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Labor & Employment Law Alert: Connecticut Legislature Increases Penalties for Employee Misclassification

April 27, 2010

CONNECTICUT LEGISLATURE INCREASES PENALTIES FOR EMPLOYEE MISCLASSIFICATION

As the federal and state governments continue their efforts to crack down on the misclassification of employees as independent contractors, the Connecticut legislature adopted recommendations from the State’s Joint Enforcement Commission on Employee Misclassification last week. The most significant provision of the legislation will increase the civil penalty on employers who illegally misclassify employees from a single $300 to a penalty of $300 for each day of the violation. The state has received approval for this legislation from the U.S. House of Representatives and the Senate and expects that 150 to 175 violations per year will be subject to the increased civil penalties. The Joint Enforcement Commission is also expected to unveil a new website to educate employees about misclassification and to allow employees to make anonymous complaints about misclassification.

COBRA PREMIUM SUBSIDY EXTENDED UNTIL MAY 31, 2010

President Obama recently signed the Continuing Extension Act of 2010 (H.R. 4851) (the “Act”). Provisions of the Act provide a third extension of the COBRA premium subsidy that was passed as part of the February 2009 economic stimulus bill.

The stimulus bill provided that employees who were involuntarily terminated between September 1, 2008 and December 31, 2009 would be entitled to a nine-month, 65% premium reduction subsidy for health insurance coverage under COBRA. The subsidy was extended by the 2010 Department of Defense Appropriations Act to cover involuntary terminations through February 27, 2010 and expanded to provide six additional months of subsidized coverage (as discussed in a previous Client Alert here). In March, the Temporary Extension Act of 2010 extended the deadline to March 31, 2010.

The Continuing Extension Act of 2010 now extends the deadline to May 31, 2010. As a result, employees who are involuntarily terminated between from April 1 to May 31 are eligible for the 15 month COBRA premium subsidy.

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