Recently, Democratic federal legislators proposed a bill to bar companies from requiring employees to sign mandatory arbitration agreements and also from preventing employees from bringing class actions.

Proposed Bill

The proposed bill, the Forced Arbitration Injustice Repeal Act (“FAIR Act”), sponsored by Connecticut Senator Richard Blumenthal and New York Congressman Jerrold Nadler, would ban mandatory arbitration in employment agreements, prohibiting employees from taking their claims to court.  It would also bar agreements that prevent workers from bringing class action claims against their employers.

Reactions to the Epic Systems v. Lewis Decision

This past summer, the United States Supreme Court ruled in an appropriately named case, Epic Systems v. Lewis, that mandatory arbitrations provisions, as well as waiver of class action claims in employment agreements, were enforceable.  Proponents for employees regard the Epic case as a blow to employees’ rights by preventing them from going public with claims, having their day in court and obtaining potentially larger jury awards, among other reasons.  In the midst of the recent #MeToo movement and pressure by employees to end mandatory arbitration at high profile companies such as Google and Vox Media, there is a concern that allowing employers to keep claims private and separate will in turn sweep legitimate claims under the rug.  Those who favor the Epic decision believe that arbitration provides a more civilized way of dealing with employment disputes because arbitration tends to be faster, cheaper, less obtrusive and private.  The FAIR Act would reverse the Supreme Court’s ruling in Epic.

Future Path of the FAIR Act

While similar bills have been proposed in recent years without moving forward, the FAIR Act has more support in the House of Representatives than in it has had in the past.  However, it will face more opposition in the Republican-controlled Senate and it is probably unlikely that President Trump would sign a bill reversing a decision written by his first Supreme Court appointee.

Stay tuned as we keep you updated with the issues that affect you!

Recently, we reported that the Department of Labor (“DOL”) would likely release a new rule addressing the “white collar” overtime exemptions for executive, administrative, and professional workers soon.  The DOL released this much anticipated proposed rule on March 7, 2019.

Proposed Changes

Under the proposed rule, the salary level threshold would increase from $455 per week (or $23,660 annually) to $679 per week (or $35,508 annually.) The DOL’s proposed increase falls almost squarely at the midway point between the proposed Obama-era increase ($913 per week) and the current salary threshold ($455 per week.) The DOL estimates that more than one million more American workers would be eligible for overtime as a result of this increase.

Other proposed changes would include:

  • Increasing the salary threshold for so-called “highly compensated employees” from $100,000 to $147,414,
  • A commitment to periodically review the salary threshold, which would require the DOL to use the notice-and-commenting rule making process, and
  • Allowing employers to use non-discretionary bonuses and incentive payments (including commissions) that are paid annually or more frequently to satisfy up to 10 percent of the standard salary level.

The proposed rule does not include:

  • Changes to the overtime protections for police officers, fire fighters, paramedics, nurses, laborers, and non-management employees,
  • Changes to the job duties test, and
  • Inclusion of automatic adjustments to the salary threshold.

At this point, this rule is just a proposal and will be open for public comment for 60 days after it is published to the federal register. The DOL will then finalize the rule after a careful review of the comments. Based on previous responses to changes to the overtime rule, it is expected that groups that are not satisfied with the final rule will take legal action to prevent its implementation.

In February, the New York City Commission on Human Rights, released guidance that defines race discrimination to include discrimination based on natural hair and hairstyles.  Under this guidance, the New York City Human Rights Law now protects the rights of New York City (“NYC”) employees to maintain natural hair or hairstyles that are closely associated with their racial, ethnic, or cultural identities.  This includes, but is not limited to, the right to maintain hairstyles such as “locs, cornrows, twists, braids, Bantu knots, fades, Afros, and/or the right to keep hair in an uncut or untrimmed state.”

Examples of policies that violate the NYC law are:

  • A grooming policy prohibiting twists, locs, braids, cornrows, Afros, Bantu knots, or fades which are commonly associated with African American people;
  • A grooming policy requiring employees to alter the state of their hair to conform to the company’s appearance standards, including having to straighten or relax hair (i.e., use chemicals or heat); and
  • A grooming policy banning hair that extends a certain number of inches from the scalp, thereby limiting Afros.

The guidance further provides that facially neutral grooming policies may violate the NYC law if an employer enforces the policy only against a protected class.

The NYC law prohibits employers from harassing, imposing unfair conditions, or otherwise discriminating against employees based on aspects of their appearance associated with their race.  Examples of discrimination include:

  • Requiring African American people to obtain supervisory approval prior to changing hairstyles, but not imposing the same requirement on other races;
  • Requiring only African American employees to alter or cut their hair or risk losing their jobs;
  • Telling an African American employee with locs that they cannot be in a customer-facing role unless they change their hairstyle;
  • Refusing to hire an African American candidate with cornrows because her hairstyle does not fit the “image” the employer is trying to promote for sales representatives; and
  • Mandating that African American employees hide their hair or hairstyle with a hat or visor.

