Posts tagged with "future clients"

What is the enforceability of an employment contract in Connecticut?

In Connecticut, the enforceability of an employment contract is based on general contract principals. This contract can be verbal, written or a combination of the two. In addition, employment contracts in Connecticut can be either express or implied. An employment contract is an express contract if it is written and signed by both parties. A valid express employment contract will contain wording that describes the job duties, working conditions, compensation, benefits and other employment details.

If, alternatively, an employment contract is implied, the terms of the contract would come from the conduct of the parties, verbal promises made before employment started, information stated in an employee handbook, promises made in an offer letter, and other sources.

Today, most employers have their employees sign a document agreeing to at-will employment as opposed to a defined term in an employment contract. This way, either the employer or the employee may end the employment relationship at any time, and usually for any reason.

In any case, Connecticut courts regularly find employment contracts enforceable against both parties. Such agreements will be upheld by Connecticut courts as long they do not violate any laws and were not entered fraudulently, under duress, or by mistake of the parties. If valid, both parties to the contract will be held responsible for abiding by its terms and liable for any breach. Frequently, allegations of breach of an employment contract involve issues of compensation and termination of employment.

If you are interested in drafting an enforceable employment contract, or interested in determining whether an employment contract you have already signed is binding, please feel free to call the Employment Law Group of Maya Murphy, P.C. in Westport, CT at 203-221-3100 or email Ask@mayalaw.com today.

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Termination Does Not Invalidate a Non-Compete Agreement

Termination Does Not Invalidate a Non-Compete Agreement

Built In America, Inc. v. Morris, 2001 Conn. Super. LEXIS 2953

Mr. Michael Morris was the owner of Built In America, Inc. until he sold his entire stock in the company to Mr. Marc Costa in October 2000. The parties executed a Purchase and Sale Agreement that legally transferred the stock and ownership of the company. The transaction included an employment contract for an initial period of two years and a non-compete clause that became effective upon Mr. Morris’s termination from the company. The company terminated Mr. Morris in April 2001 and he proceeded to work in direct competition with his former employer. Mr. Costa and Built In America sued Mr. Morris for violation of the non-compete agreement and asked the court to enforce the agreement’s provisions. Mr. Morris argued that the restrictive covenant was null and void because the company had breached the employment agreement when it unlawfully terminated his employment.
The court found in favor of Built In America, ordered the enforcement of the covenant not to compete, and issued an injunction. There was no dispute over the reasonableness of the covenant, only a dispute over whether it became void when the company allegedly improperly terminated Mr. Morris. Built In America cited previous Connecticut cases, most notably Robert S. Weiss & Associates, Inc. v. Wiederlight (208 Conn. 525 (1988)), where the court held that termination did not invalidate a non-compete agreement. Furthermore, the court concluded that the company was justified with respect to its decision to terminate Mr. Morris’s employment, stating that his “behavior was so outrageous that one is left to believe he was inviting his discharge”. The court ultimately concluded that the covenant was legally binding and ordered its enforcement.
If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

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Non-Compete Invalidated Due to Unnecessary Restrictions on Future Employment

Non-Compete Invalidated Due to Unnecessary Restrictions on Future Employment
Connecticut Bathworks Corp. v. Palmer, 2003 Conn. Super. LEXIS 2193

