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Labor and Employment Law Decisions in 2015-2016 from the Connecticut Supreme Court

Connecticut Law Tribune

September 2016

The Connecticut Supreme Court term was again relatively quiet in the area of labor and employment, with only a few decisions that impact employers.

Supreme Court sides with Employee Caught Smoking Marijuana at Work

In State of Connecticut v. Connecticut Employees Union Independent et. al., 322 Conn. 713 (2016), the question was whether Connecticut’s public policy demands termination of employment as the only appropriate disciplinary response when a state employee is caught smoking marijuana during his work hours.  The Court held it does not.

In this case, Gregory Linhoff, a union member, was employed at the University of Connecticut Health Center (“Health Center”) as a skilled maintainer. He worked the 4 pm to midnight shift.  On March 7, 2012, he was caught by a health center police officer in his state issued van smoking marijuana with a co-worker.  As a result, on June 22, 2012, the Health Center terminated Mr. Linhoff’s employment.  The Union contested Mr. Linhoff’s termination and an arbitration was held.  During the hearing, Linhoff testified he smoked marijuana because he found a pipe in his car that was in his words “smelly” from previous use.   He also testified he had experienced a cancer scare, marital issues and had recently been to the Connecticut Anxiety and Depression Treatment Center.

The arbitrator found the Health Center met its burden of establishing Linhoff had engaged in misconduct at work – possessing and smoking marijuana at work. The arbitrator concluded, however, that under the circumstances termination was not warranted. Instead, the arbitrator suspended Linhoff for six months and ordered him to undergo random drug testing for a year.  The Health Center filed an application to vacate the arbitrator’s award.  The trial court granted the application, holding that since the grievant had purposefully used marijuana at work, reinstating him sent the wrong message.

The Supreme Court applied the Burr Road factors, for determining when termination of employment is required to vindicate Connecticut public policy.  The first factor requires the Court to look at relevant statutes or regulations that shed light on the public policy.  The Court looked to the federal and state Drug-Free Workplace Acts and noted that they do not require termination for drug related misconduct at work and instead allow for rehabilitation.  The second factor is whether the employment at issue implicates public safety or the public trust.  While Mr. Linhoff was a state employee, the Court held he had very little interaction with the public – on his 4 pm to midnight shift.  The third factor is the egregiousness of the offense.  Here, the Court held Mr. Linhoff’s misconduct was significant, but held the factor was neutral. The fourth factor examines whether the grievant is incorrigible as to require termination.  As for this factor, the Court considered Mr. Linhoff’s long blemish free employment record and that he had sought therapy for anxiety and depression.  Based on the foregoing factors, the Court held that Connecticut’s public policy does not demand termination as the sole disciplinary measure when an employee is caught smoking marijuana at work.  Therefore the lower court was reversed.

For employers, this decision speaks more to the difficulty faced when attempting to vacate arbitration awards, than what happens when an employee smokes marijuana at work. This is why, despite the egregious facts, the Court would not allow public policy based second guessing of arbitral awards.  Such a review is very uncommon and reserved for extraordinary circumstances.  This was not such a case.

Remuneration Test Determines if a Volunteer is an Employee under the CFEPA

The Connecticut Fair Employment Practices Act (“CFEPA”) covers employees and not volunteers. The definition of employee was clarified in Commission on Human Rights & Opportunities v. Echo Hose Ambulance, 322 Conn. 154 (2016).  Here, Sarah, a minor, participated in an educational (precepting) program with Echo Hose, an ambulance transport provider to the city of Shelton.  As part of the program, Sarah was required to ride in an ambulance one shift a week and participate in other activities.  After the program’s completion, a complaint was filed with the Commission on Human Rights and Opportunities alleging violations of the Connecticut Fair Employment Practices Act (“CFEPA”) and Title VII of the Civil Rights Act of 1964 (“Title VII”).  Sarah allegedly was suspended and terminated without good cause, treated differently due to her race and color, and subjected to comments about Africa and the ghetto.  However, nowhere in the Complaint was it alleged that Sarah was paid or received any benefits in lieu of payment.

