schaffer_law_v2

Connecticut Legislators Considering Additional Employment Requirements

Wed, 08 Mar 2023 00:00:00 GMT

Although Connecticut is already one of the most highly regulated states when it comes to employment law, government officials are currently considering a number of changes that would impose greater employer requirements in the areas of non-compete agreements, disclosure of salary ranges, and paid sick leave.

Non-Compete Agreements

Aside from current attempts by the federal government to possibly outlaw or severely restrict non-compete agreements, a bill introduced in Connecticut would significantly limit them. HB 6594 . In particular, non-compete agreements signed on or after 7/1/23 would be enforceable only if they were limited to one year in duration following termination, and tailored to protect a legitimate business interest that could not be reasonably protected by some other means like a non-disclosure or non-solicitation agreement. Further, the law would impose limits on geographic scope, type of work prohibited, and the type of employee restricted.

The 1 year restriction period could be enlarged to 2 years if the employee was paid their base salary and benefits, minus interim earnings, during that 2 year period. Geographic restrictions beyond locations where the employee provided services or had a material presence during their final 2 years of employment, or banning work the employee did not perform during their final 2 years would be presumptively unenforceable.

In addition, only exempt employees earning 3 times the minimum wage, or independent contractors earning 5 times the minimum wage could be required to sign such an agreement.

Employees would be given a 10 day review period, and the non-compete agreement would have to include a statement that informs them that not all non-competes are enforceable, that employees earning less than the statutory minimum (3x or 5x the minimum wage) cannot be made to sign a non-compete, that they may contact the Attorney General if they believe they are being asked to sign an illegal non-compete, and that they have the right to seek legal counsel before signing a non-compete. Any non-compete would have to be stipulated in an agreement separate from any other agreement or writing.

The law would also clarify that continuing employment alone is insufficient consideration for a non-compete. Also, an employee quitting for good cause attributable to the employer would not be subject to the non-compete agreement, and Connecticut would become the sole forum for any non-compete related disputes.

It would also ban agreements restricting the right to solicit customers and employees for periods greater than one year, by bringing them into coverage under the new law.

Further, exclusivity agreements banning an employee from working for others or as an independent contractor while still employed by the employer would be outlawed, unless the person is an exempt employee earning the statutory amounts (3x and 5x the minimum rate), or the employee’s engagement in other work would imperil the worker’s safety, the safety of co-workers, or the public, or would substantially interfere with reasonable and normal scheduling expectations.

Aside from the right of the Attorney General to file in the Superior Court, employees could file directly. Relief includes actual damages, or a $5,000 penalty, whichever is greater, plus attorneys’ fees and costs.

Salary Range Disclosure

Connecticut already requires employers to provide the salary range to applicants for the job applied for, and to employees for their job. 31-40z . The legislature is now considering expanding the scope of disclosure by requiring employers to disclose salary ranges in all public and internal job postings. HB 6273 . These steps are being pursued in order to decrease the gender wage gap.

Paid Sick Leave

Under current Connecticut law, certain non-exempt service workers are covered by a paid sick leave law, if they work for an employer with 50 or more employees. Recently proposed legislation would greatly expand such coverage requiring all employers with 11 or more employees to provide 40 hours of paid sick leave each year to all employees. Employers with 10 or less employees would have to provide 40 hours of job protected, unpaid sick time. Gov Bill 6668 .

Full-time, part-time and temporary employees would accrue 1 hour of sick time for each 30 hours worked to a maximum of 40 hours per year. Employers with fewer than 11 employees who already provide paid sick leave could offset the 40 hours required under the law by the amount of paid sick leave provided. Employers with at least 11 employees could also offset the requirements of the law with any already provided paid leave, provided such leave policy permits accruals and usage as outlined in the law.

If passed, the law will take effect January 1, 2024.

Employers Who Don't Offer Retirement Plans Must Enroll in the Connecticut Retirement Savings Program by March 30, 2023

Tue, 07 Mar 2023 21:42:34 GMT

Connecticut private sector employers with 5 or more employees who do not already offer a qualified retirement savings plan must register with the Connecticut Retirement Security Authority and begin enrolling employees in the state sponsored retirement program, MyCTSavings, by March 30, 2023. Employers who do offer a qualified plan must certify they do so with the Authority.

The program, first launched in 2022, is reaching its enrollment deadline. So far, some 900 employers have enrolled, and plan assets have reached $1.7 million dollars.