Connecticut Bathworks Corporation was a company servicing New Haven, Fairfield, and Litchfield counties that remodeled bathrooms via the installation of prefabricated acrylic bathtub liners and wall systems. The company employed Mr. Palmer from approximately the beginning of April 2001 to February 28, 2003 at which point Mr. Palmer voluntarily terminated his employment. He began to work for Re-Bath of Connecticut, a company in direct competition with Bathworks, the next day. The issue in this case is that Mr. Palmer signed a “Company Confidentiality Agreement” when he began to work for Bathworks that contained a covenant not to compete that prohibited him from “being employed by any business in competition with the plaintiff [Bathworks] within any county in which the plaintiff is doing business for a period of three years from the termination of his employment with the plaintiff”. This created a three-year prohibition on working for a competitor with the tri-county area of New Haven, Fairfield, and Litchfield.
Bathworks sued Mr. Palmer in Connecticut state court and requested an injunction to enjoin him from further violations of the non-compete agreement. The court analyzed the facts of the case, held in favor of Mr. Palmer, and denied Bathworks’s request for injunctive relief. The court’s decision ultimately came down to the issue of whether Mr. Palmer’s employment with Re-Bath would negatively affect Bathworks’s interests and business operations. Bathworks carried the burden of establishing the probability of success on the merits of the case and the court held that it failed to present sufficient evidence to indicate it would be directly and immediately harmed due to breach of the restrictive covenant.
Bathworks argued that Mr. Palmer acquired valuable trade secrets and information during his employment with the company and that his continued employment with Re-Bath would harm its operations. The court however found that Mr. Palmer, as an installer, did not have access to Bathworks’s confidential information or any trade secrets that would put the company at a competitive disadvantage. The court further noted that while Mr. Palmer was a skilled laborer, he was not a high-level executive, nor did he provide “special, extraordinary, or unique” services. Bathworks also failed to present any evidence to show that Mr. Palmer knew of or took part in the company’s sales/marketing activities or the development of a business strategy.
The court stated that its role in deciding the case was to balance the parties’ interest to fairly protect Bathworks’s business while not unreasonably restricting Mr. Palmer’s right to seek employment elsewhere. This agreement however, according to court, unnecessarily restricted Mr. Palmer’s right to work at another company because there was nothing about that employment which would disadvantage Bathworks in the industry. The non-compete agreement went beyond what was reasonably necessary to protect the company’s interests and as such, the court denied Bathworks’s request for an injunction.
If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

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What’s In a Separation Agreement?

With the economy where it is, the employment lawyers in the Westport, Connecticut office of Maya Murphy, P.C. are frequently asked to review and negotiate separation agreements for terminated employees.  These agreements often appear similar in form and content but must be carefully scrutinized, as they can contain hidden “trip wires” that can have a profound and long-lasting effect on the former employee’s job prospects.  Here are some of the things to look out for.

Most separation agreements contain restrictive covenants—confidentiality, non-solicitation, or non-competition clauses.  The first two—confidentiality and non-solicitation—are typically non-controversial, as they often confirm pre-existing obligations owed an employer by a former employee.  The last—non-competition—is usually a point of contention, as it impacts directly the employee’s ability to find a new position.  We have blogged extensively on non-competes, their interpretation and enforceability, etc. and readers are invited to review those prior posts.  But other terms and conditions of a separation agreement deserve your attention, as well.

First of all, do not be surprised by the length of a separation agreement.  A federal statute called the Older Worker’s Benefit and Protection Act requires the inclusion of extensive release language, and such things as a 21 day review and seven day revocation period.  Here are some of the other things you should be on the lookout for:

  • Consideration:  Make sure all of the severance benefits are correct and clearly stated.  This includes severance pay, COBRA coverage, etc.  Do not leave anything to inference or implication.
  • Confirmation that No Claims Exist/Covenant Not to Sue: Notwithstanding the comprehensive release language, some separation agreements will also require the employee to state that he/she is not aware of any factual basis to support any charge or complaint and that the employee will forego suit, even if such a claim exists.
  • Non-disparagement: Both sides often agree that neither will say anything to disparage the other.  Sometimes (particularly in the financial industry), a separation agreement will contain a “carve out” for employer reporting to FINRA or the SEC.  In such a case, it is important to have the agreement state that as of the employee’s separation date, the employer was not aware of any reportable event or information that would warrant comment or notation on a Form U-5.
  • Governing Law:  Employment law does not travel well across state lines.  For example, California law is much different than Connecticut’s.  Large companies will sometimes have their separation agreements governed by the law of the state where it has its headquarters, irrespective of the actual place of work of the departing employee.
  • Acknowledgement of Non-Revocation: An employee has seven days within which to revoke acceptance of a separation agreement.  Some companies adopt a “belt and suspenders” approach and require the employee to acknowledge in writing a negative—that they have not revoked such acceptance.

The employment law attorneys in the Westport, Connecticut office of Maya Murphy, P.C. have extensive experience in the negotiation and litigation of all sorts of employment-related disputes and assist clients from Greenwich, Stamford, New Canaan, Darien, Norwalk, Westport and Fairfield in resolving such issues.  203-221-3100.