The City of Shelton moved to strike the complaint arguing that Sarah was not an employee, a necessary prerequisite for coverage under CFEPA or Title VII. The referee applying the remuneration test to determine whether Sarah was an employee under CFEPA struck the Complaint.  The Commission filed an administrative appeal.

The remuneration test instructs courts to conduct a two step inquiry: first, show remuneration;  second, analyze the putative employment relationship under the common law agency test.  Remuneration may consist of either direct compensation, such as a salary or wages, or indirect benefits that are not merely incidental to the activity performed. The trial court found the referee appropriately applied the remuneration test and dismissed the appeal.  The Appellate Court affirmed the judgment of dismissal.

The Supreme Court likewise affirmed the Appellate Court. On two separate bases, the Supreme Court noted that Federal case law strongly weighed in favor of applying the remuneration test, rather than the right to control test.  First, the remuneration test allowed the interpretation of CFEPA to complement the interpretation of Title VII, as adopted by the Second Circuit.  Second, the logic supporting the remuneration test was more sound.  Specifically, the right to control test assumes a hiring party and a hired party.  The legislature’s enactment of “An Act Protecting Interns from Workplace Harassment and Discrimination,” supported this interpretation, because it amended CFEPA to specifically define interns, separate and apart from employees.  Moreover, legislative history for the bill indicated that one of the bill’s sponsors explained a purpose of the bill was due to the CFEPA’s non-coverage of interns.

Therefore, the Supreme Court held that the Appellate Court properly concluded the remuneration test was appropriate for determining whether a volunteer is an employee under CFEPA. Although a volunteer might be able to meet the test by proof of benefits in lieu of wages, Sarah had not made that showing because she had not pled on the face of her complaint any payment.

“ABC” Test Clarified for Independent Contractor Status

In Standard Oil v. Administrator Unemployment Compensation Act, 320 Conn. 611 (2016), the Court clarified the “ABC Test,” for purposes of independent contractor status.  The ABC Test establishes the framework of the worker classification analysis for purposes of unemployment tax liability.   Under the test, a worker is an independent contractor if (A) such individual has been and will continue to be free from control and direction in connection with the performance of such service, both under his contract for the performance of service and in fact; (B) such service is performed either outside his usual course of the business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and (C) such individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.  All three must be met.

This case involved individuals who cleaned, serviced, and installed heating/air conditioning units or who installed security systems. Standard Oil argued the workers were independent contractors whereas the Unemployment Compensation Act Administrator, not surprisingly, argued they were employees and thus Standard Oil owed unpaid unemployment contribution taxes and interest.

The lower Court held that Standard Oil could not satisfy Part A of the Test – free from direction and control. The Supreme Court, however, disagreed and based its reasoning on a fact specific analysis of previous appellate decisions.  Ultimately, in this case, the Court held Part A was met because the workers: performed work in the customers’ homes and were not monitored by anyone at Standard Oil; they used their own materials, transportation, and insurance; they were allowed to hire assistants and Standard Oil had no way to know if they did or not; they would realize a profit or loss on the work completed; and they were free to reject jobs based on their own schedules.

As for Part B, the Court grappled with the question of whether the customers’ homes were “places of business” for Standard Oil. In reaching the conclusion that customers’ homes were not Standard Oil’s place of business, the Court was guided by two principles: (1) there should be one interpretation for both federal and state unemployment tax and (2) no part of the ABC test should be construed so broadly that it is impossible to meet, thus making the other prongs irrelevant.  The Court held a broad interpretation that any place where installers performed work constituted Standard Oil’s place of business, made the test impossible to meet.  Therefore, customers’ homes were not a place of business for Standard Oil.

This decision is significant for employers who have workers who provide services in customers’ homes. Employers who do should reexamine their classifications as it relates to independent contractor status for purposes of unemployment insurance.

