Connecticut employers must begin paying $10.10 per hour to their employees on January 1, 2017.  For hotel and restaurant employees who normally receive sufficient gratuities, the employer must pay at least $6.38 per hour ($8.23 for bartenders) under the new minimum wage, but the employee must still make at least $10.10 per hour including tips and employers must follow recordkeeping and reporting obligations related to the tip credit.

Employers must also update their workplace posters to ensure they reflect the new minimum wage.  The posters are available from the Connecticut Department of Labor at http://www.ctdol.state.ct.us/gendocs/labor_posters.htm.

Also, in case you missed it, the new “overtime rule” for salaried employees was blocked nationally on November 22nd.

Our team of labor and employment attorneys can assist employers in adjusting to the new minimum wage requirements and ensuring compliance with all applicable labor and employment laws

Earlier this year, the U.S. Department of Labor issued a rule requiring employers to pay most employees a minimum of $913 per week in order for them to be exempt from overtime under federal law.  This rule more than doubled the existing salary threshold of $455 per week and was slated to go into effect December 1.  The threshold applies to those exempt under the executive, administrative, and professional exemptions.

A federal district court in Texas just issued an emergency injunction blocking the rule from going into effect.  Moreover, the decision questions the validity of a salary minimum in general, calling into question not just the new rule, but the existing rule as well.  The emergency injunction preserves the status quo by blocking the rule from going into effect on December 1, and based on the court’s declaration that the rule is “unlawful,” a permanent injunction can be expected.  The court determined that the rule, in various respects, exceeded the authority granted by Congress to the Department of Labor under the Fair Labor Standards Act.  The Department of Labor could appeal the ruling, but given the short time remaining in the current presidential administration, it is unlikely that the rule would be defended.  In other words, the rule is likely dead.

What does this mean for employers?  If you have not already increased salaries or restructured pay to comply with the rule, you do not need to do so and can maintain the status quo.  If you already made changes, it can be hard to roll them back with current employees due to the effects on employee morale.  Some employers may choose to do this anyway, some employers may choose to make the effects permanent, and some may choose to return the pay structure to its previous status for future employees.  Collective bargaining agreements should be consulted before altering pay arrangements.  Any plans to reduce an employee’s pay must be communicated to the employee in writing before any work is performed under the new arrangement.

Future developments are difficult to predict, but it is possible we will see courts or the Trump Administration eliminate the existing salary threshold of $455 per week.  Many states, including Connecticut, have their own thresholds.  Connecticut requires a minimum salary of $400 per week for executive, administrative, and professional employees; a simplified analysis of the employee’s duties applies if a threshold of $475 is met.  Since 2004, when the $455 threshold went into effect nationally, the $400 threshold became irrelevant.  If the existing $455 threshold is eliminated, Connecticut employers may be able to pay salaries of as little as $400 per week in some cases without being subject to overtime obligations.  It is quite possible that Connecticut will pass legislation to increase the salary threshold statewide in light of the (apparently) failed effort on the federal level.

For now, the takeaway for employers is that the December 1 deadline is on hold.  What will follow remains to be seen.  Our team of labor and employment attorneys can assist employers in ensuring compliance with all applicable labor and employment laws.  Contact us to arrange a wage-and-hour self-audit for your organization.

Connecticut employers need to be aware of two significant changes in the law surrounding internships.

The first is a new state statute including unpaid interns in the protections afforded to employees with respect to discrimination and harassment. Employers should update their handbooks and training materials to ensure that interns receive the same protections as employees with respect to discrimination and harassment.  They should also ensure that internship opportunities are not advertised in a manner that would discriminate against members of protected classes.  (Last year, the New York City Council made a similar amendment to the New York City Human Rights Law.)