 

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Non-Compete Enforceability: Must Protect Legitimate Interest & Not Be Punitive

Non-Compete Enforceability: Must Protect Legitimate & Not Be Punitive
Ranciato v. Nolan, 2002 Conn. Super. LEXIS 489

Historic Restoration and Appraisal, LLC (HRA) was engaged in the business of restoring primarily detached single-family homes that had suffered casualty damage from fire and/or water. The company employed Mr. Timothy Nolan to work as a project manager for jobs located throughout the state of Connecticut. Mr. Nolan’s employment began on November 18, 1996 and the company informed him shortly thereafter that his employment was contingent on the execution of a non-compete agreement. The parties signed the restrictive covenant on November 21, 1996 and it prohibited Mr. Nolan from performing the same services offered by HRA in the states of Connecticut, Massachusetts, and Rhode Island for a period of three years. The agreement did not affect Mr. Nolan’s ability to offer painting or home improvement services that were not in connection to fire and/or water damage. In exchange for this employment restriction, the agreement stipulated that Mr. Nolan’s annual salary would be $48,500. He felt that he would be fired if he failed to sign the agreement and signed it without consulting a legal professional.
HRA fired Mr. Nolan on January 24, 1997 after repeated incidents of discovering that he was receiving lewd and inappropriate materials via the company’s fax machine. He began to work for McGuire Associates shortly after HRA discharged him and performed marketing and business development services in the capacity of his new position. Unlike HRA, McGuire is a preferred builder and the court held that it did not compete with HRA. The company sued Mr. Nolan in Connecticut state court and asked the court to enforce the non-compete agreement that the parties had executed. The Superior Court of Connecticut in New Haven rejected HRA’s request and held that the company “suffered no financial loss as a result of the defendant’s employment by McGuire”.
According to the non-compete agreement, Mr. Nolan can be in breach only if he works at a company that is “in competition with” HRA. While the court acquiesced that HRA and McGuire were both in the construction industry, it held that they performed significantly different services and were not in competition with each other for clients or projects. The industry classified HRA as a “fire chaser” because it received most of its jobs by monitoring police reports and fire scanners to alert them of individuals that needed repairs for fire and/or water damage. McGuire however was a preferred builder and provided services for not only single-family homes, but also commercial and municipal buildings. The courts interpreted the significant differences between the two companies as adequate evidence that Mr. Nolan was not “in competition with” HRA because of his new employment with McGuire.
Furthermore, the court discussed the reasons why a court would enforce a non-compete covenant, specifically referencing the legal system’s desire to balance and protect the parties’ interests. Courts generally grant injunctions to enforce a non-compete agreement when the plaintiff employer can provide adequate evidence that the former employee’s breach will result in adverse financial consequences. The court noted that this policy did not apply to the case since HRA had not suffered any financial loss or hardship and Mr. Nolan did not have any access to confidential information that would be harmful to the company should it be disclosed.
Additionally, the court concluded that the time and geographical restrictions in the agreement were unreasonable given the facts of the case. HRA did not have anything to lose because of McGuire employing Mr. Nolan because of the differences in their business operations and the court held that the restrictions, if enforced, would only serve to prevent Mr. Nolan from employment at another company. The policy to enforce non-compete agreements focuses on protecting the interests of the employer and not to punish the employee and excessively restrict future employment opportunities. Specifically, the court cited that HRA could only “benefit from protection in the New Haven area” and that the “tri-state restriction imposed on the defendant was not necessary to protect any legitimate interests of the plaintiff and, therefore, [the agreement] was not ‘reasonably limited’”.
If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

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Non-Compete Enforceability: Must Protect Legitimate Interest & Not Be Punitive

Non-Compete Enforceability: Must Protect Legitimate & Not Be Punitive
Ranciato v. Nolan, 2002 Conn. Super. LEXIS 489