Under the program, Connecticut based employees who have worked at least 120 days for a qualified employer, and are age 19 or older, are automatically enrolled by their employer. The employer must provide certain program documents to the employee upon enrollment.

Once enrolled by the employer, the employee will receive a notification from the third party Program Administrator. The employee then has 30 days to establish an online account to manage their contribution levels and investment choices.

During the 30 day period following notification from the Program Administrator, the employee may opt out of the program by changing their contribution level to 0%, or remain in the program and select their level of contribution and investment options.

If the employee does nothing, the default contribution level is 3% of earnings. All contributions are placed in an individual Roth IRA and held in a Target Retirement Date Portfolio based on the employee’s normal retirement age. Employer contributions are not permitted.

Assuming the employee does not opt out, payroll deductions will begin once the 30 day period following notification from the Program Administrator ends.

Employees may thereafter change their contribution level, investment options, opt out or back in, at any time. The funds in the Roth IRA are portable so that if an employee changes jobs their account follows them.

Employees who are not properly enrolled in the program by their employer may contact the Connecticut Department of Labor or directly bring a civil action in the Superior Court to force enrollment and recover costs and attorney’s fees.

Employers and employees can access the Authority’s website here . More detailed information about the Program is provided here .

Rights of Sexual Harassment/Assault Victims Continue to Expand

Tue, 07 Mar 2023 21:38:52 GMT

In the past, employers generally had the right to require employees to sign pre-dispute arbitration agreements, which prohibited them from filing workplace related claims in court. Also, such agreements could restrict their right to bring joint or collective actions. In essence, employees could be required to arbitrate their claims individually, even if the employer’s actions affected multiple claimants. In addition, any settlement, whether in a court or arbitration proceeding often included a non-disclosure, non-disparagement provision preventing the plaintiff from speaking out about their claims, or the terms of the settlement.

This framework changed significantly for victims of sexual harassment and sexual assault in 2017 through the #MeToo Movement following revelations of Harvey Weinstein’s long history of misconduct toward women dependent on him for career advancement.

Initially, the federal government made it more costly for employers to hide the terms of any sexual harassment/sexual assault settlement by eliminating the right to a tax deduction for settlement payments and attorney’s fees where the settlement agreement contained a non-disclosure provision. More specifically, the IRS Code was amended so that “for amounts paid or incurred after December 22, 2017, new section 162(q) provides that no deduction is allowed under section 162 for any settlement or payment related to sexual harassment or sexual abuse if it is subject to a nondisclosure agreement. In addition, attorney’s fees related to such a settlement or payment are not allowed as a deduction.”

Then in March 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act that outlawed pre-dispute mandatory arbitration agreements for sexual harassment and/or sexual assault claims. This gave victims the right to file in court as opposed to being required to have their claims heard in arbitration. Employees retained the right to go to arbitration, if agreed to by the employer. Court proceedings offer greater public access to the claims and outcomes than private arbitration.

The Act also banned any pre-dispute agreement that prohibited an employee from participating in a joint, class, or collective action in a judicial, arbitration, administrative or other forum in cases alleging sexual harassment or assault brought under any Federal or State law

Further, any issue arising over the interpretation of the rights granted by the Act are determined under Federal Law by a court, and not an arbitrator, regardless of what the underlying agreement between the parties may say.

More recently, President Biden signed the Speak Out Act on December 7, 2022. It bans pre-dispute non-disclosure and non-disparagement agreements that prevent claimants from speaking out about alleged sexual harassment and assault in the workplace.

In the Findings supporting the Speak Out Act, Congress articulated its reasons for passing the new law. It found that 81% of women and 43% of men experience some form of sexual harassment or assault during their lifetime. Among women facing sexual harassment, 87%-94% never file a formal complaint. In order to combat harassment, the ability to speak out offers a powerful tool to encourage survivors to come forward, hold perpetrators accountable, and make the workplace safer.

Taken together, these three laws prevent pre-dispute non-disclosure agreements, pre-dispute mandatory arbitration agreements, and pre-dispute joint/collective action restrictions in matters related to sexual harassment and sexual assault. They also remove the tax deductibility of any costs and legal fees incurred where a settlement agreement involving sexual harassment/assault contains a non-disclosure provision.

Given the high cost and negative publicity associated with sex related misconduct, it is incumbent on employers to have strict policies in place, provide on-going training, take complaints seriously, and deal with violators quickly and severely.