8:00 a.m. Registration and Networking Breakfast
9:00 a.m. Program
12:30 p.m. Lunch
Major Changes to Non-Competes
Massachusetts passed a new law that will limit the enforceability of non-compete agreements entered into on or after October 1, 2018. Some highlights of the new law include: (1) the law applies to employees who live or work in Massachusetts, and to independent contractors; (2) non-competes are prohibited for employees classified as non-exempt under the Fair Labor Standards Act; (3) non-competes are not enforceable against employees who are terminated without cause or laid off; (4) employers must pay employees during the non-compete period either 50% of their salary (referred to as “garden leave” pay) or “other mutually agreed upon consideration”, which is not defined; (5) the non-compete cannot be for a period of longer than one year, with limited exceptions; and (6) non-competes signed after employment has commenced must be supported by “fair and reasonable consideration”, which is not defined. There are numerous other requirements. Please contact us should you require additional information.
Paid Family and Medical Leave
Starting January 1, 2021, eligible employees will be entitled to take up to 20 weeks of paid medical leave to attend to their own serious medical needs, up to 12 weeks of paid leave to care for a sick family member or a newborn, and up to 26 weeks of paid leave to care for a covered service member. The paid leave program will be administered by the state of Massachusetts and funded through a 0.63% payroll tax, which the employer and employee will split. Employees will be required to cover 100% of the contributions for family leave, and 40% of the contributions for personal medical leave. However, employers with over 25 employees must pay 60% of the contributions for personal medical leave. Employer and employee contributions will begin on July 1, 2019.
Before receiving payment during leave, the employee will have to take seven days of unpaid leave. Thereafter, the employee will be eligible for a weekly paid leave equal to 80% of the employee’s wages (capped at 50% of the state average weekly wage) plus 50% of their wages beyond that amount (capped at $850 per week), which is adjusted annually to remain at 64% of the state average weekly wage.
There are a number of other administrative and notice requirements. Please contact us should you require additional information regarding these requirements.
Increased Minimum Wage
Beginning January 1, 2019 and gradually increasing over the following five years, the hourly minimum wage in Massachusetts will increase from $11.00 to $15.00 and the tipped hourly minimum wage will increase from $3.75 to $6.75.
Sweeping Sexual Harassment Laws
The New York state budget that was enacted on April 12, 2018 includes numerous requirements concerning sexual harassment. The new requirements: (1) extend protection against sexual harassment to non-employees, including contractors, subcontractors, vendors and consultants; (2) prohibit employers from requiring employees to arbitrate sexual harassment claims; (3) prohibit employers from including non-disclosure provisions in settlement agreements for sexual harassment claims unless the employee prefers otherwise and certain other requirements are met; and (4) mandate all employers, effective October 9, 2018, to adopt a sexual harassment policy containing certain specific provisions, and to conduct annual interactive sexual harassment training for all employees covering certain specific topics.
On June 27, 2018, the United States Supreme Court issued a pivotal decision in Janus v. American Federation of State, County and Municipal Employees, which overturned more than 40 years of precedent. The Janus case involved “agency fees” that unions typically require non-union employees to pay. That is, employees who are covered under a union’s collective bargaining agreement, but choose not to join the union, do not have to pay full union dues. Instead, they pay agency fees to cover the basic costs that the union incurs in representing them. In Janus, the Court held that public employee unions cannot force non-union employees to pay agency fees because this requirement violates the First Amendment.
The Janus case overturned the Court’s prior decision in Abood v. Detroit Bd. of Educ. where the Court held that agency fees were constitutional so long as the union used the fees for non-political purposes, such as collective bargaining, contract administration, grievance adjustment purposes, and other activities “germane to the union’s duties as collective bargaining representative.” The Court reasoned that there was a compelling state interest in promoting “labor peace” and avoiding the issue of “free riders”—i.e., employees reaping the benefits of union representation without paying dues.
In Janus, the plaintiff was a non-union public employee who was required to pay an agency fee that was 78.06% of total dues, or $535 annually. The plaintiff challenged the agency fee claiming that it violated the First Amendment because it was “coerced political speech.”
