On August 31, 2017, a Texas federal judge struck down the Obama administration’s controversial DOL Overtime Rule.  The judge concluded that the DOL “exceeded its authority and had gone too far with the final rule.”

Background

In March 2014, then President Obama sent a memorandum directing the Secretary of Labor to “modernize” and “streamline” the existing overtime regulations for executive, administrative, and professional (“EAP”) employees. In response, the DOL initiated the process of creating a new overtime rule. The resulting Final Rule raised the minimum salary threshold for “EAP” workers from $455 per week ($23,660 annually) to $913 per week ($47,476 annually) and for “highly compensated employees” from $100,000 to $134,000.

Several states and business groups challenged the rule in federal courts in Nevada and Texas. The cases were consolidated before the same federal judge in Texas. On November 22, 2016, the Texas judge issued a preliminary injunction preventing the rule from taking effect. The Obama administration appealed the injunction ruling to the Fifth Circuit Court of Appeals before President Trump was sworn in. The DOL recently moved to withdraw its appeal in light of the federal judge’s ruling.

Decision

The Texas judge concluded that the DOL had exceeded its authority by creating a salary level requirement that essentially eliminated the job duties test. He held that the while the DOL has broad authority to define and delimit the EAP exemptions, this authority is limited by the plain meaning of the words of the statute and Congress’s intent  The judge stated that, “the Department does not have the authority to use a salary-level test that will effectively eliminate the duties test… [n]or does the Department have the authority to categorically exclude those who perform ‘bona fide executive, administrative, or professional capacity’ duties based on salary level alone.” In reaching this conclusion, the judge noted that the proposed rule would have automatically made 4.2 million workers eligible for overtime without a change to their job duties.

Impact for Employers

The overtime rule is invalidated for now. However, Labor Secretary Alexander Acosta stated during his confirmation hearings that the Obama-era increase was far too high but that the salary threshold should be increased to somewhere between the proposed salary level and the current level. In July 2018, Secretary Acosta followed up on this statement and issued a request for information inviting public feedback on ways to revise the Obama administration’s rule. We will keep you posted on important developments as they occur.

On August 17, 2017, the Connecticut Supreme Court unanimously held in Williams et. al. v General Nutrition Centers, Inc. that the federal fluctuating workweek (“FWW”) method for paying overtime cannot be used for retail employees.

Basic Facts and the Court’s Ruling

In Williams, the plaintiffs were managers at GNC stores who were paid a base salary plus a commission.  GNC paid the plaintiffs overtime using the FWW method. This method is recognized under the federal Fair Labor Standards Act (FLSA) as an alternative to paying non-exempt employees overtime based on time and one-half their regular rate of pay. Under this method, there must be a “clear mutual understanding” that the employee will be paid a fixed salary that serves as compensation for all hours worked, which must fluctuate from week to week. The employee must then be paid an additional one-half of the regular rate for all overtime hours.  The FLSA regulations provide the following example:

During the course of 4 weeks, an employee whose salary is $600 works 40, 37.5, 50, and 48 hours.  Accordingly, the regular hourly rate of pay in each of these weeks is $15.00, $16.00, $12.00, and $12.50, respectively. Since the employee has already received straight-time compensation on a salary basis for all hours worked, only additional half-time pay is due. For the first week the employee is entitled to be paid $600; for the second week $600; for the third week $660 ($600 plus 10 hours at $6.00 or 40 hours at $12.00 plus 10 hours at $18.00); for the fourth week $650 ($600 plus 8 hours at $6.25, or 40 hours at $12.50 plus 8 hours at $18.75).

This example illustrates how, under the FWW method, an employee’s regular rate and, correspondingly, the overtime rate, decreases as the employee works more hours.   The Court ruled that the FWW method is unlawful for retail employees because the Connecticut Department of Labor (DOL) promulgated a wage order specifically requiring that mercantile employees be paid overtime based on the conventional method of paying overtime.

Impact for Employers

Connecticut employers can no longer use the FWW method of paying overtime for employees who work in the mercantile trade.  The Supreme Court stated that Connecticut’s wage and hours laws do not specifically prohibit the FWW method for employees who do not work in the mercantile trade. However, the Connecticut DOL has not adopted any regulations that specifically permit the FWW method to be used. While Connecticut generally follows the FLSA, it remains to be seen whether this decision will trigger lawsuits seeking to challenge the FWW method for other groups of employees.  Connecticut employers using the FWW method for other employees should assess their risks of continuing to do so, and should monitor further developments in this area.

The Connecticut Appellate Court recently held that an employee’s request for leave was not a reasonable accommodation where the employee requested an indefinite leave and did not respond to the employer’s request to contact her regarding her leave.  The case, Thompson v. Department of Social Services, provides helpful guidance to employers in managing medical leaves of absences.

Basic Facts

The plaintiff was employed by the Connecticut Department of Social Services (DSS) from 1987 to 2013. She suffered from a chronic condition that required her to take medical leaves throughout her employment, including intermittent leaves and leaves on a reduced work schedule.

On February 6, 2013, after having exhausted her available FMLA leave, the plaintiff left a note under an HR representative’s door stating that she would be taking a medical leave beginning the next day and lasting “over thirty days depending on my lung condition as I need to get well and my lungs better.”  The plaintiff provided her cell phone number and her home address, advising the HR representative to contact her if she had any questions. The plaintiff also left paperwork making claims under two short-term disability policies. On one policy, the plaintiff claimed that she would be unable to work until reevaluated, and her physician indicated that she would be unable to work from February 7, 2013 to “ongoing”, and that he expected “significant improvement in the [plaintiff’s] medical condition” in one to two months. On the other policy, the physician claimed that the plaintiff’s need for leave would be “ongoing” and she would be able to return to work “when reevaluated”, although no date was provided for the reevaluation.