Employee Free Speech Claims Are Expanded

Trusz v. UBS Realty Investors, LLC, 319 Conn. 175 (2015), involved a certified question from the Connecticut’s federal District Court.  Specifically, the Connecticut Supreme Court was asked if the rule announced by the United States Supreme Court in Garcetti v. Ceballos, 547 U.S. 400 (2006), i.e., ‘that when . . . employees make statements pursuant to their official duties, the employees are not speaking as citizens for first amendment purposes, and the constitution does not insulate their communications from employer discipline’ applied with the same force under Connecticut law to both public and private employees.  The Connecticut Supreme Court, in a unanimous decision, determined that the Gracetti ruling does not override the free speech protection found in Connecticut’s state constitution, which the Court found provided a higher level of protection for whistleblowers than federal law and the First Amendment.

 More specifically, the Court held the Connecticut Constitution “protects employee speech in the public workplace on the widest possible range of topics, as long as the speech does not undermine the employer’s legitimate interest in maintaining discipline, harmony, and efficiency in the workplace.” Therefore, the Connecticut constitution provides employees greater free speech rights than federal law.  For employers, this means that such a broad application can lead to landmines and a potential increase in whistleblower claims under the Connecticut constitution.  Employees who express concern about “matters of public concern” such as “official dishonesty, other serious wrongdoing, or threats to health and safety” will now be protected from retaliation under Connecticut law.

The question arose because Richard Trusz was the head of UBS’s Realty valuation unit. In early 2008, he reported to management what he perceived as errors in the valuation of certain properties UBS held in various investment funds.  He also believed UBS was obligated to disclose the error to investors.  UBS and an external auditor hired by UBS agreed there was an error in the valuation method but did not believe it warranted disclosure. Mr. Trusz disagreed and continued to voice his concerns.  Mr. Trusz ultimately filed discrimination and retaliation complaints with the Connecticut Commission on Human Rights and Opportunities, the Equal Employment Opportunity Commission, and the United States Occupational Safety and Health Administration claiming he was discriminated against because of a disability and retaliated against.  This culminated in his termination in August 2008 because he opposed what he perceived were securities law violations.

When litigation ensued, Defendants moved for summary judgment asking the court to decide that no material dispute of facts exists with respect to plaintiff’s claim under Connecticut General Statute § 31-51q. Section 31-51q protects employees from discipline by employers for exercising their rights to freedom of speech pursuant to state and federal constitutions so long as the speech does not interfere “substantially or materially” with the job.  On plaintiff’s request, the District Court certified the question to the Connecticut Supreme Court. The District Court will now continue consideration of the case with this opinion from the Connecticut Supreme Court and clarification of free speech rights of employees under the Connecticut constitution.

Unrestricted Arbitration Submission May Yield Unanticipated Results

 In AFSCME, Council 4, Local 2663 v. Dep’t of Children & Families, 317 Conn. 238 (2015), the Court upheld an arbitration award, not proposed by either party, but which conformed to the parties’ unrestricted arbitration submission and drew its essence from the parties’ collective bargaining agreement.

In this case, Suzanne Listro was an employee of the Department of Children and Families. She became the foster parent to a seven month old boy and one week after having him in her care, he died under suspicious circumstances.  She claimed that he rolled off of a bed while changing his diaper, but the autopsy indicated he died from shaken baby syndrome.  She was charged with manslaughter and risk of injury to a child.  The Department terminated her employment.  Listro was acquitted of the criminal charges and the Union filed a grievance.  The arbitration submission stated:  (1) Did the department have just cause to dismiss Listro? And (2) If not, what shall be the remedy consistent with the terms of the collective bargaining agreement?

The arbitrator issued a memorandum denying Listro’s grievance. However, the arbitrator did not adopt the Department’s position that Listro fatally caused the child’s death.  Instead, she applied a negligence standard to Listro’s conduct finding despite being off duty, her actions made her unemployable by the Department.

