KemLaw

Not only do Connecticut employers need to know about the significant changes in the employment law landscape following the most recent state legislative session which just ended in June 2019, but several other developments which have occurred during the past year or so are presented below to serve as a “refresher course” in case you missed them:

SALARY HISTORY

It is now unlawful in Connecticut:^[1]

• To ask applicants about their wage or salary histories;
• To engage any third-party (such as background check agency) to ask about a job candidate’s prior pay.

Connecticut employers may:

• Ask an applicant what his/her desired wage/salary is;
• Inform an applicant about what the wage/salary range may be for the position and ask if the applicant remains interested;
• Verify salary information from prior employers only if that information was voluntarily disclosed by an applicant (without any request to do so by the employer); and
• Inquire about the structure of an applicant’s prior compensation package (i.e., whether the prior compensation included commissions, bonuses, stock options, retirement benefits, etc.) but not about the value or amount of those components.

PREGNANCY ACCOMMODATION

It is now unlawful in Connecticut:^[2]

• To fail or refuse to make a reasonable accommodation for an employee or person seeking employment due to her pregnancy, unless the employer can demonstrate that such accommodation would impose an undue hardship on such employer. NOTE: “reasonable accommodation” means, “but shall not be limited to, being permitted to sit while working, more frequent or longer breaks, periodic rest, assistance with manual labor, job restructuring, light duty assignments, modified work schedules, temporary transfers to less strenuous or hazardous work, time off to recover from childbirth or break time and appropriate facilities for expressing breast milk.”
• To force an employee or person seeking employment affected by pregnancy to accept a reasonable accommodation if such employee or person seeking employment (i) does not have a known limitation related to her pregnancy, or (ii) does not require a reasonable accommodation to perform the essential duties related to her employment;
• To require an employee to take a leave of absence if a reasonable accommodation can be provided in lieu of such leave;
• To single out pregnancy-related conditions for special procedures to determine an employee’s ability to work;
• To treat a pregnant employee differently than any other temporarily disabled employee (i.e., if the employer allows temporarily disabled employees to modify tasks, perform alternative assignments, or take disability leave or leave without pay, the employer also must allow an employee who is temporarily disabled because of pregnancy to do the same); and
• To not allow pregnant employees to work as long as they are able to perform their jobs. NOTE: An employer also may not have a rule that prohibits an employee from returning to work for a predetermined length of time after childbirth.

Connecticut employers are now further required:

• To provide a “Notice of Pregnancy Rights” to all new hires upon hire (should be posted in the workplace and could be included in an employee handbook as a policy); and
• To provide the “Notice of Pregnancy Rights” to any existing employee within 10 days after she notifies the employer of her pregnancy or conditions related to her pregnancy (or the employer otherwise becomes aware of pregnancy).

CRIMINAL HISTORY QUESTIONS & BACKGROUND CHECKS

• Employers in Connecticut are prohibited from asking applicants about their criminal history on an application or from obtaining criminal history report prior to an interview.^[3] Employers can still obtain criminal information after the first interview and before hire.
• It remains best practice to require applicants to undergo a criminal background check for convictions after the first interview.  However, rejecting an applicant based on criminal history requires individualized assessment of: (i) the nature and gravity of the offense or conduct; (ii) the time that has passed since the offense, conduct and/or completion of the sentence; and (iii) the nature of the job held or sought.

CREDIT CHECKS

• Except for certain circumstances, Connecticut employers are prevented from requiring an applicant or employee to consent to a request for a “credit report” as a condition of employment and from using credit scores in making hiring or employment decisions.^[4] A “credit report” is something that contains information about the credit score, credit account balances, payment history or savings or checking account numbers or balances of the applicant or employee.
• This prohibition does not apply when: (a) the employer is a financial institution (i.e., bank, savings and loan association, credit union, insurance company, investment advisor or broker-dealer); or (b) when the report is required by law; or (c) when the employer “reasonably” believes the employee engaged in any activity that constitutes a violation of the law related to his/her employment; or (d) when the report is “substantially” related to the applicant or employee’s current or potential job or when the employer has a bona fide purpose for requesting or using the information in the credit report that is substantially job-related and is disclosed in writing to the employee or applicant.
• As to the last exception, a credit report is considered “substantially related” to the individual’s prospective or current job when the position: (i) is a managerial job which involves the direction or control of a business, division, unit or agency of a business; or (ii) involves access to customer or employee personal or financial information (other than information customarily provided in a retail transaction; or (iii) involves a fiduciary relationship to the employer (including having the authority to issue payments, collect debts, transfer money or enter into contracts; or (iv) provides an expense account or corporate debit/credit card; or (v) provides access to confidential or proprietary business information or trade secrets (which are the subject or efforts that are reasonable under the circumstances to maintain its secrecy; or (vi) involves access to an employer’s nonfinancial assets valued at $2,005 or more.