The Court held in favor of the plaintiff describing the Abood decision as “poorly reasoned.” It also pointed out that the decision has led to “practical problems and abuse.” The Court explicitly rejected the “labor peace” and “free rider” justifications underlying the Abood decision, concluding that these justifications did not outweigh First Amendment protections. With respect to “labor peace,” the Court noted that there are millions of public employees in states that do not allow agency-fee arrangements and unions continue to represent them. On the issue of “free riders,” the Court concluded that the issue simply does not provide a compelling interest to override the First Amendment protections at issue. As a result, the Court concluded that mandatory agency-fees are unconstitutional and that public employees must affirmatively agree to pay union dues.
The Janus decision will have a significant impact on public unions particularly in states like Connecticut, which allow agency fees. We are monitoring developments following this decision and will update you as more details unfold. Please do not hesitate to ask us any questions you might have regarding this decision and its affects.
Join us for the next session in the 2018 Human Resources Roundtable Breakfast Series on Thursday, September 27th!
Topic: “Handling Generational Issues in the Workplace.”
For more information, please click here.
Join us for the next session in the 2018 Human Resources Roundtable Breakfast Series on Thursday, July 26th!
Topic: “Responding to a CHRO Charge: How to Put Your Best Foot Forward.”
For more information, please click here.
On May 21, 2018, the United States Supreme Court held in Epic Systems Corp. v. Lewis, and two related cases, that class action waiver provisions contained in arbitration agreements do not violate the National Labor Relations Act. This decision is a significant favorable development for employers. Justice Gorsuch, writing in a 5 to 4 decision, held that although the public policy is debatable, the Federal Arbitration Act allows arbitration agreements with such waiver provisions to be enforced despite claims that “concerted activity” under the National Labor Relations Act includes the right to file class actions. In a strongly worded dissent, Justice Ginsburg called the decision “egregiously wrong.”
As we alerted you previously, this is a hot button issue that provides key insight into the current Supreme Court’s view on arbitration and the National Labor Relations Act. The decision continues a long line of cases favoring arbitration. Stated simply, it means that employers may require employees to sign valid arbitration agreements prohibiting class actions as a condition of employment.
Under these waiver provisions, it will be more difficult for employees to challenge employment practice violations through the usually more expensive and burdensome class action litigation process. (The cases before the Court were alleged wage-hour violations under the FLSA.) Instead, such challenges will be decided individually on the merits through what is generally regarded as a more expedient and efficient arbitration process. Critics of the Court’s decision argue that this will discourage claims, lead to inconsistent decisions and result in less protection of employee rights. Proponents argue otherwise: the more efficient arbitration process could result in more claims being filed. Proponents also note that the costly and burdensome class action process was being misused to leverage large settlements from employers.
In addition to the major impact this decision could have on the employment law landscape, the decision also is significant because it foreshadows the current Court’s more limited view on deference to administrative agencies, such as the NLRB, under the so-called “Chevron deference” doctrine.
Employers should revisit the pros and cons of requiring their employees to arbitrate employment claims. The Court’s decision in Epic Systems is a major factor, among others, in favor of binding arbitration. However, other countervailing factors should be considered, such as reduced chances of prevailing on dispositive motions and limited appellate review. Yet there is no question that most large employers could benefit from limiting their exposure to class actions, particularly given the recent surge in class or collective wage-hour litigation. As a caveat, employers should recognize that there are essential components that must be included to establish a legally enforceable, mandatory arbitration procedure.
Given the controversy surrounding the Court’s decision and the policy questions it raises, state legislatures might seek to minimize or undermine the Court’s decision. We will continue to monitor this area and update you as the law develops. At the same time, we continue to work with clients as they modify policies in response to this important development.
The 2018 edition of Chambers USA Guide to America’s Leading Lawyers for Business ranks Carmody Torrance Sandak & Hennessey LLP Labor & Employment practice area and three attorneys in the top tiers in Connecticut. Chambers USA is a publication by Chambers and Partners, a third-party research and publishing company, that ranks U.S. Law firms and attorneys based on extensive interviews with clients and members of the legal community.
Lawyers are ranked on the basis of their legal knowledge and experience, their ability, their effectiveness, and their client service. Departments are ranked on the qualities of their lawyers and the effectiveness of the department as a whole.