An HR representative mailed a certified letter to the plaintiff’s home address notifying her that she was ineligible for leave, that she had not provided sufficient documentation to support her current leave of absence, that she was ineligible to use leave time donated by a coworker, and that her current leave was not authorized. The plaintiff was instructed to contact her supervisor on a daily basis, and that if she did not provide a medical certificate to support her leave by February 21, 2013, she would be considered to have resigned not in good standing. The plaintiff did not respond and, therefore, a second letter was mailed confirming her separation of employment. The plaintiff stated that she did not receive either letter because she had been staying at her daughter’s home for approximately two weeks, and she was not retrieving her mail. The plaintiff filed a lawsuit claiming that she was discriminated against based on her disability and that DSS failed to provide her a reasonable accommodation in violation of the Connecticut Fair Employment Practices Act (CFEPA).

Court’s Ruling

The trial court rendered summary judgment in favor of the employer and the Appellate Court affirmed on the grounds that a reasonable accommodation does not require an employer to provide an indefinite leave of absence. The Court highlighted the plaintiff’s statement at her deposition that she did not know how long she would be out and the statements on her short-term disability paperwork did not indicate “when—or even whether—the plaintiff would be returning to work.” The Court further noted that the plaintiff did not respond to DSS’s attempt to obtain further information thereby denying DSS the “opportunity to engage in the required interactive process with the plaintiff regarding a reasonable accommodation for her disability.”

Lesson for Employers

This case underscores several important points for employers. First, an employer’s obligation to consider medical leaves as a form of accommodation does not necessarily end when FMLA expires. The Appellate Court recognized that a medical leave of absence can be a form of reasonable accommodation under the CFEPA. Second, a request for an indefinite leave of absence is not reasonable.  Third, employers have a right to request reasonable documentation and information related to an employee’s need for an accommodation, and employees cannot ignore such requests. Fourth, employers and employees have a duty to engage in an interactive process to explore various accommodations. And, finally, the party responsible for the breakdown in the interactive process usually will come out on the short end.

The General Assembly ended its session on June 7, 2017.  There were few labor and employment developments as much of the focus was on the State’s budget situation.  The session featured bills that, if passed, would have significantly changed the current state of the law.  For example, members of the General Assembly sought to establish paid FMLA leave, stronger pay equity measures and significant increases to the minimum wage.  It is likely that most, if not all, of these bills will resurface in future sessions.

One of the bills that did pass was Public Act 17-118, “An Act Concerning Pregnant Women in the Workplace”, which Governor Malloy signed on July 6, 2017.  The law becomes effective on October 1, 2017 and amends the Connecticut Fair Employment Practices Act (CFEPA) to provide additional protections for pregnant employees and applicants, including requiring employers to provide reasonable workplace accommodations unless the employer demonstrates that the accommodation would be an undue hardship. The law defines what constitutes a “reasonable accommodation” and an “undue hardship”. Some reasonable accommodations include, without limitation, being permitted to sit while working, more frequent or longer breaks, periodic rest, job restructuring, light duty assignments and modified work schedules.

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On July 10th, Governor Malloy released the “Connecticut Cybersecurity Strategy” (available for download  here). The “Strategy” is a call to arms for state and municipal government, private business, higher education, and law enforcement in the fight against cyber attacks. The 39-page document describes particular cyber threats and their potentially catastrophic impacts on Connecticut business, health, and public safety; it proposes general plans of action for each stakeholder group; and it identifies available resources for plan execution.  The Strategy calls for action in seven areas: executive awareness and leadership; literacy; preparation; incident response; recovery and continuity; communication; and verification. Although the Strategy applies to Connecticut business broadly, the document highlights the roles particular to the critical infrastructure, financial services, insurance, and defense industries.

We recommend that business leaders get familiar with the Connecticut Cybersecurity Strategy. It proposes a voluntary collaboration and contains no mandates for business.  However, the Strategy expressly declines to rule out future regulatory and legislative action.  The Strategy is a first step and presents “a pathway to a more detailed, operational action plan.” The State recently took a similar approach with respect to the cybersecurity of public utilities.  In that context, it issued a strategy document in 2014, followed by an operational action plan in 2016, which has resulted in annual, confidential reporting on utility company cybersecurity programs.

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A Connecticut Federal District Court judge ruled on August 8, 2017 that an employer may violate state law by refusing to hire an applicant who tests positive for marijuana where the applicant is a lawful user of medical marijuana under Connecticut Law.
Facts
In Noffsinger v. SSC Niantic Operating Company, LLC, the plaintiff was recruited by the defendant for a position as director of recreational therapy at a nursing facility. She was offered the position during the interview and accepted it the next day.  The plaintiff was required to undergo a routine drug screen as a condition of employment. Prior to the drug screen, she informed the defendant that she was registered as a “qualifying patient” authorized to use medical marijuana to treat her post-traumatic stress disorder.  The plaintiff explained that she only took Marinol (a synthetic form of cannabis) in the evening before bed and was never impaired during the workday.  The plaintiff took the pre-employment drug test and tested positive for cannabis. Thereafter, the defendant withdrew its offer of employment, and the plaintiff filed a complaint alleging: (a) violation of Connecticut law prohibiting discrimination against qualifying patients; (b) a common law claim for wrongful rescission of a job offer in violation of public policy; and (c) negligent infliction of emotional distress. The defendant filed a motion to dismiss the claims.