This law is an interesting development in light of a 2016 federal appellate court decision that held that an employer’s ban of dreadlocks was not per se race discrimination.  In that case, the Equal Employment Opportunity Commission took the position that it was.  The Supreme Court declined to hear the case and federal courts remain split on whether natural hair discrimination is race discrimination.  We will update you as this area of the law develops.

An updated rule for the Fair Labor Standard’s Acts “white collar” overtime exemptions for executive, administrative, and professional workers is likely coming soon.  In mid-January, the United States Department of Labor (“DOL”) submitted its proposed final rule governing these exemptions to the White House Office of Management and Budget for final approval.  As we reported previously, the drastic Obama-era updates to the overtime exemptions, which nearly doubled the salary threshold, were struck down by a federal court.

What can we expect in a new rule?

You can certainly expect an increase in the salary threshold.  Current DOL Secretary Alexander Acosta testified in his confirmation hearings that the salary threshold should increase but he thought that the Obama-era increase was done in a way that “created a shock to the system.”  It is likely that the salary threshold will fall somewhere in the middle of the current threshold, which is $23,600 and the proposed Obama-era threshold, which was $47,476.

When can we expect a new rule?

No release date has been provided.  However, the DOL is likely to publish a new rule this year.  An appeal of the court’s decision to strike down the Obama-era rule is pending before a federal appellate court.  The federal appellate court can overturn the lower court’s decision and reinstate the Obama-era proposed rule if the DOL does not finalize its new rule.

The General Assembly began its 2019 Legislative Session on January 9th.  Many bills affecting the workplace have already been introduced.  They include the following:

Leave of Absence

  • HB5003 and SB1 would create a paid Family and Medical Leave funded by employee contributions, similar to a workers’ compensation program. The bills would also broaden the existing Connecticut FMLA, making it applicable to all employers, and offering up to twelve weeks of paid leave during any twelve-month period.
  • SB358 would provide time off to employees in order to vote.

Wage and Hour

  • HB5004 would raise the minimum wage in the state from $10.01 to $15 over multiple years.
  • SB764 would prohibit on-call shift scheduling.
  • HB6111 would permit employers to require employees to participate in direct deposit for paychecks.
  • HB5053 would create a task force to increase employment opportunities for people recovering from substance abuse.
  • HB5045 would create a task force to increase employment opportunities for people with disabilities.

Non-Compete Agreements

  • HB6913 would prohibit employers from requiring certain employees from signing unfair non-compete agreements. The terms “certain” and “unfair” are currently undefined.
  • HB6914 would prohibit non-compete agreements for employees below a certain salary.
  • HB377 would prohibit non-compete clauses in a physician employment contract.

Discrimination

  • HB5271 would revive last year’s Time’s Up Act. It would require employers with 3 or more employees to provide sexual harassment prevention training to all employees of Connecticut employers.  Currently, employers with 50 or more employees are required to provide two hours of training for supervisors
  • SB697 would restrict workplace nondisclosure agreements “to prohibit the silencing of victims in the workplace and to prevent sexual harassment by repeat offenders.” This goes beyond the federal Tax Cut and Jobs Act of 2017, which limited tax deductions for confidential sexual harassment settlements.
  • HB6113 would prohibit employers from asking about an applicant’s date of birth or date of graduation on an employment application to prevent age discrimination.
  • SB765 would ensure all employees “receive fair and equal pay for equal work.”

Stay tuned as we continue to monitor these bills and update you over the course of the legislative session.

There are 3 significant developments at the National Labor Relations Board (“NLRB”).

NLRB Revises Independent Contractor Test

In late January, the Board overturned the Obama-era test for establishing whether an individual is an employee or independent contractor under the National Labor Relations Act.  Under the Obama-era test, the Board ignored whether an individual had entrepreneurial opportunities in performing the services.  Under the current test, the Board has restored the previously longstanding common law agency test and will again consider whether the individual had entrepreneurial opportunities.

This decision will make the analysis of independent contractor status more employer-friendly and balanced, particularly in the context franchisors and franchisees and a company’s service providers.  For more information on the decision, see the NLRB’s press release.

Still No New Joint-Employer Rule

After two 30-day extensions, the period for submitting comments to the NLRB’s proposed rule for replacing the Obama-era Joint-employer test closed on January 22, 2019.  Nevertheless, until the proposed rule is finalized the Obama-era test remains in effect.  For more information on the propose rule, see notice of proposed rule.