Historic Restoration and Appraisal, LLC (HRA) was engaged in the business of restoring primarily detached single-family homes that had suffered casualty damage from fire and/or water. The company employed Mr. Timothy Nolan to work as a project manager for jobs located throughout the state of Connecticut. Mr. Nolan’s employment began on November 18, 1996 and the company informed him shortly thereafter that his employment was contingent on the execution of a non-compete agreement. The parties signed the restrictive covenant on November 21, 1996 and it prohibited Mr. Nolan from performing the same services offered by HRA in the states of Connecticut, Massachusetts, and Rhode Island for a period of three years. The agreement did not affect Mr. Nolan’s ability to offer painting or home improvement services that were not in connection to fire and/or water damage. In exchange for this employment restriction, the agreement stipulated that Mr. Nolan’s annual salary would be $48,500. He felt that he would be fired if he failed to sign the agreement and signed it without consulting a legal professional.
HRA fired Mr. Nolan on January 24, 1997 after repeated incidents of discovering that he was receiving lewd and inappropriate materials via the company’s fax machine. He began to work for McGuire Associates shortly after HRA discharged him and performed marketing and business development services in the capacity of his new position. Unlike HRA, McGuire is a preferred builder and the court held that it did not compete with HRA. The company sued Mr. Nolan in Connecticut state court and asked the court to enforce the non-compete agreement that the parties had executed. The Superior Court of Connecticut in New Haven rejected HRA’s request and held that the company “suffered no financial loss as a result of the defendant’s employment by McGuire”.
According to the non-compete agreement, Mr. Nolan can be in breach only if he works at a company that is “in competition with” HRA. While the court acquiesced that HRA and McGuire were both in the construction industry, it held that they performed significantly different services and were not in competition with each other for clients or projects. The industry classified HRA as a “fire chaser” because it received most of its jobs by monitoring police reports and fire scanners to alert them of individuals that needed repairs for fire and/or water damage. McGuire however was a preferred builder and provided services for not only single-family homes, but also commercial and municipal buildings. The courts interpreted the significant differences between the two companies as adequate evidence that Mr. Nolan was not “in competition with” HRA because of his new employment with McGuire.
Furthermore, the court discussed the reasons why a court would enforce a non-compete covenant, specifically referencing the legal system’s desire to balance and protect the parties’ interests. Courts generally grant injunctions to enforce a non-compete agreement when the plaintiff employer can provide adequate evidence that the former employee’s breach will result in adverse financial consequences. The court noted that this policy did not apply to the case since HRA had not suffered any financial loss or hardship and Mr. Nolan did not have any access to confidential information that would be harmful to the company should it be disclosed.
Additionally, the court concluded that the time and geographical restrictions in the agreement were unreasonable given the facts of the case. HRA did not have anything to lose because of McGuire employing Mr. Nolan because of the differences in their business operations and the court held that the restrictions, if enforced, would only serve to prevent Mr. Nolan from employment at another company. The policy to enforce non-compete agreements focuses on protecting the interests of the employer and not to punish the employee and excessively restrict future employment opportunities. Specifically, the court cited that HRA could only “benefit from protection in the New Haven area” and that the “tri-state restriction imposed on the defendant was not necessary to protect any legitimate interests of the plaintiff and, therefore, [the agreement] was not ‘reasonably limited’”.
If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

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DOMA’s Unconstitutionality and How it Impacts Employee Benefit Plans Going Forward

The U.S. Supreme Court issued two landmark decisions on same-sex marriage Wednesday that will affect how employers administer their employee benefit plans and treat same-sex spouses. Below is a summary of the cases, their outcomes and how these two decisions impact plan sponsors of employee benefit plans.

The Cases

In U.S. v. Windsor, the Court struck down the federal law defining “marriage” as exclusively the union between a man and a woman and “spouse” as a person who is married to someone of the opposite sex. The Defense of Marriage Act (DOMA) prohibited the federal government from treating same-sex and opposite-sex married couples alike. It entitled only opposite-sex married couples to federal privileges incident to marriage, such as the ability to file joint federal tax returns.

In a 5-to-4 decision, the Court ruled DOMA was unconstitutional because states and territories are generally free to define “marriage” and the federal government must generally accept those definitions for purposes of administering benefits incident to marriage. Therefore, if a person in a same-sex marriage resides in a state or territory that permits or recognizes same-sex marriages, such as Connecticut, Massachusetts, New York and the District of Columbia, that person must now be deemed married for federal purposes. Currently, 12 states and the District of Columbia recognize same-sex marriage. However, if the person lives in a state or territory that does not authorize or recognize same-sex marriages, then federal law does not require that the person be considered married.

