FLSA Overtime Rule Changes Finally Released

Posted by Bud O'Donnell on Wed, Jul 20, 2016 @ 04:14 PM

On May 18, 2016, the U.S. Department of Labor finally released its rules updating the overtime regulations under the Fair Labor Standards Act (“FLSA”) which will take effect December 1, 2016.  Not surprisingly, the updates significantly increase the salary threshold for executive, administrative and professional workers (“white collar employees”) and for highly compensated employees and include automatic updates to these thresholds going forward.

Under the new rules, any employee earning less than $47,476 a year ($913 a week) will be a covered non-exempt employee entitled to overtime. This new threshold, up from $23,660 ($455 a week), equals the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region.  Additionally, unlike the previously static threshold, the new rules will be adjusted upward every three years to reflect cost of living adjustments with the first update taking effect on January 1, 2020. 

 The new rule also increased the total annual compensation threshold for highly compensated employees from an annual salary of $100,000 to $122,148 (linked to 90th % percentile of earnings of full-time salaried workers in the lowest-wage Census Region).  Connecticut employers should not rely on this change as Connecticut does not recognize the highly compensated employee exemption.

 Although the new rules do not change the “duties test” under the FLSA, they do amend the “salary basis test” to allow employers to credit nondiscretionary bonuses and incentive payments (including commissions) towards satisfying up to 10% of the new salary threshold, so long as employers pay those amounts on a quarterly or more frequent basis.

 Given the new rules, employers must now either raise salaries of affected employees to meet the new threshold or begin treating these employees as nonexempt.  Employers must ensure that all “exempt” employees meet the duties tests for their applicable exemption and earn a salary that is high enough to satisfy the new threshold.  Employers should also take this opportunity to confirm that each “exempt” employee actually performs duties that meet their applicable exemption, regardless of the employee’s title or job description.

Hard-Fought Battle Results in Significant Client Victory in Connecticut Supreme Court

Posted by Glenn Duhl on Tue, Mar 08, 2016 @ 05:09 PM

          On March 7, 2016, the Connecticut Supreme Court released its much-anticipated (and long-awaited) decision in Standard Oil v. Administrator, Unemployment Compensation – one of the most significant employment law decisions in years.   

          The Supreme Court ruled in favor of Standard Oil of Connecticut, Inc.’s challenge to the determination by the Administrator of the Connecticut Unemployment Compensation Act that Standard Oil had misclassified installer and technicians as independent contractors instead of employees.  This decision results in a victory not only for Standard Oil, but for other businesses that use independent contractors to visit and service customers’ sites.   

           The decision addresses the first two prongs of the ABC test—the test in Connecticut, and in other states, to determine whether a worker is an employee or an independent contractor.

           As to the first prong, the Supreme Court found that Standard Oil had satisfied its burden of showing that the installers/technicians were free from its control and direction under part A of the ABC test, Connecticut General Statutes § 31-222(a)(1)(B)(ii)(I).

           More importantly, and as an issue of first impression, the Supreme Court interpreted whether “places of business” under part B of the ABC test, Connecticut General Statutes § 31-222(a)(1)(B)(ii)(II), extended to the homesof Standard Oil’s customers.  The Court concluded that the meaning of “places of business” should not be extended to the homes in which the installers/technicians worked, unaccompanied by Standard Oil’s employees and without its supervision.  Rather, the homes of Standard Oil’s customers, unlike its business offices, warehouses, and other facilities, were under thehomeowners’ control.  Accordingly, the homes of Standard Oil’s customers were not “places of business” under part B of the ABC test.

           In rejecting a broad interpretation of “places of business,” the Supreme Court acknowledged the practical implications of such an interpretation—namely, that it would effectively convert every Connecticut household into a place of business for any company that performs services at a customer’s home, thereby profoundly limiting an employer’s ability to subcontract work. 

           Standard Oil is a family-owned Connecticut-based company providing home heating oil delivery and service and alarm system monitoring and service to customers in Connecticut.  It employs more than 250 individuals who provide home heating oil delivery service and sell heating and cooling equipment to customers’ homes; they provide “on call” repair and emergency service 24 hours a day, seven days a week.  It also engaged installers (to install heating oil and alarm systems) and technicians (to repair and service heating systems at times of peak demand), as independent contractors instead of employees.

