service, the employer may pay the tipped employee 97 percent of the tips without violating the FLSA.

The DOL also has 2006 opinion letter bolstering its views here. Even Connecticut, in an unofficial guidance, permits the practice.

While that aspect is clear, the remaining aspects of tip pooling are still very much being debated.  According to a DOL Field Bulletin this spring, in the Conolidated Appropriations Act, 2018, the Act provided that certain other portions of DOL regulations that barred tip pooling when employers pay tipped employees at least the full FLSA minimum wage and do not claim a tip credit no long have further force or effect.

As a result, according to the DOL, “employers who pay the full FLSA minimum wage are no longer prohibited from allowing employees who are not customarily and regularly tipped—such as cooks and dishwashers—to participate in tip pools.”

And if that weren’t confusing enough, employers in Connecticut also need to comply with the Wage Order drafted by the Connecticut Department of Labor that has additional guidance on tip pooling.

Employers must continue to tread cautiously in the area of wages. Minefields continue to be ever present — and the impact of a failure to comply with the law can be costly.

 

Typically, in our court system, we operate under the “American Rule” which means that parties have to pay their own attorneys’ fees in cases, regardless of whether they win or lose.  (Contrast that with the English Rule which is a “loser pays” system.)

But there is one big exception to the American Rule — and it can be found in lots of employment law cases.   In several instances, the governing statute allows the prevailing party (or, in some instances, just the Plaintiff — read “employee”) to collect attorneys fees.

This is often seen in wage & hour claims, where an overtime claim may get dwarfed by a claim for attorneys’ fees.  One blog pointed out a few years ago in an FLSA case on “how attorney’s fees can grow to be the tail that wags the dog.”

A recent case out of the District Court of Connecticut also shows the impact in employment discrimination cases too.

The decision flows from a jury trial that awarded damages in an employment discrimination case to an individual suing a major employer.  Afterwards, both parties engaged in extensive post-trial litigation concerning attorneys’ fees, damages and more.  Ultimately, the court issued a ruling and then a final ruling after both parties asked for reconsideration.

The court awarded the Plaintiff in the discrimination claim the following:

  • Compensatory damages: $125,000
  • Punitive damages: $175,000
  • Economic damages (back pay): $ $243,711.89
  • Pre-judgment interest (on back pay): $15,665.37
  • Reinstatement

So, ultimately, the verdict is a little more than $550,000.

But the court also awarded attorneys’ fees.  And these fees far exceeded the verdict itself.

Grand total?  $973,083.50 in attorney’s fees and $30,960.24 in costs.

Such awards make employment cases unique animals in the law.  They provide extraordinary incentives to attorneys to not only take such cases, but pursue them.

For employers, the case is a difficult reminder that even when you value the case as somewhat small based on damages, the award of attorneys’ fees can add a substantial amount to what a case is worth.

 

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.