In a related decision, Hollingsworth v. Perry, the Court declined to rule on a dispute over the validity of a California state law that, like DOMA, defined marriage as exclusively between a man and a woman. This decision leaves in place a lower federal court’s ruling that California’s law was unconstitutional, and so, effectively, same-sex couples are once again permitted to marry in California.

What Does This Mean For Employee Benefit Plans?

These decisions will significantly impact how employers administer their employee benefit plans and how they treat same-sex spouses for benefit purposes. Summarized below are examples of how welfare and retirement benefit plans will be affected:

Welfare Benefit Plans

Same-sex spouses will be able to receive tax-free employer-paid health benefits, meaning employers will not have to impute income on the value of employer-provided health coverage to nondependent same-sex spouses or their children, nor will they be required to pay payroll taxes on the imputed income.
Same-sex spouses will be able to claim COBRA continuation healthcare coverage in the event they lose their employer-provided coverage due to a COBRA qualifying event.
Employees will be entitled to reimbursements under flexible spending accounts, health reimbursement accounts and health savings accounts (HSAs) for expenses incurred by their same-sex spouse.
Earned income from same-sex spouses will affect the exclusion amount under a dependent care assistance program.
A single-family contribution limit applicable to HSAs will apply to same-sex couples (same-sex couples were formerly entitled to twice the family limit).
The invalidation of DOMA may trigger a change-in-status event under the cafeteria plan rules.

Retirement Benefit Plans

Same-sex spouses will be entitled to survivor benefits, including those available under the qualified joint and survivor annuity and qualified preretirement survivor annuity rules applicable to pension plans.
Domestic relations orders involving same-sex spouses may entitle the former spouse to retirement benefits.
Expenses related to same-sex spouses may entitle plan participants to hardship withdrawals.
Same-sex widows/widowers will not be required to commence payment of their same-sex spouse’s retirement benefits until April 1 of the year following the year such same-sex spouse would have attained age 70½.

The Supreme Court’s rulings in these two cases leave open many issues. Specifically, the rulings do not answer the questions of whether the invalidation of DOMA is prospective (i.e., effective as of the date of the Supreme Court’s ruling) or retroactive (i.e., effective as of the date of DOMA’s enactment) and what employers are required to do to comply. We anticipate transition guidance from the Internal Revenue Service and expect employers will be given sufficient time to adequately address the required changes. In the meantime, we recommend employers immediately review their plan documents and administrative procedures to determine what plan amendments and adjustments to administrative procedures will be required. Day Pitney’s employee benefits attorneys can assist you in this process.
The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment and corporate law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County. If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, place contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

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IRS Issues Proposed Regulations on Dependent Care Expenses

The IRS has issued proposed regulations under Internal Revenue Code (“Code”) 21 regarding dependent care assistance expenses. (Code Section 21 defines when a dependent care expense qualifies for the dependent care tax credit.) For Dependent Care Assistance Plan (“DCAP”) sponsors, these regulations are important because they provide much-needed clarity with respect to what constitutes a qualifying expense under a DCAP. A dependent care assistance expense will qualify for reimbursement under a Dependent Care Assistance Plan (“DCAP”) if the expense meets the definition of an employment-related “dependent care assistance” expense under Code Section 21(b)(2). This requires, among other things, that the individual has an “employment-related” purpose in paying for the expense – in other words, the individual must incur the expense so that he or she can be gainfully employed.

The highlights of the proposed regulations are as follows:

Pre-Kindergarten Programs, Nursery Schools, and Specialty Day Camps Qualify as Dependent Care Assistance Expenses

The expenses of pre-school and other pre-kindergarten programs now qualify as dependent care assistance expenses.

The cost of kindergarten, and other educational programs above the kindergarten level, may not be considered dependent care assistance expenses since such programs have an educational purpose. However, the cost of after-school programs for children above kindergarten age may qualify as a dependent-care assistance expense.

