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Labor & Employment Law Alert: New Connecticut Laws

June 9, 2016

There are a number of new state laws that will require employers to take action:

Connecticut "Bans the Box"

Effective January 1, 2017, employers will be prohibited from inquiring about a prospective employee’s prior arrests, criminal charges or convictions on an initial employment application unless: (1) the employer is legally required to do so or (20 a security or fidelity bond or an equivalent bond is required for the position for which the prospective employee is seeking employment. See Public Act 16-83

New Connecticut Law Will Require Certain Employers to Establish IRAs for Employees

A new law creates the Connecticut Retirement Security Authority and authorizes it to establish a program requiring certain private sector employers to establish Roth Individual Retirement Accounts (IRAs) for their employees (Roth IRAs are after-tax IRAs). The employees, unless they opt out, will be required to contribute 3% of their wages to a Roth IRA. “Qualified Employers” must automatically enroll “Covered Employees” into Roth IRAs no later than 60 days after the employer provides the employee with the informational material on the program. Covered Employees may opt out of the program by electing a contribution level of zero.

“Qualified Employers” are those who employ at least five employees who were paid at least $5000 in wages in the preceding calendar year. “Covered Employees” are those who have worked for a qualified employer for at least 120 days and are at least 19 years old.

Exempt employers are those who maintain a retirement plan recognized under the Internal Revenue Code, such as 401(k), 403(b), or 401(a) pension plans. Those employers are exempt from the requirements to provide the informational material and automatically enroll Covered Employees.

The effective date is January 1, 2018, with many details yet to be established by the newly created Authority. We will continue to monitor and inform you of future developments. May Special Session, Public Act 16-3

Restrictions on Non-Compete Covenants for Physicians

Effective July 1, 2016, a covenant not to compete for a physician is valid and enforceable only if it is: (1) necessary to protect a legitimate business interest; (2) reasonably limited in time, geographic scope and practice restrictions as necessary to protect such business interest; and (3) otherwise consistent with the law and public policy. The party seeking to enforce a covenant not to compete shall have the burden of proof in any proceeding.

Also, a covenant not to compete that is entered into, amended, extended or renewed on or after July 1, 2016 shall not restrict the physician's competitive activities for a period of more than one year, and in a geographic region of more than fifteen miles from the “primary site” where such physician practices. The “primary site” where the physician practices is the office, facility or location where a majority of the revenue derived from the physician’s services is generated, or any other office, facility or location where such physician practices and is mutually agreed to by the parties and identified in the covenant not to compete.

A covenant not to compete is not enforceable if (1) the employment contract or agreement expires and is not renewed or (2) the employer terminates the employment or contractual relationship without cause.

Each covenant not to compete entered into, amended or renewed on or after July 1, 2016, shall be separately and individually signed by the physician. Also, if a covenant is rendered void and unenforceable, the remaining provisions of the contract remain in full force and effect. Public Act 16-95

Connecticut FMLA Broadened to Cover Military “Qualifying Exigency”

Effective immediately, the Connecticut FMLA allows an eligible employee to take up to 16 weeks of leave during any 24-month period because of any “qualifying exigency”, as determined under the federal FMLA, arising out of the fact that the spouse, son, daughter, or parent of the employee is on active duty, or has been notified of an impending call or order to active duty in the armed forces. Public Act 16-195

Employers May Pay on a Bi-Weekly Basis Without Prior Department of Labor Approval

Effective immediately, Connecticut employers may now pay their employees’ wages on a biweekly basis without having to obtain approval from the Connecticut Department of Labor. Public Act 16-169

Employers May Use Payroll Cards to Pay Employees

Effective October 1, 2016, employers may pay their employees through “payroll cards,” provided that the employee is notified of the option of receiving wages, salary or other compensation by direct deposit or by negotiable check. The employee must voluntarily and expressly authorize, in writing or electronically, that he or she wishes to be paid with a payroll card. The decision must be made by the employee without any intimidation, coercion, or fear of discharge or reprisal from the employer. Employers cannot require payment through a card as a condition of employment or for receiving any benefits or other type of remuneration. Also, the card must be associated with an ATM network that ensures the availability of a substantial number of in-network ATMs in the state, employees must be able to make at least three free withdrawals per pay period, and none of the employer’s costs for using payroll cards can be passed on to employees.

The new law also allows employers, regardless of how they pay their employees, to provide them with an electronic record of their hours worked, gross earnings, deductions, and net earnings (i.e., pay stub) provided the following requirements are met: (1) the employee explicitly consents; (2) the employer provides a way for the employee to access and print the record securely, privately, and conveniently; and (3) the employer incorporates reasonable safeguards to protect the confidentiality of the employee’s personal information.

Employers also may pay employees through direct deposit upon an employee’s written or electronic request. Public Act 16-125

Paid FMLA Does Not Pass in Connecticut, But Does in New York

The push to approve legislation requiring employers to provide paid FMLA did not pass in Connecticut. However, such a measure did pass in New York. Under the new law in New York, up to 12 weeks of paid family leave will be administered and paid for by the State’s disability benefits fund. The program will be funded through employee payroll deductions. The new law is effective January 1, 2018.

Also, recently in the news...                                                                 

U.S. Supreme Court Allows Employee to Pursue Free Speech Lawsuit Because of His Perceived Politics. The U.S. Supreme Court held in Heffernan v. City of Paterson that when an employer demotes an employee to prevent the employee from engaging in protected political activity, the employee is entitled to challenge that unlawful action under the First Amendment even if the employer's actions are based on a factual mistake about the employee's behavior.

