Working Together

We have written about the General Assembly’s Labor and Public Employees Committee’s final flurry of activity approving and advancing bills out of committee.  In addition to the bills that we have already summarized, here is a brief summary of other bills approved by the Committee (and which now await action by the full General Assembly). 

H.B. No. 6594 (“An Act Concerning Noncompete Agreements”) is similar to prior bills that did not pass, although this year’s bill would protect both employees and independent contractors (i.e., “workers”).  This bill would mandate that a covenant not to compete entered into, renewed, or extended is permissible only if it is: 1) not restrictive of the worker's competitive activities for a period of more than one year following the employee’s termination; 2) necessary to protect a legitimate business interest of the employer that could not be protected through less restrictive means (e.g., non-disclosure or non-solicitation agreements, the Uniform Trade Secrets’ Act protections); 3) no more restrictive than necessary to protect such business interests in terms of duration, geographic scope, type of work and type of employer; 4) the worker is an exempt employee (i.e., a salaried employee not entitled to overtime pay); 5) the employment or contractual relationship was not terminated by the worker for good cause solely attributable to the employer or contractor;  6) not requiring the worker to submit to an  adjudication outside of the state; and 7) otherwise consistent with the public interest, the law of this state “and public policy.”  In addition to the limitation to exempt employees, covenants not to compete shall NOT be enforceable against: 1) employees who receive compensation at less than three times the minimum wage; or 2) independent contractors whose monetary compensation is less than five times the minimum wage.

The bill provides that each covenant not to compete shall: 1) be provided to the employee not less than ten business days prior to the date of signing or the deadline for signing, whichever is earlier; 2) contain a statement of the employee’s rights (including the right to consult with counsel prior to signing); 3) be supported by sufficient consideration independent from continuation of the employment or contractor relationship, if the agreement is added to an existing employment or independent contractor relationship; and 4) be signed by the employee and the employer.

Even if all the above conditions are met, a noncompete agreement is presumed unenforceable if it applies to: 1) geographic areas in which the employee neither provided services nor had a material presence or influence within the last two years of employment; or 2) types of work that the employee did not perform during the last two years of employment. The bill provides that a covenant not to compete that otherwise conforms in all respects to these new requirements shall not be invalid based upon its duration of more than one year but not longer than two years following the termination if it is a part of an employment agreement or a separation agreement under which the employer agrees to continue to compensate the employee with the employee's base salary and benefits for at least one year following the termination. 

The bill excludes from the definition of covered non-compete agreements: non-solicitation agreements (provided that such agreements are not longer than one year’s duration and are no more restrictive that necessary to protect business interests in terms of duration, geographic scope, type of work and type of employer), non-disclosure/confidentiality agreements, agreements not to reapply to the same employer, and any agreement made in anticipation of a sale of the goodwill of a business or all of the seller’s ownership interest in a business or as part of a partnership or ownership agreement.

This bill has a separate provision with respect to “exclusivity agreements,” which are defined as contracts, provisions, or agreements that restrain a worker from (or impose a penalty on a worker for) being simultaneously employed by another employer, working as an independent contractor, or being self-employed. Specifically, no employer or contractor may request or require that a worker sign such an exclusivity agreement unless the worker is: 1) an exempt employee who receives compensation more than three times the minimum wage; or 2) an independent contractor whose monetary compensation is more than five times the minimum wage. However, an employer or contractor may request or require a worker to sign an exclusivity agreement if the worker's additional employment, work  as an independent contractor, or being self-employed would: 1) imperil the safety of the worker, the worker's coworkers, or the public; or 2) substantially interfere with the reasonable and normal scheduling expectations for the worker, provided that on-call shift scheduling shall not be considered a reasonable scheduling expectation for the purposes of this bill.

The bill authorizes the Attorney General to bring a civil action in Superior Court on behalf of any worker aggrieved by its provisions. The bill provides that the party seeking to enforce a covenant not to compete or exclusivity agreement would have the burden of proof in any proceeding. The remaining provisions of any contract or agreement that includes a covenant not to compete or exclusivity agreement that is rendered void and unenforceable would remain in full force and effect, including provisions requiring the payment of damages resulting from any injury suffered by reason of termination of such contract or agreement. 

S.B. No. 910 (“An Act Concerning Permanent Partial Disability Benefits and Pension Offsets”) would prohibit any municipality or special taxing district with a pension and retirement system from diminishing or eliminating any rights or benefits under such a system due to a retiree’s receipt of “permanent partial disability” workers’ compensation benefits. The bill indicates that it shall not be construed to interfere with or diminish the provisions of any previously negotiated collective bargaining agreement.

S.B. No. 911 (“An Act Increasing The Threshold Amount For Felony Unemployment Compensation Fraud”) would increase the threshold amount for felony unemployment compensation fraud to fraud that is more than $2,000.  Currently, the threshold amount is $500.

S.B. No. 912 (“An Act Concerning The Status Of Probate Court System Employees”) would allow Probate Court employees to be considered state employees for the purpose of collective bargaining rights.

H.B. No. 6550 (“An Act Requiring Notice Of Discontinuance Of Prescription Medication Under A Workers' Compensation Claim”) would require employers or insurers acting on behalf of employers to 1) provide notice of a proposed discontinuance or reduction of coverage of an employee's prescription medication under the Workers’ Compensation Act (with the bill setting forth what the notice must contain), and 2) obtain approval from a Workers’ Compensation Commission Administrative Law Judge before such discontinuance or reduction takes effect.

H.B. No. 6551 (“An Act Concerning Standard Wages For Certain Service Workers And Paid Leave”) would grant to workers covered by the “standard wage” applicable to certain state contracts payment of a standard rate to cover paid leave, with the rate to be determined by the State Department of Labor (similar to the standard wage rate). 

H.B. No. 6552 (“An Act Concerning The Connecticut Retirement Security Program”). In additional to making technical changes with respect to the governance and administration of the Connecticut Retirement Security Program, this bill would provide that no person shall be subject to civil liabilities for the debts, obligations or liabilities of the Program, and that the Comptroller shall indemnify and hold harmless individuals who act as Program Advisory Board members. The bill would also expressly provide that employers shall not be held liable for an employee's decision whether or not to participate in the program or for the investment decisions of the Board or of any enrollee. The bill would also permit the Comptroller to enter into intergovernmental agreements, memoranda of cooperation, or memoranda of agreement with other states or territories of the United States relating to areas of collaboration, including but not limited to data collection, shared program administration and financial services, pooled investment of assets, marketing and outreach support, program evaluation and research, data collection and participant privacy.

H.B. No. 6553 (“An Act Concerning Volunteer Fire Departments And Ambulance Companies And The Definition Of Employer Under The State Occupational Safety And Health Act”) would provide that volunteer fire departments and ambulance companies are to be considered employers under Connecticut’s OSHA laws, except that those departments and companies governed by the federal OSHA law would continue to be regulated by the federal law. 

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Bills affecting labor and employment issues may also emerge from other committees (such as the Judiciary Committee and the Planning and Development Committee).  The 2023 regular session of the General Assembly is scheduled to adjourn on June 7, 2023, so stay tuned to see if any of these bills are eventually enacted by the full legislature (not to mentioned signed into law by the Governor).

Please contact any of Pullman & Comley's Labor and Employment Law attorneys should you have any questions.