Day Camps/Specialty Day Camps. The full cost of day camps, including specialty day camps that specialize in one particular activity such as soccer or computers, now qualify as a dependent-care assistance expense. (Overnight camp expenses still do not qualify since they are not considered employment-related expenses.)

“Indirect Expenses,” Transportation Expenses, and a Caregiver’s Room and Board Now Qualify as Dependent-Care Assistance Expenses

Transportation Expenses – to and from a day camp or an after-school program not on school premises – now qualify as a dependent-care assistance expense.

“Indirect Expenses.” Indirect expenses are expenses that relate to, but are not directly for the care of a dependent. Examples of qualifying indirect expenses include application fees, agency fees, and deposits may qualify if they are paid to obtain care for the dependent. Let’s say Jane places a deposit with Pre-School A to reserve a place for her child and subsequently decides to send her child to a different pre-school. By doing this, Jane forfeits her deposit with Pre-School A. The forfeited deposit does not qualify as a dependent-care assistance expense.

Room and Board. The cost of providing room and board to a caregiver may be considered an employment-related expense and therefore qualify as a dependent-care assistance expense.

Payments to Most Relatives for “Dependent Care” Do Not Qualify as Dependent-Care Assistance Expenses

The proposed regulations clarify that an individual’s payments to his or her child, spouse, or the dependent child’s parent (who is not the individual’s spouse), do not qualify as a dependent-care assistance expense.

However, if an individual pays his parent to care for his dependent children, those payments may qualify as a dependent-care assistance expense as long as the parent cannot be characterized as the individual’s dependent under Code Section 151.

Temporary Absences and Part-Time Work

Expenses Incurred During a Temporary Absence May Qualify as a Dependent-Care Assistance Expense. Prior to the proposed regulations, this was not the case. However, under the proposed regulations, an expense may qualify as a dependent-care assistance expense even if it is incurred while the individual is temporarily absent from work, for example, due to vacation or sickness. Although the proposed regulations have not specified the maximum duration of the absence, in two examples they note that expenses incurred during a two-day absence will qualify while expenses incurred during a four-month absence will not.

Part-Time Employees. If the part-time employee is required to pay for dependent care on a periodic basis, such as weekly or monthly, which includes both worked days and non-worked days, the entire cost of day care may constitute a dependent-care assistance expense. If, however, the part-time employee pays for dependent care on a daily basis, he or she can treat as dependent-care assistance expenses only those expenses incurred while he or she was at work.

Credit: Stefanie Kastrinsky

The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment and corporate law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County. If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, place contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

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CT’s New Stricter Laws on Employers

On June 21, 2013, Governor Dannel P. Malloy signed Public Act No 13-176 (the “Act”) into law. The Act amends the Connecticut Personnel Files Law to impose new requirements on Connecticut employers with respect to: (1) providing current and former employees with access to their personnel files; (2) notifying employees of discipline and termination documents; and (3) informing employees of their right to submit rebuttals to any performance, disciplinary or termination documents. The Act also amends the civil penalties that the Connecticut Department of Labor may impose for violations of the Personnel Files Law. Employers must begin complying with the new amendments to the Personnel Files Law on October 1, 2013. Below is a summary of the amendments.

Employee Access To Personnel Files

Prior to the amendment, the Personnel Files Law required employers to provide a current or former employee an opportunity to inspect the employee’s personnel file “within a reasonable time” after the employer’s receipt of a written request from the employee. The Act makes this requirement more specific by mandating that an employer provide a current employee with a right to inspect and copy his/her personnel file within seven days of the employer’s receipt of such written request. The Act also provides that employers must provide a former employee with the right to inspect and copy his/her personnel file within ten days of the employer’s receipt of a written request from the former employee, provided that the former employee has submitted the request within one year after the employee’s separation.

The Act also modifies the requirement regarding the location of former employees’ inspection and copying of personnel files. Prior to the amendment, inspection and copying of a personnel file would take place at the employer’s place of business or a place reasonably near the employer’s place of business. The Act, however, requires that employers permit a former employee to inspect and copy his/her personnel file at a “mutually agreed upon” location, and if no location can be agreed upon, the employer must mail a copy of the personnel file to the former employee within ten days of receiving the written request to copy the personnel file.