The second change is the recent Second Circuit decision in Glatt v. Fox Searchlight Pictures.  This decision makes it easier for for-profit employers to meet the requirements for an intern to be unpaid.  The U.S. Department of Labor has taken the position that an intern may only be unpaid when all parts of a six-part test are met.  The Second Circuit held that this test should be replaced with a more flexible “primary beneficiary test” to assess whether the intern or the employer is the primary beneficiary of the relationship.  The Second Circuit then provided a list of seven non-exhaustive considerations that should be applied by “weighing and balancing all of the circumstances.”  In other words, the test provides some guidelines, but it is not necessary for all of the factors to be met in order for an intern to be unpaid and courts may consider other relevant evidence as appropriate.  The factors are:

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands‐on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

The Second Circuit’s decision covers New York, Connecticut, and Vermont.  Employers in other jurisdictions are subject to decisions within their jurisdictions and/or the Department of Labor’s six-part test.  Also, until the Second Circuit’s factors are used in more decisions allowing for some level of predictability of outcome, employers should take a conservative approach when determining whether interns must be paid.  If in doubt, paying the intern at least minimum wage and complying with all applicable employment laws is the safest course of action.

While employers must still remain wary about hiring unpaid interns, the Second Circuit decision enhances the options available to employers who desire to use interns.  The new Connecticut statute, while creating a new avenue of liability for employers, is unlikely to have a significant impact on employers’ practices.   Our team of labor and employment attorneys can assist you in reviewing these issues to ensure your use of interns is legal.

A recent speech by Labor Secretary Thomas Perez at the IAFF conference provided some details about the changes to the managerial exemption to the Fair Labor Standards Act (“FLSA”).  Significantly, Secretary Perez reiterated that the current salary threshold of $455 is inadequate and that the primary duties test creates an employer friendly “loophole” that is used to prevent many low income employees from earning overtime. 

The last changes to the managerial exemption occurred in 2004 when the salary threshold was raised from $250 to $455.  This was the second increase in the 40 years the exemption has existed.  The remarks by Secretary Perez mirror those made by President Obama back on March 13th that the current $455 threshold is inadequate.  

Continue Reading Obama and Labor Secretary are working to Overhaul Overtime Rules for Exempt Employees

Employers in the construction industry should not be surprised if the Department of Labor comes knocking at their door in the near future.  Recently, the Hartford office of the U.S. Department of Labor’s Wage and Hour Division announced an enforcement initiative to identify and eliminate wage and hour violations through increased compliance with the federal Fair Labor Standards Act (FLSA).  The initiative is targeted at Connecticut and Rhode Island employers in the construction industry.   

The DOL is developing new strategies to better identify and remedy labor violations in an effort to effect change across the entire construction industry.  According to the DOL, some contractors are subcontractors “cut corners with respect to wages, hours and employment conditions” and the initiative is a means to protect workers against exploitation.  Of paramount concern for the DOL is that general contractors require and ensure FLSA compliance by all of their subcontractors. 

Included in the initiative is the investigation of general contractors and subcontractors on large projects, and aggressive pursuit of corrective action for violations of the law, including payment of back wages, civil money penalties, and liquidated damages.  Between 2000 and 2010, the DOL conducted nearly 300 investigations of construction industry employers in Connecticut and Rhode Island, resulting in the payment of $5.6 million in back wages to workers.  With this new focus, the DOL seeks to increase the number of investigations and the amount of back pay paid by employers to workers.  The DOL’s press release announcing the initiative can be found here.

Some of the major FLSA requirements and pitfalls that employers encounter include:

  • Payment of at least the minimum wage.  While the federal minimum wage is $7.25 per hour, Connecticut law requires payment of $8.25 per hour and Rhode Island requires payment of $7.40 per hour.
  • Payment of one and-one half times (1 ½) an employee’s regular rate of pay for hours worked over 40 per workweek.
  • Proper determination of what constitutes an employee’s “regular rate of pay.”  Regular rate of pay can include more compensation than the employee’s hourly rate, such as shift differentials or pay incentives for hazardous work.
  • Payment for all “hours worked,” as the term is interpreted under the FLSA.  Depending on the circumstances, waiting time, on-call time, travel time, and meal periods can all constitute work time for which an employer must compensate an employee.

Compliance with recordkeeping requirements, including maintaining specified information about each employee and his/her hours worked and wages earned.  In addition, employers are required to preserve at least 3 years of payroll records, collective bargaining agreements, and sales and purchase records.  Records must be open for inspection by a DOL representative.

Given the DOL’s initiative to identify and remedy FLSA violations, Connecticut and Rhode Island employers in the construction industry are well advised to review their current wage and hour practices to ensure compliance with the law.  Significantly, in some instances, failure to comply with the FLSA can result in an award of double the amount of back wages for the past 2 or 3 years, plus attorney’s fees and court costs.