           In 2008, the Administrator of the Unemployment Compensation Act, audited Standard Oil’s payroll to determine whether it paid the correct amount of unemployment compensation taxes on its workforce.  It accused Standard Oil of misclassifying the installers and technicians as independent contractors instead of employees.  The Administrator reclassified them as employees, and assessed taxes and interest. 

           Standard Oil stood firm on its conviction that it properly classified its workforce and challenged the Administrator’s claims.  It argued that it was exempt from unemployment compensation taxes on payments to the installers/technicians, and was prepared to prove, through various witness testimony and documentary evidence, that the installers/technicians were bona fide independent contractors.

           Many witnesses testified and voluminous exhibits were introduced into evidence.  The findings of fact suggested that Standard Oil prevailed in its burden of proof that the installers/technicians were not employees.  However, the conclusion reached by the hearing referee said otherwise.  Standard Oil appealed to the Board of Review.  Again, it received a ruling in favor of the Administrator.  It then appealed to the Superior Court.  The decision there was no better.  Then, during the pendency of its appeal to the Appellate Court, the Connecticut Supreme Court, on its own, transferred the case to itself.

           Now, more than six years since the commencement of the audit, the Connecticut Supreme Court vindicated Standard Oil, ruling that it was right all along. The Supreme Court's opinion can be found on its website here.

Tags: exempt employees, Employers, independent contractor, CT Wage & Hour Laws, appeals, employee, unemployment, CT Supreme Court

Connecticut Minimum Wage Increase - January 2016

Posted by Bud O'Donnell on Tue, Mar 08, 2016 @ 04:28 PM

Effective January 1, 2016 the minimum wage has changed to $9.60.

As we welcome in the New Year, employers should remember that for yet another year, Connecticut’s minimum wage is increasing.  Effective January 1, 2016, the Connecticut minimum wage will rise to $9.60 per hour.  The updated wage and hour law poster, including the minimum wage rate for this year is available at http://www.ctdol.state.ct.us/wgwkstnd/DOL-75.pdf.  All employers must post this notice, no later than January 1st,  wherever covered workers are employed.

Where applicable, Connecticut restaurants may pay their wait staff $6.07 per hour, taking a tip credit for $3.53 per hour; bartenders may be paid $7.82 per hour, taking a tip credit of $1.78 per hour.  However, if the employee does not earn sufficient tips to equal the minimum wage or more over the workweek, the employer must pay the difference as wages.

Connecticut employers should also recall that next year, effective January 1, 2017, the minimum wage will increase again to $10.10 per hour.

Tags: Employers, business, DOL, jobs, minimum wage, CT Wage & Hour Laws, Wage

Connecticut Law Imposes Double Damages in Wage Claims

Posted by Angelica M. Wilson on Wed, Dec 02, 2015 @ 04:17 PM

“An Act Concerning an Employer’s Failure to Pay Wages” (Public Act 15-86), which took effect October 1, 2015, imposes double damages on employers who fail to pay an employee minimum wage or overtime pay in compliance with Connecticut's wage and hour laws.  This law, codified as Connecticut General Statutes § 31-68, applies to both private and public employers.  

Importantly, this legislation overrules well-established Connecticut Supreme Court precedent that required a trial's court finding of bad faith, arbitrariness or unreasonableness by the employer in order to award double damages and attorney's fees.  In fact, the new law turns this precedent on its head.   
Now, with one exception, an employee in a successful civil action may recover twice the full amount of the minimum wage or overtime wages (less any sum paid by the employer), plus costs and reasonable attorney's fees.  To avoid paying double damages, it is incumbent upon the employer to establish that it had a good faith belief that the wages paid were in compliance with the law.  Should the employer satisfy this "good faith" exception, the employee may recover only the full amount of the correct wages (less any amount paid by the employer), with costs and reasonable attorney's fees.  

