Legislative Update: New Laws Affecting Connecticut Employers
As the most recent legislative session came to an end, Governor Malloy signed into law several bills passed by the General Assembly that are of significance to Connecticut employers:
- Connecticut has become the most recent state to join the "Ban the Box" movement. Effective January 1, 2017, Public Act 16-83 prohibits Connecticut employers with at least one employee from inquiring about a prospective employee's prior arrests, criminal charges or convictions on initial employment applications. The restriction does not apply where (i) state or federal law compels an employer to inquire about a candidate's criminal history, and (ii) a security or fidelity bond is required for the position. Employers may have already made changes to their employment applications following the EEOC's 2012 Enforcement Guidance regarding consideration of arrest and conviction records as a factor in the hiring process, but should nevertheless now make certain their employment application forms comply with Public Act 16-83.
- Public Act 16-125 permits employers to pay their employees by way of a "payroll card" rather than a traditional paycheck or via direct deposit. This law takes effect on October 1, 2016. A payroll card is a stored value card, similar to a debit card, which allows employees to access wages from a payroll card account. Use of a payroll card requires an employee's voluntary and express authorization, and employers must still give employees the option to be paid by check or through direct deposit. The card must be associated with an ATM network that ensures the availability of a substantial number of in-network ATMs in the state, and employees must be able to make at least three free withdrawals per pay period. None of the employer's costs for using payroll cards may be passed on to employees.
The new law also allows employers, regardless of how they pay their employees, to provide employees with records of their hours worked, gross earnings, deductions, and net earnings electronically, instead of by way of a paystub, so long as, (1) the employee explicitly consents; (2) the employer provides a way for the employee to securely, privately, and conveniently access and print the record; and (3) the employer incorporates reasonable safeguards to protect the confidentiality of the employee's personal information. Employers opting to take advantage of the new law should maintain a record of their employees' explicit consent to receipt of electronic records, and consult with their payroll service providers regarding the security and confidentiality of the records and employees' personal information to ensure compliance with Public Act 16-125.
- Effective July 1, 2016, Public Act 16-95 codifies the typical common-law restrictions applicable to covenants not to compete in Connecticut, but only as applied to physicians. Accordingly, a covenant not to compete for a physician is valid and enforceable only if it is (1) necessary to protect a legitimate business interest; (2) reasonably limited in time, geographic scope and practice restrictions as necessary to protect such business interest; and (3) otherwise consistent with the law and public policy. Public Act 16-95 expounds upon the second element of enforceability by providing that covenants not to compete entered into, amended, extended or renewed on or after July 1, 2016, may not restrict a physician's competitive activities:
- for a period of more than one (1) year; and
- in a geographic region of more than fifteen (15) miles from the "primary site" where the physician practices. "Primary site" is defined in the Act as either the location from which the majority of the physician's revenue is generated or any other location where the physician practices that is mutually agreed upon and specifically identified in the covenant not to compete.
In addition, covenants not to compete will not be enforceable against a physician if (1) the employment contract or agreement expires and is not renewed (unless it was made in anticipation or as part of a partnership or ownership agreement); or (2) the employer terminates the employment or contractual relationship without cause. Each covenant not to compete entered into, amended or renewed on or after July 1, 2016, must be separately and individually signed by the physician.
- Effective immediately, Public Act 16-195 amends the Connecticut Family and Medical Leave Act ("CFMLA") to mirror the federal FMLA's provision allowing an eligible employee to take leave for a "qualifying exigency" arising from the fact that the spouse, son, daughter, or parent of the employee is on active duty, or has been notified of an impending call or order to active duty in the armed forces. Under the CFMLA, an eligible employee may now take up to 16 weeks of leave during any 24-month period because of such qualifying exigency. The CFMLA applies to those employers with 75 or more employees in Connecticut.
- Effective immediately, Public Act 16-169 permits employers to pay their employees biweekly without first obtaining a waiver from the Connecticut Department of Labor, as was previously required.
- Public Act 16-3 from the May Special Session establishes the Connecticut Retirement Security Authority and authorizes it to develop a program requiring certain private sector employers to establish Roth Individual Retirement Accounts (IRAs) for their employees. For further details please see our recent advisory regarding the newly-established state retirement savings program.