The union appealed and the trial court granted the appeal holding the arbitrator exceeded her authority because the Department never accused Listro of negligence. The Department appealed and the Appellate Court reversed.  The Appellate Court concluded the negligence standard came within the purview of the collective bargaining agreement.  The Supreme Court agreed with the Appellate Court because the arbitration submission was so broad.  It noted, “had they intended to limit the arbitrator’s consideration to specific conduct, specific evidence, or a specific state of mind, they could have limited the scope of the submission if the agreement permitted such a limitation.”  The lesson here for employers is that broad submissions to the arbitrator open the door for unexpected results and the application of standards not suggested by the parties.  Such broad submissions also give the arbitrator significant leeway to reach results not anticipated by the parties.

General Statute §31-291 Requires a Principal Employer to Pay Cost of All Injured Employees’ Benefits to Receive Immunity

In Elvira R. Gonzalez et. al. v. O and G Industries, Inc., et. al., 322 Conn. 291 (2016), O and G Industries, Defendant, was the general contractor for the construction of a gas fired power plant in Middletown.  It hired a subcontractor, United Anco Services, Inc., to assemble scaffolding and Ducci Electrical Contractors to test instrumentation.  Ducci, in turn, hired Instrument Sciences and Technologies, Inc. to perform instrumentation and control work. Both Ducci and United Anco agreed to the standard subcontract which allowed Defendant to implement a CCIP, consolidated purchase of insurance, and Defendant exercised this right.

On February 7, 2010, an explosion occurred at the construction site injuring James Thompson, an employee of United Anco, and James McVay, an employee of Instrument Services. McVay and Thompson applied for workers’ compensation benefits and Defendant, under the terms of the CCIP, paid a $250,000 deductible and $17,500 fee for administration to its carrier, Old Republic.  McVay and Thompson then sued Defendant for various tort claims.  Defendant argued it was immune from suit pursuant to § 31-291 as McVay and Thompson’s principal employer and thus filed a motion for summary judgment.  § 31-291 provides in part “[w]hen any principal employer procures any work to be done wholly or in part by a contractor . . . and the work to be so procured to be done is a part or process in the trade or business of such principal employer  . . . The provisions of this section shall not extend immunity to any principal employer from a civil action brought by an injured employee or his dependent under the provisions of section 31-293 to recover damages resulting from personal injury or wrongful death occurring on or after May 28, 1998, unless such principal employer has paid compensation benefits, under this chapter to such injured employee or his dependent for the injury or death which is the subject of the action.”

McVay and Thompson opposed the motion arguing a material fact existed as to whether Defendant actually “paid” workers’ compensation benefits because it shifted the cost of the insurance premium to its subcontractors by issuing change orders in the amount of each subcontractor’s insurance costs. In essence, the subcontractors paid the workers’ compensation through a reduction in contract bid prices.

The trial court granted Defendant’s motion holding that “paid” within the meaning of § 31-291 meant to “transfer money” and did not require the principal employer to pay all of the workers’ compensation benefits to the injured worker to receive full immunity. The Connecticut Supreme Court affirmed the trial court’s decision but disagreed with the reasoning.  Specifically, the Supreme Court held the principal employer must “bear the cost” of the benefits, not just transfer money.  It also held the principal employer is required to bear the entire cost of the benefits.   In this case, the Supreme Court held no genuine issue of material fact existed as Defendant had paid the entire cost.  Thus, this case grants an owner immunity who provided workers’ compensation benefits through an owner-controlled insurance program.

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Each year brings a new focus for the Court. As the Court begins their new term this month, employees, employers, and their counsel should remain aware of the Court’s latest leanings.  We look forward to next year’s update.

Robert G. Brody is the founder of Brody and Associates, LLC. Katherine M. Bogard is an associate at the firm.  Brody and Associates represents management in employment and labor law matters and has offices in Westport and New York City.