While the statute does not specify what satisfies this "good faith" exception, it is reasonable to anticipate that Connecticut courts will look to the "good faith"  defense available under the Fair Labor Standards Act (the "FLSA") for guidance.  Under 29 U.S.C. § 260, the court may deny liquidated damages (equal in amount to actual damages, i.e., the amount of unpaid compensation found owing) where the employer shows that, despite its failure to pay appropriate wages, it acted in subjective "good faith" with objectively "reasonable grounds" for believing that its acts or omissions did not violate the FLSA.  To establish the requisite subjective "good faith," an employer must show it took "active steps to acertain the dictates of the FLSA and then act to comply with them."  Barfield v. N.Y. City Health & Hosps. Corp., 537 F.3d 132, 150–151 (2d Cir. 2008).   The employer's burden is admittedly "a difficult one" as "double damages [are] the norm and single damages the exception."  Id. at 150 (citing Herman v. RSR Sec. Servs., 172 F.3d 132, 142 (2d Cir. 1999)).  

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This new law ups the ante for employers who fail to comply with Connecticut's wage and hour laws; it automatically doubles the damages available to prevailing plaintiffs and shifts the burden of establishing a"good faith" exception to the employer.  

At the very least, it should inspire employers to reexamine their pay practices (with the assistance of experienced employment counsel) to ensure that they do not run afoul of Connecticut's wage and hour laws.  

Tags: CT Wage & Hour Laws, Double Damages

New Connecticut Law Regulates Employer’s Online Activity

Posted by Meredith Diette on Thu, May 21, 2015 @ 05:35 PM

As if the National Labor Relation Board’s aggressive expansion of social media protection wasn’t enough, Connecticut businesses must now contend with new legislation targeting employer’s online activity. On May 19, 2015, Governor Malloy signed into law “An Act Concerning Employee Online Privacy.” With this Act, Connecticut joins more than 20 other states to have legislation restricting an employer’s access to the social media accounts of applicants and employees. The Act, which goes into effect October 1, 2015, prohibits employers from requiring employees or applicants to:
  • Provide their user name and password or any other access to an employee’s personal online account;
  • Access an online account in the employers presence; or
  • Accept an invite or other invitation from the employer to join a group associated with the employee’s online account. The Act applies to both private and public employees and offers few limited exceptions.

Fines for violations of the Act range from $25 against applicants and $500 against employees and can increase to $500 and $1,000 for continuing or repeat violations.

Fortunately, this new Act doesn’t cover any account created, maintained, used, or accessed by an employee or applicant for the employer’s business purposes. Furthermore, employers will still be able to monitor, review, access or block electronic data stored on an electronic communications device paid for by an employer, or traveling through or stored on an employer’s network.


Additionally, employers can conduct an investigation: based on receiving specific information about activity on an employee’s or applicant’s personal online account to ensure compliance with (a) applicable state or federal laws, (b) regulatory requirements, or (c) prohibitions against work-related employee misconduct.

An employer conducting these investigations can require an employee to provide access to a personal online account, but cannot require disclosure of the user name, password, or other means of accessing the personal online account. For example, an employee or applicant under investigation could be required to privately access a personal online account, but then provide the employer with access to the account content.

Connecticut’s regulatory environment just got a little more challenging, and, as a result, employers should review their Internet policies and practices to ensure compliance.

Tags: Social Media, Employment Law

NLRB Approves Ambush Election Rules: Christmas Comes Early for Big Labor

Posted by Ryan O'Donnell on Mon, Dec 15, 2014 @ 12:19 PM

For organized labor, Christmas has come early. Unfortunately, Americas’ employers received a lump of a coal.

Late last week, President Obama’s National Labor Relation’s Board finalized the so-called “ambush election rules”—a gift that was at the top of every union’s wish list. By speeding up the timeframe for representation elections, this new regulation will significantly handicap employers’ ability to contest union organizing drives.

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As Siegel O’Connor has previously noted, the average time between when a union files a representation petition—the first step in organizing a workplace into a union—is 38 days, but this new rule would reduce that to as few as 10 days.  Consequently, unions could launch guerrilla-organizing campaigns that, because of the compressed timeline, deny management its legal right to discuss with their employees whether a union has anything worthwhile or constructive to offer them or the company.

Employers across the country have strongly criticized the change. For instance, the Retail Industry Leaders Association (RILA) issued the following statement:

This flawed rule is harmful to both workers and employers. By dramatically changing the procedures that govern union elections, the rule limits the information available to employees prior to entering the voting booth, potentially subjects employees to harassment at home and undermines the due process rights of employers.