NOTE:  As of September 2018, employers are required to use a new version of the “Summary of Rights under the Fair Credit Reporting Act” Notice (updated to include a section on security freezes) to send to any applicant (or employee) prior to taking any adverse action based on results of any background check. To access a copy of this new Notice, visit: https://files.consumerfinance.gov/f/201504_cfpb_summary_your-rights-under-fcra.pdf.

PAYCARDS/BI-WEEKLY PAY

• Connecticut employers may now pay an employee with a paycard. The employee has to sign off that they agree to receive their funds on a paycard.  Employees must still be given option of direct deposit or to be paid by check.
• The paycard must be associated with an ATM network that has a “substantial number” of in-network ATMs and employees must be permitted to make at least three withdrawals without fees per pay period. None of the employer’s costs for using paycards can be assessed to employees.  Employers must provide employees with the ability to check, free of charge, payroll account balances 24 hours a day, 7 days a week by automated telephone system, teller machine or electronically.
• Connecticut employers may pay employees on a bi-weekly basis without obtaining advance approval from the Connecticut Department of Labor.

PERSONNEL FILES/DISCIPLINARY DOCUMENTS

• Employers must allow a current employee to inspect his/her personnel file up to two (2) times per year within seven (7) days of a written request and also permit that employee to copy the file at the time of the inspection.
• Former employees have a right to inspect their file within ten (10) days of a written request if the employer receives the request within one (1) year of the employee’s departure. Inspection of the personnel file by a former employee must take place at a mutually agreed upon location. If the employer and former employee cannot agree on a location, the employer has ten (10) days from the date of receiving the written request to mail a copy to the former employee.
• Employers must provide employees with a copy of “any documentation of any disciplinary action imposed on the employee” within one (1) business day after the discipline is imposed.
• Employers must “immediately provide” an employee with a copy of “any documented notice of [his/her] termination of employment.”
• Employers are required to include in every documented disciplinary action, notice of termination and performance evaluation, a “clear and conspicuous” statement that an employee may submit a written statement explaining his/her position if he/she disagrees with any information in the above-mentioned documents. The employee’s statement must be maintained as part of the employee’s personnel file and must be included in “any transmittal or disclosure from the personnel file to a third party.”

SEXUAL HARASSMENT (NEW YORK EMPLOYEES)

Any employers who have any employees (whether part-time, full-time,  temporary or seasonal) who work or will work in New York (even if that employee is regularly based in a state outside of New York) are subject to new sweeping changes pertaining to sexual harassment laws in New York, including by having to:

• adopt a detailed sexual harassment policy and complaint form;
• conduct specific interactive training for all employees by October 1, 2019 and retraining at least once per year thereafter;
• eliminate provisions in any contracts mandating arbitration of sexual harassment claims; and
• restrict the use of non-disclosure provisions in settlements that prevent the employee from disclosing the underlying facts and circumstances of the harassment.

NONCOMPETE AGREEMENTS (MASSACHUSETTS)

Recent changes in Massachusetts law have severely restricted the use of non-compete agreements for employees who work in Massachusetts and/or employees who live in Massachusetts but work outside of the state.

Specifically, the Massachusetts Noncompetition Agreement Act (“Act”):

• Precludes an employer from having any non-compete provisions for:
• Non-exempt (hourly) employees under the Fair Labor Standards Act (FLSA);
• Employees who are terminated “without cause” (not defined under the law) or laid off;
• Undergrads and grad students who are enrolled in school during their paid or unpaid assignment with the employer and not working full time;
• Anyone 18 or younger;
• Physicians/Nurses/Psychologists/Social Workers;
• Lawyers; and
• Employees in the broadcasting industry

The Act further requires (if the non-compete provision is entered into at time of hire):

• Must be in writing;
• Must be provided by the earlier of the time of the formal offer or ten business days before commencement of employment;
• Must state that the employee has the right to consult counsel prior to signing;
• Must be signed by both the employer and employee; and
• Must include a “garden leave clause” (defined as requiring payment of at least 50% of the employee’s highest annualized base salary paid by the employer within the employee’s last two years of employment, to be paid on a pro rata basis during the restricted period) or be supported by “other mutually-agreed upon consideration” (a term which not defined in the law and thus it is unclear how much “money” may be necessary) independent from being hired (i.e., the giving of the job itself alone will not be sufficient “other mutually-agreed upon consideration” for a noncompete entered into at time of hire), which “other mutually-agreed upon consideration” must be specifically identified in the agreement. In addition, absent a breach of the non-compete by the employee, the employer cannot unilaterally discontinue making any such payments for the garden leave clause or the other mutually-agreed upon consideration (i.e., continued employment alone will not be sufficient consideration for a noncompete entered into after employment has begun);

The Act further requires (if the non-compete provision is entered into after hire and not in connection with an employee’s separation from employment):

• Must be in writing;
• Must be provided not less than 10 business days before the effective date of the agreement;
• Must state that the employee has the right to consult counsel prior to signing;
• Must be signed by both the employer and employee; and
• Must include a “garden leave clause” (as defined above) or be supported by “other mutually-agreed upon consideration” (as not defined in the law per above), independent from continued employment itself (i.e., continued employment alone will not be sufficient consideration for a noncompete entered into after employment has begun).

