Bonuses are wages says the Appellate Court!

In yet another victory for employees, in what is shaping up to be a banner year for employees in Connecticut, the Appellate Court has held that a bonus is a wage if it is in exchange for services.  See Ziotas v. The Reardon Law Firm, P.C.  The importance of this holding is that employees can win double damages and attorneys fees if they sue for wages and show that the employer acted “arbitrarily, unreasonably or in bad faith” in refusing to pay them.  An associate attorney of the Reardon Law Firm sued under an employment contract that provided for a base salary and an annual bonus for such things as “business generation, business productivity, quality of work/professional abilitiy [and] work profitability,…”  The plaintiff won a pro rata bonus even though he did nto complete the calendar year and even though there was no fixed formula for its calculation.  This case should make employers think twice before denying bonuses to employees who leave or are terminated before the year’s end.  Congratulations to Anthony Fitzgerald of Carmody & Torrance for this important win!

I just got a pink slip. Now what do I do?

There is no denying it, this economy is unprecedented.  Companies are in trouble and are laying workers off at record rates.  There were over 200,000 layoffs in September nationwide at companies with over 50 employees.  The National Law Journal reported these statistics lately, as well as a surge in calls to employment lawyers – both employee side and management side. 

From an employee’s perspective, the fear and and uncertainty can be crippling.  Generally, there is nothing illegal about a layoff.  Companies are allowed to make termination decisions based on economic difficulties.  Of course, they cannot choose to layoff all of the older workers, or base their decisions on other suspect classifications.

There are many legal issues that employees should consider, however, even if the layoff was legal.  They include unemployment compensation, letters of reference, severance pay, earned compensation (wages, commissions, incentive compensation) and others.  One useful resource is the Connecticut Lay-Off Survival Guide.  This simple document can help you think through this difficult time.  Good luck.

Appellate court permits fitness for duty exam for “stressed out” employee.

Well, it had to happen.  Employees had been doing quite well with the Supreme Court and had won a number of favorable rulings lately.  Recently, the Appellate Court set us back a bit.  In Joyner v. Simkins Industries, Inc., the Appellate Court ruled that an employer was within its rights to terminate an employee who failed to show up for a fitness for duty exam after missing a few days because of stress.  While the ADA regulations permit fitness for duty exams in limited circumstances, this rule should be narrowly construed in favor of employee’s medical rights.  Employers certainly do not have the right to require prospective employees to submit to general medical examinations.  They should not acquire that right simply because an employee took a few days off because she became “stressed out” over an increased workload.  The slippery slope here is obvious.  Any time an employee takes a mental health day, they could be subject to a general medical examination.  Of course, the privacy rights of the employee to his or her medical conditions will then be destroyed.  This was a bad ruling by the Appellate Court.  Maybe the Supremes will correct it.

Connecticut Supreme Court rules for employees again!

In yet another in a string of employee friendly decisions, the Connecticut Supreme Court rejected an employer’s argument that the obscure and patently unfair “fluctuating workweek” method of calculating overtime pay should apply.  Stokes v. Norwich Taxi, LLC, ____ Conn. ___ (Conn 2008).

“The what?” you might ask.  When an employee sues for unpaid overtime pay, most people would think that they should receive their regular rate of pay multiplied by 1 1/2 (time and a half).  Under an obscure federal regulations, many pro-employer courts have actually awarded less than 1/2 time.  That regulation permits employers to pay non-exempt employees a flat salary, and when they work more than 40 hours in a week, divide the total hours worked by the weekly salary and pay 1/2 that new lower hourly rate of pay for the hours past 40.  Did you get that?  I don’t blame you.  Very few employers use it.  I’ve given lectures to Human Resources professionals who have never heard of it.

Its most damaging effect comes when an employee or class of employees sues an employer for illegally classifying them as exempt when they should have been classified as non-exempt. Lets say those employees were paid $800 per week.  If they worked 45 hours per week, most people would say they should be awarded $30 per hour for the 5 hours of overtime.   Under the Fluctuating Workweek method, they get less than $10!  

While a few federal Circuit Courts permitted this calculation a few decades ago, the modern trend has been away from permitting employers who never used this method in practice from asserting it as a defense when they get sued. 

Now, our Supreme Court has correctly joined the movement.  It has narrowly construed this regulation and ruled that an employer may not take advantage of this method of calculating overtime pay unless it made the payments of the overtime premiums as they were earned.  

    ” And, by its plain terms, the method applies only when (1) the parties clearly agree that the fixed salary constitutes adequate straight-time payment (i.e., compensation apart from overtime premiums) for all hours worked and (2) the employee receives extra compensation of at least half his regular rate of pay, in addition to the fixed salary, for overtime hours during the weeks when he works overtime.”

This ruling will result in employees winning larger awards.  It may also induce more employee rights lawyers to take overtime cases which otherwise might have been too small to be worthwhile.  Kudos to Attorney Marc Mercier, counsel for the Plaintiff, and to the Supremes!