Carmody’s Labor and Employment Group is included and noted for “a depth of litigation experience in claims concerning discrimination, retaliation and harassment, among other matters.” One source shared “They provide clear advice in personnel matters.” The publication also highlights three of the group’s attorneys, D. Charles Stohler, Giovanna Tiberii Weller and Domenico Zaino, for their extensive experience in labor and employment matters.
Chuck Stohler, of West Hartford, CT, is highlighted for his experience across a spectrum of employment law issues, including labor relations and wage and hour disputes. One interviewee opined “He has a very good practical approach to problem solving. He has been doing this a long time and I’ve never seen anything rattle him. He’s very practical and methodical in dealing with problems on a step-by-step basis.”
Giovanna Tiberii Weller, of Meriden, CT, is noted for extensive experience representing employers in trials and appeals. She is described by her peers as “a fierce trial attorney and a litigator through and through.”
Nick Zaino, of Glastonbury, CT, is recognized for counseling employers on the full range of employment issues, including regulatory and compliance training. Sources also highlight his work with labor arbitrations and administrative proceedings.
The Connecticut General Assembly ended its legislative session quietly for the second year in a row. There were significant employment proposals on pay equity, paid FMLA, sexual harassment and discrimination, paid sick leave, and an increase in the minimum wage, but the General Assembly only passed the pay equity bill.
The General Assembly passed “An Act Concerning Pay Equity.” Under this law, employers will be prohibited from inquiring or directing a third party to inquire about a prospective employee’s wage and salary, unless the prospective employee has voluntarily disclosed such information.
This law does not apply to employers or third parties who are required to inquire about wage or salary history by federal or state law. The law also does not prohibit employers from inquiring about other elements of a prospective employee’s compensation structure (e.g., whether the employee received stock options.) However, the employer may not inquire about the value of other elements of the prospective employee’s compensation structure (e.g., the value of the stock options.)
The Governor has indicated that he will sign this bill into law and if signed, it will take effect on January 1, 2019.
No Changes to Sexual Harassment Laws
One of the most surprising developments was the failure of the General Assembly to pass reforms to the state’s sexual harassment laws. Proposed bills would have, among other things, increased the number of employers required to provide sexual harassment training and would have required training for non-supervisory employees. One proposal also would have eliminated an important affirmative defense for employers and would have significantly increased the statute of limitations for bringing such claims.
These proposals were made in the wake of the #MeToo movement and had overwhelming support among legislators. It appears that the bill failed to pass due to concerns about a provision extending the statute of limitations for certain sex crimes. It remains to be seen whether the momentum for strengthening the state’s laws on sexual harassment will carry through to the next legislative session.
Employers should not take the Connecticut legislature’s failure to pass a bill as a sign that the #MeToo movement is waning. In fact, New York state, and New York City, recently passed laws requiring sexual harassment training for all employees. Other neighboring states also are considering new sexual harassment laws. Connecticut employers should continue to review their policies and procedures on preventing and properly responding to harassment in the workplace. Covered employers must continue to train their supervisors and, although not legally required to do so, an increasing number of employers also are training non-supervisory employees.
Please contact us if you are considering training your non-supervisory employees as we have developed a program for this audience.
Employers should be aware of two developments in federal wage and hour law. The U.S. Supreme Court has issued an employer-friendly decision regarding the interpretation of the FLSA exemptions and the U.S. Department of Labor has launched a new program that will allow employers to self-audit and avoid fines for accidental violations of the federal wage and hour laws on overtime and minimum wages.
Supreme Court Decision Signals Broader View of FLSA Exemptions
On April 2, 2018, the U.S. Supreme Court issued an important decision which signals that it will take a broader view of FLSA exemptions. In Encino Motorcars LLC, v. Navarro, the Court held that auto service advisors, who advise customers about repair work, are exempt under the FLSA exemption that excludes salesmen, partsmen, or mechanics “primarily engaged in selling or servicing automobiles.”
Although this case only involved auto service advisors, the decision is important because the Court abandoned the long-held principle that FLSA exemptions are to be “narrowly construed” against employers seeking to assert them. In the past, if there was any “gray area” or uncertainty, the court would resolve that ambiguity in favor of employees and hold that they were not exempt.