Board Member Mark Gaston Pearce Will Not Seek Re-Appointment

On Tuesday February 5, 2019, former NLRB Chairman Mark Gaston Pearce announced that he will not seek re-appointment to the Board.  President Trump re-nominated Pearce to the Board immediately after his term expired, but, his re-appointment was met with criticism by business groups and Congress did not act on his nomination.  Pearce’s announcement ensures that a new Board Member will be appointed.

The long held tradition is that the President appoints the majority of the board (i.e., 3 members) from his own party and a minority (i.e., 2 members) from the other party.  Based on the Board’s composition, it is likely that the President will appoint a member of the Democratic party.

As a reminder, Connecticut Public Act No. 18-8 titled “An Act Concerning Pay Equity” became effective January 1, 2019. Under this law, all employers are prohibited from asking or directing a third party to ask about a job applicant’s wage and salary, unless the job applicant has voluntarily disclosed this information.
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Exceptions
There are two exceptions to the new law. It does not apply to employers or third parties who are required to ask about wage or salary history by federal or state law. The law does not prohibit employers from asking about other elements of an applicant’s compensation structure (e.g., whether the applicant received stock options.) However, an employer may not ask about the value of the other elements of the applicant’s compensation structure (e.g., the value of the stock options.)
Takeaways
Employers should immediately:
  • advise their Human Resources Department and other employers with interview responsibilities not to ask applicants about their wage and salary history, and
  • review their employment application(s) and remove any questions about past wages or salary.

Carmody attorneys, Vincent Farisello and Sarah Healey, will be presenting at the Employers Association of the NorthEast (EANE) CT Employment Law & HR Practices Update on Thursday, January 17th at the Hilton Garden Inn in Wallingford, CT. Vincent and Sarah will be speaking on the ever-changing landscape of employment laws and HR best practices.

If you are interested in the conference, please use EANE’s link below for more information and to register.

Click here to register.

On December 14, 2018, a federal district court in Texas held in Texas v. United States that the Affordable Care Act’s (ACA) individual mandate is unconstitutional.  The court also concluded that because the individual mandate cannot be severed from ACA, the entire law is invalid.

Background

As you may recall, the ACA has both an individual and employer mandate. In 2012, the Supreme Court held, in National Federation of Independent Businesses v. Sibelius (“Sibelius”), that the individual mandate was a constitutional exercise of Congress’ power to tax. Although the individual mandate was upheld as a valid tax, the Supreme Court noted that the individual mandate would otherwise have been unconstitutional under the Constitution’s Commerce Clause.

Individual Mandate Held Unconstitutional Because the Penalty is Zero Beginning in 2019

In 2017, Congress passed the Tax Cuts and Jobs Act of 2017, which will reduce the individual mandate tax penalty to zero effective January 1, 2019.  As a result, Texas and numerous other states commenced litigation arguing that the individual mandate was no longer a proper exercise of Congress’ taxing authority. The Texas court agreed, holding that, without a tax penalty, the mandate was now rendered unconstitutional under the Commerce Clause as the Supreme Court previously noted in the Sibelius case.

Entire ACA Held Unconstitutional Because the Individual Mandate Cannot Be Severed

The Texas federal court did not simply declare the individual mandate unconstitutional. It went on to consider what impact this had on the rest of the ACA—specifically, whether the individual mandate could be severed from the rest of the ACA. The Texas court noted that the Sibelius decision found two other provisions (guaranteed issue and community rating) of the ACA were inseparable from the individual mandate.  Further, the court noted that the Supreme Court’s 2015 decision, King v. Burwell, determined that the same two provisions could not work without the individual mandate. Therefore, the Texas court concluded that it could not sever the individual mandate from ACA because the other provisions of the ACA were so intertwined.  As such, the Court held that the entire law was unconstitutional.

What Should Employers Do?

An appeal of the Texas court’s decision is very likely. Therefore, employers should stay the course for now.  For example, large employers subject to the employer mandate provisions of ACA should still file Forms 1095-C for 2018 and continue to offer coverage for 2019.  Even if the decision is upheld, it is unlikely to be given retroactive effect, because the mandate was still a valid tax for 2018. If the court’s decision is upheld, then employers and insurers will have to decide what to do about many of the popular ACA requirements, such as dependent coverage to age 26, no cost for preventive care, etc.  It remains to be seen how insurers will respond to the case.  Keep in mind that Connecticut (and potentially other state’s laws) require many provisions in health insurance policies that are also contained in the ACA.  We will continue to monitor the developments.

Carmody Torrance Sandak & Hennessey will hold a training session for supervisors on Thursday, December 6th on the prevention of sexual harassment in the workplace.  The program will be presented from our Waterbury office, but individuals may also participate by video conference in our New Haven and Stamford offices.  Registration starts at 8:15 a.m. and the program begins at 8:30 a.m.  The fee is $75 per person and includes a continental breakfast.

For more information and to register, please click here.