Bottom Line for Employers

Fortunately for America’s employers, these new regulations don’t go into effect until April 2015; additional legal and legislative challenges are likely. In the interim, however, Employers should contact their respective members of Congress and demand an end to the Obama NLRB’s hyper-partisan antics. Employers are also urged to contact their labor counsel and begin developing a strategy for contesting ambush elections.

Tags: National Labor Relations Board, Register Guard, Labor Law, SNAP elections, Employers, business, small business

Epic Fail: Obama NLRB Gives Unions Access to Employers’ Email Systems

Posted by Ryan O'Donnell on Mon, Dec 15, 2014 @ 10:35 AM

Earlier this week, the National Labor Relations Board (NLRB) issued a decision (Purple Commc’ns Inc) giving employees the right to use employers’ email systems for non-business purposes—including union organizing. This ruling overturns the Board’s 2007 decision in Register Guard, and opens up yet another front in the partisan Board’s war against employers.

In its decision, the Board declared the analysis in Register Guard to be “clearly incorrect,” and one that focuses “too much on employers’ property rights and too little on the importantance of email as a means of workplace commutation.” As a result of this ruling, agues the Board, the NLRB “failed to adequately protect employees’ rights under the Act” and abdicated its responsibility to “adapt the Act to the changing patterns of industrial life.” Indeed, throughout its analysis, the Board justifies its ruling by referencing email’s new role as the “primary means of workplace discourse.”

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Having dismantled Register Guard, the Board will now adopt a “presumption that employees who have been given access to the employer’s email system in the course of their work are entitled to use the system to engage in statutorily protected discussions about their terms and conditions of employment while on nonworking time.”

In an attempt to mollify employers, the Board offers the following three limitations on employee’s ability to use email for organizing purposes:

  1. This decision applies only to employees who have been granted access to the employer’s email system in the course of their work; employers are not required to provide such access
  2. Employers may justify a total ban on non-work use of email by demonstrating that special circumstances make the ban necessary to maintain production or discipline.
  3. This decision does not address nonemployees or any other type of electronic communication.

These limitations, however, offer little solace to employers already struggling to comply with the avalanche of union-friendly regulations churned out by an increasingly hostile NLRB.

A Powerful Dissent

The Board’s decision in Purple Commc’ns Inc., is unprecedented. As Board Member Philip Miscimarra notes in his dissent, “The [National Labor Relations] Act has never previously been interpreted to require employers, in the absence of discrimination, to give employees access to business systems and equipment for NLRA-protected activities that employees could freely conduct by other means.” Furthermore, it is all but impossible “to determine whether or what communications violate restrictions against solicitation during working.”

Member Johnson, who penned his own 32-page dissent, hammered the majority’s decision for essentially forcing employers to subsidize speech in violation of the U.S. Constitution. Johnson argues, “The First Amendment violation is especially pernicious because the Board now requires an employer to pay for its employees to freely insult its business practices, services, products, management, and other coemployees in its own email. All of this is now a matter of presumptive right…”

Looking forward, Johnson’s dissent warns that “Taken to its extreme, the majority’s…rationale would just as easily apply to taking over an employer auditorium, or conference room in the middle of the workday during an employer presentation/conference.

The Road Ahead

On a practical level, however, employers must now re-evaluate their internal rules and regulations regarding employee use of company email. Specifically, Purple Commc’ns Inc has now rendered most employee handbooks obsolete; employers should, over the next few weeks, review their employee email communications policy, and contact their labor counsel to examine how this stunning new decision will impact existing company policies.

Tags: NLRB, Unions, National Labor Relations Board, right to unionize, Register Guard, violation of National Labor Relations, Labor Law

Non-Compete Clauses: A Critical Update for Employers

Posted by Meredith Diette on Tue, Sep 23, 2014 @ 04:05 PM

The Connecticut Appellate confirmed today that continued employment alone will not bind an existing employee to an adverse change in contract terms. 

In Thoma v. Oxford Performance Materials, Inc., Conn. App. Ct., No. AC 35313, official release 9/23/14, the Court found that a terminated executive was entitled to benefits of her original employment agreement, despite having the executive having signed a second employment agreement negating said benefits. 

CT appSpecifically, the Oxford executive signed a first employment agreement with provisions including severance pay in the case of termination without cause and received at increase in salary.  Some time after, Oxford decided that the benefits in the first agreement were too generous and revised the agreement.  Both parties signed the second agreement, which excluded any severance benefits and did not provide any further increase in salary.  As provided in the first agreement, the executive’s salary increased.  When Oxford terminated the executive over a year later and failed to pay her severance, she sued Oxford. 