Connecticut Supreme Court Gives Employers Win in Independent Contractor Case. A divided Connecticut Supreme Court reversed the judgment of a trial court and held that installers/technicians were independent contractors, and not employees, under the ABC test set forth in the Connecticut Unemployment Compensation Act.

Under the ABC Test, a worker is deemed to be an employee and not an independent contractor unless the worker must meet all three of the following tests: (A) the worker is free from direction and control in the performance of the service, both under the contract of hire and in fact; and (B) the worker’s services must be performed either outside the usual course of the employer’s business or outside all of the employer’s places of business; and (3) the worker must be “customarily engaged” in an “independently established” trade, occupation, profession or business of the same nature as the service being provided.

In Standard Oil v. Administrator, the Court found that Standard Oil satisfied its burden of showing that the installers/technicians were free from its control and direction under part A of the ABC test. The Court also determined that the meaning of ‘‘places of business’’ under the ABC Test should not be extended to the homes in which the installers/technicians worked, unaccompanied by Standard Oil employees and without its supervision.

Connecticut Supreme Court Allows Workers' Compensation Benefits for PTSD. The Connecticut Supreme Court held that a FedEx driver who suffered a cardiac episode while delivering packages and was subsequently diagnosed with post-traumatic stress disorder (PTSD) due, in part, to his manager's demands is eligible for workers' compensation benefits.

In William D. Hart v. Federal Express Corp., the Court upheld 47 weeks of temporary total disability benefits that had been awarded by the state’s Workers’ Compensation Review Board. The Court rejected FedEx’s argument that the employee’s PTSD was not compensable because it did not arise out of a physical injury at work.

Second Circuit Holds that Individual Managers Could Be Held Liable for FMLA. The Second Circuit recently ruled that a human resources director could be held individually liable for violations of the Family and Medical Leave Act.

The court in Graziadio v. Culinary Institute of America, et al, stated that the key issue in determining individual liability is whether a manager has sufficient control over an employee to qualify as an “employer.” Some factors that courts consider include whether the individual: (1) had the power to hire and fire employees; (2) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained employment records.

Federal DOL Issues Final "Persuader" Rules. The U.S. Department of Labor (DOL) issued its new "persuader" rule on March 23, 2016. The rule significantly expands reporting requirements for employers who enter into agreements with labor consultants and attorneys to persuade employees, directly or indirectly, concerning the right to organize or bargain collectively.

The NLRB takes an expansive view of “indirect” persuader activities that will require reporting, including: (1) planning, directing or coordinating meetings or interactions between supervisors and employees; (2) providing materials to employers for dissemination or disclosure to employees; (3) conducting a seminar for supervisors on, for example, strategies to avoid unionization; and (4) developing policies or practices that directly or indirectly persuade employees. If applicable, the reports (which include, among other things, expenditures paid by employers and received by consultants/law firms on persuader activities) must be filed electronically with the DOL and, once filed, they are publicly available.

EEOC Guidance on Leaves Under the ADA. The EEOC recently issued a Guidance on Employer-Provided Leave Under the Americans With Disabilities Act (ADA).

The Guidance emphasizes the EEOC’s position that an employer must consider leave as a reasonable accommodation even if an employer is not covered under the FMLA, the employee is not eligible for leave under the FMLA, or the employee has exhausted leave under the FMLA. The Guidance also provides that: (1) employers must have flexible policies concerning the maximum amount of leave employees can take; (2) employers cannot require employees returning from leave to have no restrictions unless it would cause an undue hardship or pose a significant risk of substantial harm to the employee or to others; and (3) employers must consider reassignment as an option for employees who cannot return to their jobs following a medical leave.

EEOC Issues Fact-Sheet on Bathroom Access Rights for Transgender Employees. On the heels of North Carolina passing a law requiring that individuals only use restrooms that correspond to the biological sex on their birth certificates, the EEOC issued a Fact-Sheet on Bathroom Access Rights for Transgender Employees.

The EEOC states that transgender status is protected under Title VII and, therefore, employers may not deny an employee equal access to a common restroom corresponding to the employee’s gender identity. A Connecticut Federal District Court also recently held in Fabian v. Hospital of Central Connecticut that discrimination on the basis of transgender identity is employment discrimination “because of sex” in violation of Title VII of the Civil Rights Act.

DOL Releases New FMLA Poster and FMLA Guide for Employers. The US DOL issued a new general Family and Medical Leave Act (FMLA) Notice poster and a new guide to assist employers in administering the FMLA. Employers that are covered under Connecticut's FMLA should recognize that the Guide does not address their compliance obligations under state law.

EEOC Proposes Rule Requiring Employers to Provide Pay Data. The EEOC recently proposed revising the Employer Information Report (EEO-1) to include collecting pay data from employers, including federal contractors, with 100 or more employees. According to the EEOC, this new data will assist the agency in identifying possible pay discrimination and assist employers in promoting equal pay. The current EEO-1 form requires employers to report employment data by sex, race and ethnicity. The revised form would add information on total compensation as reported on W-2 forms for employees in 10 job categories and 12 pay bands. If the proposed revision is approved, employers would be required to submit pay data by the September 30, 2017 EEO-1 filing deadline.

We will continue to monitor and inform you of future developments.

If you have any questions, please contact any member of the Carmody Torrance Sandak & Hennessey Labor and Employment Practice Group for more information.