Now, the Court will apply a “fair reading” of FLSA exemptions, meaning it will take a more holistic, rather than a narrow approach, when determining whether employees are exempt. This new standard includes a critical examination of the statutory language, consideration of relevant industry practices, and the intent of the exemption. In the Encino Motorcars, LLC case, the Court looked at the phrases “salesman, partsman, or mechanic” and “selling or servicing automobiles” and determined that the language could be combined such that a “salesman” who is primarily engaged in “servicing” vehicles falls within the exemption. The Court held that service advisors were “obviously” a form of “salesmen of services” and, therefore, were exempt.
The decision may make it easier for employers to establish that employees are exempt under the FLSA. But employers should be aware that this decision does not affect state laws and state laws on exemptions still apply.
DOL Announces Pilot Program to Self-Audit
Recently the U.S. Department of Labor announced the “Payroll Audit Independent Determination,” or PAID, program, which will allow employers to self-audit and to pay back wages for accidental overtime and minimum wage violations. This program requires employers to carefully audit their pay practices and correct any violations going forward.
There are numerous unanswered questions, most notably the effect of voluntary compliance with the federal FLSA under the PAID program would have on potential state violations for the same issues. The program is currently in a six month “pilot” period and will be evaluated at the end of the period.
Before participating in what could be a beneficial and efficient way to resolve possible wage and hour violations, employers are advised to consult counsel to understand the full ramifications of the PAID program.
Employers should take note of the following developments in labor law. The National Labor Relations Board vacated a key joint-employer decision and the United States Supreme Court is considering two cases which will impact labor law and union organizing.
Oops! Board Member’s Private Practice History Leads to Return of Obama-Era Joint-Employer Standard
In a previous post, we reported that the Board overturned the Obama-era Browning-Ferris decision and restored the employer-friendly “direct and immediate” control test for establishing joint-employer status when it issued the Hy-Brand decision. On February 26, 2018, however, the Board vacated that decision.
The Board vacated it because current Board Member William Emmanuel’s former law firm represented the employer in Browning-Ferris when the case was before the Board and before his appointment. Critics of the Hy-Brand decision argued it was improper because Emmanuel’s former firm participated in a decision he voted to overturn once he was appointed. The NLRB’s Inspector General sent the Board Members a memorandum which concluded that Emanuel should not have participated in the Hy-Brand decision and recommended that the Board consult with agency ethics officials to determine whether it should vacate the decision. The Board decided to vacate it.
This means that the Browning-Ferris “indirect control” standard has been resurrected, at least for now. The Board must now consider the joint employer standard in a new case where there are no conflicts of interest.
We also reported that the “Save Local Business Act” is pending before Congress. This Act would establish the “direct control” standard for the National Labor Relations Act and Fair Labor Standards Act. The Board’s decision to vacate the Hy-Brand decision may lead to action on this bill. We will keep you updated on any developments.
U.S. Supreme Court Considers Mandatory Arbitration and Agency Fees
The Supreme Court is currently considering two cases that will have a large impact on labor arbitrations and union organizing.
The first is titled National Labor Relations Board v. Murphy Oil. This is a trio of cases which consider whether class and collective action waiver provisions are lawful in arbitration agreements. The Board’s position is that requiring employees to give up their right to arbitrate class or collective action claims is a violation of the employees’ rights to engage in concerted activity. The Supreme Court heard argument on this case on October 2, 2017, and a decision will likely be released soon.
This decision will provide insight on the current Supreme Court’s views on arbitration, employees and the National Labor Relations Act.
The second is Janus v. American Federation of State, County and Municipal Employees. In this case, the Supreme Court is considering whether the requirement that public-sector employees be required to pay union dues as a condition of employment regardless of union membership is constitutional. Currently, public-sector employees are required to pay union dues and these funds are used for, among other things, union organizing and campaigning. The Supreme Court will be deciding whether this requirement violates the public-sector employees’ First Amendment rights because many of the employees are not union members or union supporters but are required to contribute to union funding.
This case will provide insight to the current Court’s views on unions and union organizing. The case was heard on February 27, 2018. We will keep you updated on the result.