Requirement To Provide Discipline and Termination Documents To Employees

The Act imposes a new requirement on employers to provide certain discipline and termination documents to employees. Specifically, the Act requires employers to provide an employee with a copy of “any documentation of any disciplinary action imposed on that employee” within one business day after the date the discipline is imposed. Such documentation presumably includes all written warnings, suspensions, demotions, salary reductions, and any other disciplinary action. The Act also imposes a new requirement that an employer “immediately provide” an employee with a copy of “any documented notice of that employee’s termination of employment.”

Notice To Employee of Right To Submit Rebuttal

Prior to the amendment, the Personnel Files Law provided an employee with the right to ask an employer to remove or correct information in his/her personnel file. Under the Act, employers will have to include in every documented disciplinary action, notice of termination and performance evaluation a statement in “clear and conspicuous language” that if the employee disagrees with any information in such documents, the employee may submit a written statement explaining his or her position. The employer must keep the employee’s statement in the personnel file and include it whenever the file is transmitted or disclosed to a third-party.

Changes To Civil Penalties Under Personnel Files Law

Under the pre-amendment Personnel Files Law, the Connecticut Labor Commissioner could issue a $500 civil penalty for an employer’s first violation of the Personnel Files Law against a particular employee and a $1,000 civil penalty for each subsequent violation related to the same employee. The Act, however, allows the Labor Commissioner to issue a civil penalty of up to $500 for a first violation and up to $1,000 for each subsequent violation regardless of whether such violations are related to the same employee.

When determining the amount of the civil penalty, the Act requires the Connecticut Labor Commissioner to consider: (1) the amount needed to insure immediate and continued compliance with the Personnel Files Law; (2) the violation’s character and degree of impact, (3) any prior violations of the Personnel Files Law by the same employer; and (4) any other factor the Commissioner deems relevant.

The Act does not authorize a private right of action under the Personnel Files Law. As a result, an employee alleging a violation of the Personnel Files Law must pursue his complaint through the Connecticut Department of Labor rather than through a private lawsuit.

Awareness and Compliance

As noted above, the amendments go into effect on October 1, 2013. Accordingly, employers should promptly begin notifying their legal, human resources and supervisory personnel of the new requirements under the Act. In addition, the Act’s new requirements should serve as a reminder to employers to use care in preparing all disciplinary and termination documents.

Credit: Jaclyn Leung

The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment and corporate law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County. If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, place contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

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IRS 2014 Pension Plan Limitations

On October 31, 2013, the IRS announced the following cost-of-living adjustments to certain dollar limitations applicable to employee pension benefit plans for 2014:

• The annual benefit limit for defined benefit plans is increased from $205,000 to $210,000.

• The annual addition limit for defined contribution plans is increased from $51,000 to $52,000.

• The annual limit with respect to the exclusion for elective deferrals to a 401(k), 403(b) or 457 plan remains unchanged at $17,500.

• The annual limit on annual contributions to an individual retirement account (“IRA”) remains unchanged at $5,500. The dollar limit for catch-up contributions to an IRA remains unchanged at $1,000.

• The annual limit on compensation that can be taken into account under a qualified retirement plan is increased from $255,000 to $260,000.

• The dollar limit for defining key employees in a top-heavy plan is increased from $165,000 to $170,000.

• The dollar amount for determining the maximum account balance in an employee stock ownership plan (“ESOP”) subject to a five-year distribution period is increased from $1,035,000 to $1,050,000. The dollar amount used to determine the lengthening of the five-year distribution period is increased from $205,000 to $210,000.

• The dollar limit for catch-up contributions for anyone 50 and older remains unchanged at $5,500, while the limit applicable to those participants under SIMPLE plans and SIMPLE IRAs remains unchanged at $2,500.

• The limitation used in the definition of highly compensated employee remains unchanged at $115,000.

Employers who sponsor qualified retirement plans should review their administrative and payroll procedures to make sure the new limits are reflected as they must operate their plans in accordance with the new limits. The failure to do so could result in plan disqualification. Additionally, individual contributions that exceed the IRA limits may be subject to an excise tax.

Credit: Frank Rubinetti

The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment and corporate law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County. If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, place contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

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