Ultimately, the Court’s decision should not come as a huge surprise to Connecticut employers.  For some time, Connecticut courts have leaned toward requiring some form of additional consideration to bind existing employees to any adverse change in their terms or conditions of employment.  Employers should know that if they want to incorporate a non-compete agreement or a mandatory arbitration clause, these significant restrictions on employees must be done in connection with hiring or some incentive other than continued employment to be binding and enforceable. 

Tags: Labor Law, Employers, Employment Law, Litigation

Harris v. Quinn: What's Next for Employers?

Posted by Ryan O'Donnell on Mon, Jun 30, 2014 @ 11:31 AM

This morning, the U.S. Supreme Court held that personal care assistants who are paid by the state of Illinois—but mostly supervised by the homecare recipients they serve—are not “full-fledged” public employees. As a result, these employees cannot be forced to pay union dues or fees.

In a 5-4 decision, the majority ruled that requiring personal care assistants to pay union dues would violate the First Amendment rights of nonmembers who disagree with the positions that unions take.

The Court noted that these assistants are “different from full-fledged public employees,” because they work primarily for their disabled client, and do not receive the same benefits as regular state employees.describe the image

This decision deals a considerable blow to organized labor. Unions are losing members—and, in turn, the dues and fees provided by said members—at an astonishing rate. Had the court ruled in their favor, public-sector unions would have had access to 26,000 new members—and their wallets. And given that nine other states, including Connecticut, allow personal care assistants to join unions, the impact will be felt far beyond Illinois.

In making its decision, the court refused to overturn Abood v. Detroit Board of Education, a 1977 Supreme Court cases that requires “full-fledged” public employees to pay dues, even if they are not members of the union. Justice Alito, writing for the majority, noted that:

Abood itself has clear boundaries; it applies to public employees. Extending those boundaries to encompass partial-public employees, quasi-public employees, or simply private employees would invite problems...If we allowed Abood to be extended to those who are not full-fledged public employees, it would be hard to see just where to draw the line, and we therefore confine Abood's reach to full-fledged state employees.

However, labor unions will likely emphasize that the ruling stressed the unique nature of the personal care assistant:

PAs are much different from public employees. Unlike full-fledged public employees, PAs are almost entirely answerable to the customers and not to the State, do not enjoy most of the rights and benefits that inure to state employees, and are not indemnified by the State for claims against them arising from actions taken during the course of their employment. Even the scope of collective bargaining on their behalf is sharply limited.

Bottom Line for Employers:

Look for this decision to trigger a battle over the definition of “full-fledged public employees,” as well as a renewed organizing push from public sector unions.

Tags: right to unionize, Labor Law, Employers, business, supreme court, public sector

Amendments to Connecticut's Paid Sick Leave Law

Posted by Glenn Duhl on Mon, Jun 16, 2014 @ 11:14 AM

The Connecticut legislature voted this month to enact Public Act 14-128 (the “Act”).  The Act makes several changes to Connecticut’s existing law governing paid sick leave, Conn. Gen. Stat. § 31-57r–w, and will take effect on January 1, 2015.  Changes of note for all Connecticut employers include the following:

Under existing Connecticut law governing paid sick leave, an employer must provide paid sick leave to qualifying employees if it employs 50 or more employees in Connecticut during any of the previous year’s quarters.  Under the Act, the employer now must determine if it meets the 50-employee minimum threshold for coverage based upon the number of employees on its payroll for the week containing October 1, annually. 

Next, the Act changes the timeframe for accruing the paid sick leave benefit.  Under the Act, employees accrue one hour of paid sick leave for every 40 hours worked based upon whatever 365-day year the employer uses to calculate employee benefits.  This provides an employer with the flexibility to start the benefit year on any date, rather than only on January 1.   

Finally, the Act prohibits an employer from taking certain actions to avoid providing paid sick leave to employees.  This includes terminating or transferring employees between job sites for the purpose of staying below 50 employees, the threshold for coverage under Connecticut's paid sick leave law. 

Tags: Employers, business, small business, Employment Law, Restaurant Industry, regulations, Paid Sick Leave, Public Act 14-128