In Southwest Appraisal Group v. Administrator, Unemployment Compensation Act, the Connecticut Supreme Court resolved an important question bearing on the so-called ABC test, which is used to evaluate whether an individual is an independent contractor or an employee.

Specifically, the Court held that an individual who works in connection with only one company can still be considered an independent contractor. However, the Court noted that it will continue to use the ABC test in assessing the putative employer-employee relationship.

As noted by the Court, the ABC factors include: (1) the existence of state licensure or specialized skills; (2) whether the putative employee holds himself or herself out as an independent business through the existence of business cards, printed invoices, or advertising; (3) the existence of a place of business separate from that of the putative employer; (4) the putative employee’s capital investment in the independent business, such as vehicles and equipment; (5) whether the putative employee manages risk by handling his or her own liability insurance; (6) whether services are performed under the individual’s own name as opposed to the putative employer; (7) whether the putative employee employs or subcontracts others; (8) whether the putative employee has a saleable business or going concern with the existence of an established clientele; (9) whether the individual performs services for more than one entity; and (10) whether the performance of services affects the goodwill of the putative employee rather than the employer.

In Boutillier v. Hartford Public Schools, No. 3:13-CV-01303-WWE (November 17, 2016), a Connecticut district court held that Title VII of the Civil Rights Act of 1964 prohibits discrimination based on sexual orientation. This decision is at odds with Second Circuit Court of Appeals precedent in Simonton v. Runyon, where the Court held that “Title VII does not proscribe discrimination because of sexual orientation.”

As Judge Eginton explained in Boutillier, “straightforward statutory interpretation and logic dictate that sexual orientation cannot be extricated from sex; the two are necessarily intertwined.The court further reasoned that “[p]resuming that an employer has discriminated against an individual with respect to compensation, terms, conditions, or privileges of employment, because of such individual’s sexual orientation, that employer has necessarily considered both the sex of the partner and the sex of the individual.”

Effective January 1, 2017, Connecticut’s minimum wage shall increase to $10.10.

Laws governing non-compete agreements vary from state to state. Certain states, such as California, North Dakota and Oklahoma, ban non-compete agreements entirely.

The White House is pressuring states to follow suit, and to ban non-compete agreements for certain employees and in certain industries, stating that that non-compete agreements unfairly limit the ability of workers to jump from one company to another. Specifically, the White House is advocating for the ban of non-compete agreements as to low-wage employees who are unlikely to know trade secrets, health and safety employees, and employees laid off through no fault of their own.

This announcement comes on the heels of last week’s announcement by the Department of Justice and the Federal Trade Commission that they would launch criminal investigations into companies caught colluding on salaries or agreeing not to hire each other’s employees.

In State of Connecticut v. Connecticut Employees Union Independent, the Supreme Court of Connecticut upheld an arbitrator’s determination that termination was too harsh a punishment and was not mandated by the employer’s drug-free workplace policy.

The case involved a UConn Health Center employee who was discovered by a Health Center police officer smoking marijuana in a state-owned van during his shift. The employee was in possession of two bags of marijuana and marijuana paraphernalia. The employee was arrested and the Health Center terminated his employment. The Health Center asserted that the employee had violated numerous workplace policies, including the Health Center’s drug-free workplace policy, and had demonstrated that he was untrustworthy to perform his duties.

The employee’s termination was arbitrated, and the arbitrator determined that that termination was too harsh a punishment and was not required by the Health Center’s drug-free workplace policy. The arbitrator also noted mitigating factors including the employee’s claim that he had been using marijuana to treat his anxiety and depression. The arbitrator determined that a six (6) month unpaid suspension and random drug testing upon his return to work was appropriate discipline. The Health Center sought to vacate the arbitrator’s decision, stating that it violated a defined public policy against drug use in the workplace. The trial court found for the Health Center.

The case eventually made it to the Connecticut Supreme Court, where it was reversed. Specifically, the Connecticut Supreme Court found that Connecticut has a strong public policy against recreational marijuana use in the workplace, but that the arbitrator’s decision did not violate the public policy.

In conjunction with its recent changes to overtime rules, the United States Department of Labor has also announced that penalties for wilful violations of the minimum wage and overtime provisions of the Fair Labor Standards Act will increase from $1,100 to $1,894 for each violation, to be assessed in addition to back wages and liquidated damages.

Note that a “wilful” violation may be found where an employer intentionally committed prohibited conduct or showed a “reckless disregard” for the law.

The Connecticut Supreme Court, in Commission on Human Rights and Opportunities v. Echo Hose Ambulance et al., ruled that unpaid volunteers are not “employees” for the purposes of the Connecticut Fair Employment Practices Act, which contains Connecticut’s workplace anti-discrimination laws.

Specifically, the Connecticut Supreme Court decided that a volunteer must satisfy the ‘‘remuneration test’’ used to resolve similar federal causes of action, as opposed to Connecticut’s common-law ‘‘right to control’’ test. The remuneration test is comprised of a two-step inquiry. As a threshold matter, the volunteer first demonstrate remuneration. Remuneration may consist of either direct compensation, such as a salary or wages, or indirect benefits that are not merely incidental to the activity performed. The second step involves analyzing the putative employment relationship under the common-law agency test.

Upholding the Appellate Court’s ruling, the Connecticut Supreme Court held that the Plaintiff was not an “employee” under the Connecticut Fair Employment Practices Act, because she failed to meet the remuneration prong of the remuneration test.

In Lewis v. Epic Systems Corporation, No. 15-2997 (May 26, 2016), the Court of Appeals for the Seventh Circuit ruled that an employer-imposed agreement that required that employees bring any wage-and-hour claims against the employer only through individual arbitration, and prohibited collective arbitration or collective action in any other forum, violated the National Labor Relations Act (NLRA), and was unenforceable under the Federal Arbitration Act (FAA).

An employee sued Epic Systems in federal court, contending that it had violated the Fair Labor Standards Act (FLSA) and state law by misclassifying him and fellow employees, and thereby unlawfully deprived them of overtime pay. Epic Systems moved to dismiss the claim and compel individual arbitration pursuant to the agreement. The Plaintiff responded that the arbitration clause violated the NLRA because it interfered with employees’ right to engage in concerted activities for mutual aid and protection and was therefore unenforceable. The district court agreed and denied Epic Systems’ motion.

The Seventh Circuit Court of Appeals upheld the district court’s determination, stating that the agreement ran straight “into the teeth” of  the employees’ Section 7 right to engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection, and that contracts that stipulate away employees’ Section 7 rights or otherwise require actions unlawful under the NLRA are unenforceable. 

In May, the United States Department of Labor  issued its final rule updating the regulations governing the exemption of employees from the minimum wage and overtime pay protections of the Fair Labor Standards Act. Significant components of the final rule are as follows:

1. Sets the standard salary level at $913 per week or $47,476 annually for a full-year worker;

2. Sets the total annual compensation requirement for highly compensated employees subject to the duties test to $134,004.

3. Allows employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level, so long as they are provided on a quarterly or more frequent basis; and

4. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Notably, the final rule makes no changes to the duties test. Employers have until December 1, 2016 to comply with the new rule.