All non-compete provisions (whether entered into at time of hire or during employment) must be:

• No longer than 12 months following end of employment (unless the employee is a bad actor who has, for example, stolen confidential information or breached his fiduciary duties, in which case the restriction can be up to 24 months);
• Necessary to protect the currently recognized legitimate business interests of the employer (i.e., the protection of trade secrets, confidential information, and goodwill), and such legitimate business interests cannot be adequately protected by other types of restrictive covenants (i.e., such as non-solicitation agreements, no raid agreements, and nondisclosure agreements);
• Reasonable in scope (the agreement will be presumed reasonable in scope if it is limited to the types of services provided by the employee during the last two years of employment); and
• Reasonable in geography (the agreement will be presumed reasonable in geographic reach if it is limited to areas where the employee, within the last two years of employment, provided services or had a material presence or influence).

Other important provisions of this Act include:

• The Act prohibits an employer from having a choice of venue as to where to sue to enforce any breach of a non-compete agreement. Basically, all actions to enforce a non-compete must either be brought in the employee’s county of residence, or if mutually agreed upon by the employer and the employee, in the MA state court located in Suffolk County (which covers Boston and areas near Boston)
• The Act applies only to agreements entered into on or after October 1, 2018 (though to the extent existing agreements prior to October 1, 2018 don’t comply with these new requirements, employees will likely still argue that this new law should be applied retroactively to their agreements if they are challenged from breaching more onerous terms in their existing agreements).
• Nothing in the Act will make unenforceable the remainder of any agreement containing an unenforceable noncompetition provision, or preclude the imposition of a noncompetition restriction by a court, whether through preliminary or permanent injunctive relief or otherwise, as a remedy for a breach of a statue or common law duty by the employee (i.e., a violation of law).

The requirements of the Act have no effect on (i.e., does not prohibit employers from having with employees):

• a covenant not to solicit or hire or raid employees of the employer;
• a covenant not to solicit or transact business with customers, clients or vendors of the employer;
• a nondisclosure or confidentiality agreement;
• an assignment of inventions to employer agreement;
• an agreement by which an employee agrees to not reapply for employment to the same employer after termination of the employee;
• a covenant non-to-compete made in connection with the sale of a business (or substantially all of the operating assets of a business entity or partnership), or otherwise disposing of the ownership interest of a business entity, partnership or division or subsidiary of a business entity or partnership, when the party restricted by the noncompetition agreement is a significant owner of, or member or partner in, the business entity who will receive significant consideration or benefit from the sale or disposal;
• a covenant not-to-compete made at the time of an employee’s separation from employment (if the employee has not been terminated without cause – not defined – or has not been laid off and is expressly given 7 business days to rescind acceptance of the separation agreement).

If you’re an employer and have questions about labor and employment law, consider calling on the attorneys at Kainen, Escalera & McHale in Connecticut.  We do one thing and one thing only – we are an employer defense law firm – in fact, we are one of the largest employer defense law firms in the region.  What’s more, each of our attorneys has over 25 years of experience in employment and labor law matters and can provide your business with comprehensive legal counsel ranging from assistance with necessary preventive measures to trial advocacy.  Please call us if we can help you.

The information provided above is made available by Kainen, Escalera & McHale, P.C. for educational purposes only.  It is not intended to provide specific legal advice to your individual circumstances or legal questions. You acknowledge that neither your reading of, nor posting on, this site establishes an attorney-client relationship between you and our law firm or any of the attorneys in our firm. This information should not be used as a substitute for seeking competent legal advice from a licensed professional attorney in your state nor is it provided for the specific purpose of soliciting your business on any particular matter. Readers of this information should not act upon anything communicated in it without seeking professional counsel.

[1] It is further noted that other states surrounding Connecticut also have their own state-specific laws on salary history inquiries.

[2] It is further noted that other states surrounding Connecticut also have their own state-specific pregnancy accommodation laws.

[3] It is further noted that other states surrounding Connecticut also have their own state-specific criminal background laws.

[4] It is further noted that other states surrounding Connecticut also have their own state-specific credit check laws.