Posts tagged with "limited scope"

CT’s New Stricter Laws on Employers

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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.

In addition, the Act states 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.

Unconstitutionality of DOMA and How it Impacts Employee Benefit Plans Going Forward

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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.

Credit to Day Pitney

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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.

CT Calls for Broader Initial Disclosures

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All of the judges in the District of Connecticut are now using Initial Discovery Protocols in most non-class action employment cases. In applicable cases, the Initial Discovery Protocols supersede parties’ initial disclosure obligations under Rule 26(a)(1) of the Federal Rules of Civil Procedure. Both the plaintiff and the defendant must respond to the Initial Discovery Protocols within 30 days after the defendant has submitted a responsive pleading or motion, unless the court rules otherwise.

Protocol Requirements

The protocols require both the plaintiff and the defendant to produce considerably more information and documents than Rule 26(a)(1) requires. Specifically, a defendant must produce 14 categories of documents, including the plaintiff’s personnel file, documents relied upon to make the employment decision at issue in the lawsuit, and communications concerning the factual allegations and claims at issue in the lawsuit. The defendant must also identify the plaintiff’s supervisor and/or manager, the people who were involved in making the decision to take the adverse action at issue, and people who have knowledge of the facts at issue.

The initial discovery protocols apply in all employment cases that challenge one or more actions alleged to be adverse except class actions and cases in which the allegations involve only the following: discrimination in hiring; harassment/hostile work environment; violations of wage and hour laws under the Fair Labor Standards Act; failure to provide reasonable accommodations under the Americans with Disabilities Act; violations of the Family Medical Leave Act; and violations of the Employee Retirement Income Security Act.

Responding to Protocols

Since defendants must respond to the Initial Discovery Protocols within 30 days after a responsive pleading, it is important for employers to work with counsel to gather the necessary information and documents as soon as they receive notice of a lawsuit. Complying with these initial protocols may be challenging because it is a significant undertaking in the early stages of litigation.

Credit to: Ashley Harrison, DP llc

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.

Breach of Non-Compete in Connecticut Insurance Firm

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CUNA Mutual Life Insurance Co. v. Butler, 2007 Conn. Super. LEXIS 1623

Mr. Matthew Butler worked for CUNA Mutual Life Insurance Co. for approximately five years (August 2002 to March 2007) as an Executive Benefits Specialist servicing accounts in Maine, Vermont, Connecticut, Rhode Island, New Hampshire, Massachusetts, and part of New York.  CUNA sold insurance-related products to credit unions and Mr. Butler was responsible for marketing and constructing deferred executive compensation programs that involved life insurances, mutual funds, and annuities.  CUNA had Mr. Butler agree to and sign a non-compete agreement when it hired him and stipulated that he be prohibited from soliciting or providing services to CUNA clients for a period of two years following his termination from the company.

Mr. Butler also agreed to return “all company books, rate books, records, applications, materials, conditional receipts, [and] customer or client lists”.

On March 22, 2007, while still employed by CUNA, Mr. Butler created Elite Capital Management Group to do business as an affiliate of Cambridge Research Investment, with the intent to continue to market and sell insurance-related products.  On March 28, 2008, he sent an e-mail to seventy-five of his CUNA clients lauding the prestige, expertise, and quality of the newly formed Elite Capital.  He tendered his resignation from CUNA and immediately began to provide the same services at his new firm.  He told the court that several clients had contacted him for work because of his March 28 e-mail describing Elite Capital.  CUNA sued Mr. Butler in Connecticut state court requesting enforcement of the non-compete agreement.

The Court’s Decision

The court granted CUNA’s request to enforce the restrictive covenant and enjoined Mr. Butler from further soliciting and providing services to CUNA’s current or past clients.  This was a proper decision in order to provide the necessary protection for CUNA with regard to its investment in developing good will and positive customer relationships via its employment and occupational enrichment of Mr. Butler.  There was clearly a breach of the restrictive covenant in Mr. Butler’s active solicitation of CUNA’s clients during and immediately following his employment at the company.

Furthermore, the court held that the restrictions were reasonable in the sense that they “protected CUNA Mutual’s substantial investment in building good will with its clients while permitting Mr. Butler to market to a very large potential group of customers”.  The restrictions had a very limited scope (credit unions in the northeast that were customers of CUNA) and did not excessively restrict Mr. Butler’s ability to earn a living.  There was no evidence that the agreement would create unreasonable hardships for Mr. Butler since he was still able to market his skills and products to state and federal banks, corporations, non-profits, and other business that were not in the narrow definition of prohibited parties.

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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.

Gender Wage Gap in Connecticut

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The Gender Wage Gap Task Force in Connecticut issued its report last month with both findings and recommendations on continued disparities between what men and women, on average, earn. In doing so, it recognized that there are multiple factors that are responsible for the gap in its view. It paints a far more complicated picture of the wage gap than some politicians suggest. As it detailed:

Understanding this inequity is not a simple matter. Many factors contribute to the overall wage gap including education and skills, experience, union membership, training, performance, hours worked and the careers women and men choose. However, even after these factors are controlled for, an estimated wage gap of 5-10% remains. The task force has identified six key contributors to the gender wage gap in Connecticut: unconscious bias, occupational segregation, lower starting salaries and positions for women, women’s slower career advancement, the existence of a glass ceiling and a lack of support for working families.

Reasons for the Wage Disparity

Mara Lee, from the Hartford Courant, does a nice job recapping some of the key findings. Her take?

The report says that researchers have determined there are two reasons for that disparity: women don’t negotiate salary offers as often as men, and there may be subtle biases among bosses, even ones they don’t realize they have.

The report gives an example of a study of students graduating from Carnegie Mellon with master’s degrees, which found that 57 percent of men negotiated salary offers and 7 percent of women did. The men’s salaries were 7.6 percent higher than the women. And that $4,000 was almost the exact amount more that people who negotiated were paid compared to those who didn’t.

What might we see as a result of the report?

There are a number of recommendations, but surprisingly few of them touch on changes to the legal system.

First, it suggests that Connecticut “align” its Family Medical Leave Act with the federal Family Medical Leave Act by expanding it to include companies with 50 or more employees.

If the General Assembly does take that up, legislators should consider narrowing the differences between the two statutes. For example, Connecticut gives employees 16 weeks of leave over a 24 month period, instead of the federal 12 weeks of leave every twelve months, which can be confusing at times and leads to strange results that allow employees to get 16 weeks of leave the first year and then another 12 weeks during the second year — far more than just the 16 weeks first contemplated under Connecticut law.

The report also recommends supporting paid leave programs, like those in New Jersey and California. Connecticut is currently studying various proposals.

Employers in Connecticut should remain cognizant of both the issues that this report raises and the legislative developments that may arise from it as a result.

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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.

Contents provided by: Daniel Schwartz of http://www.ctemploymentlawblog.com/

IRS 2014 Pension Plan Limitations

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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

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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.

IRS Issues Proposed Regulations on Dependent Care Expenses

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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.

Proposed Regulations

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.