GavelThe Connecticut Supreme Court term was relatively active in the area of labor and employment in 2016-17, with several decisions that impact employers. As usual, many of the decisions involved public sector employees, but a few reached all Connecticut employees.

No Punitive Damages Allowed Under the Connecticut Fair Employment Practices Act.

In Tomick v. UPS, 324 Conn. 470 (2016), the Supreme Court considered whether the Connecticut Fair Employment Practices Act, General Statutes § 46a-104 provides for an award of statutory punitive damages as a remedy for discriminatory practices. The court held that it does not provide for such an award. The case involved claims of disability discrimination in violation of the Connecticut Fair Employment Practices Act. After the jury returned a verdict in favor of the plaintiff, the trial court denied the defendant’s motion to set aside the verdict but granted a motion to set aside a statutory award of punitive damages in the amount of $500,000. The defendant appealed, and the plaintiff cross-appealed; the appellate court affirmed the judgment of the trial court. The plaintiff then appealed to the Supreme Court.

In reaching this decision, the court relied on the principles of statutory construction. The statute provides that “The court may grant a complainant in an action brought in accordance with section 46a-100 such legal and equitable relief which it deems appropriate including, but not limited to temporary or permanent injunctive relief, attorney’s fees and court costs. The amount of attorney’s fees allowed shall not be contingent upon the amount of damages requested by or awarded to the complainant.” While the plaintiff argued “including but not limited to” included punitive damages, the court found the term was ambiguous and looked to case law to resolve the issue. Based on a review of the statutory principles applied in Ames v. Commissioner of Motor Vehicles, 267 Conn. 524 (2004), which required an express statutory authorization for damages, the court held punitive damages were unavailable, since none were specified in the statute.

Police Officer Entitled to Workers’ Compensation for Injury Incurred as He Leaves His Abode.

In Balloli v. New Haven Police Dep’t., 324 Conn. 14 (2016), the issue before the court was whether the plaintiff, a police officer with the New Haven Police Department, had departed his “place of abode” when he was injured, thus entitling him to workers’ compensation benefits. Unlike private employees, police and fire fighters are covered by workers’ compensation as soon as they leave their place of abode for work.

The facts in this case sound like a law student final exam. The plaintiff parked his vehicle on the public street in front of his house after moving it out of the way for a family member. When he went to get in his vehicle to go to work, he dropped his keys, and they landed underneath his vehicle. The plaintiff squatted down to pick up his keys, and he injured his lumbar spine. He filed a workers’ compensation claim. The Workers’ Compensation Commissioner and Review Board both found he was not entitled to benefits because he had not left his “place of abode.”

The applicable statute provides “[f]or a police officer or firefighter ‘in the course of the employment encompasses such individual’s departure from such individual’s place of abode to duty, such individual’s duty, and the return to such individual’s place of abode after duty …” Here, the court again relied on the principles of statutory construction and the dictionary meaning of terms.

Webster’s dictionary defines “departure” as “removal from a place … act of going away … a setting out [as on a journey].” Based on these definitions, the court found the fact the plaintiff had entered the public thoroughfare on his way to duty was sufficient to establish he was covered. It was not necessary for him to start the engine of his car or otherwise begin his commute to be in the course and scope of his employment for purposes of workers’ compensation benefits.

Plain Language of Statute Provides Workers’ Compensation Benefits to Officer

In Holston v. New Haven Police Dep’t, 323 Conn. 607 (2016), the issue before the court was whether hypertension and heart disease were separate diseases for purposes of workers’ compensation benefits. Simply put, the court held a plaintiff could file a claim for benefits related to either hypertension or heart disease, and plaintiff’s failure to file a timely claim for benefits resulting from hypertension did not bar his timely claim for heart disease.

The plaintiff joined the New Haven police force in 1996 and passed a physical with no signs of hypertension or heart disease. On March 10, 2011, he suffered from a myocardial infarction. He filed a claim for benefits under Sec. 7-433c for hypertension and heart disease. During the hearing, his physician testified he diagnosed the plaintiff with hypertension in 2009. The defendant argued the claim for benefits was untimely because the heart disease and hypertension were related, and the plaintiff filed his claim more than one year after the hypertension diagnosis. Both the Workers’ Compensation Commissioner and Review Board disagreed.

The Supreme Court likewise found the plaintiff was entitled to benefits because the plain language of Sec. 7-433c provides coverage if either hypertension or heart disease causes the injury/condition. Specifically the statute states: “in the event a uniformed member of a paid municipal fire department or a regular member of a paid municipal police department who successfully passed a physical examination on entry into such service, which examination failed to reveal any evidence of hypertension or heart disease, suffers either off duty or on duty any condition or impairment of health caused by hypertension or heart disease resulting in … temporary … disability … shall receive from his municipal employer compensation.” (emphasis added)

Moreover, the medical evidence in the case supported the board’s conclusion that the plaintiff’s hypertension and heart disease were separate medical conditions. Therefore, the Supreme Court affirmed the benefits.

Mayor Can’t Double Dip with Retirement Benefits—Another Case Focused on Statutory Construction

In Maturo v. State Emp. Ret. Comm’n, 326 Conn. 160 (2017), the court again grappled with statutory construction. The plaintiff served as a firefighter in East Haven from 1973 to 1991. In 1991, his employment ended due to a “service-connected disability.” In 1992, he was approved for retirement payments and informed that his payments would be suspended if he became employed with the town again.

In 1997, he was elected mayor of East Haven. Despite the prior warning that his retirement payments would cease if reemployed, the agency found he could continue to receive retirement payments because he was reemployed in a “non-participating” position. However, in June 2010, the agency determined its previous interpretation of the act was incorrect and he would no longer receive benefits while mayor. He served as mayor from 1997 to 2007 and was reelected in November 2011.

On November 19, 2011, the plaintiff received a letter that his disability retirement payments would cease because he could not collect a disability retirement pension while working for the same municipality from which he had retired, even in a nonparticipating position. The plaintiff asked the retirement services division to reconsider and then appealed to the commission and the Superior Court to no avail. The trial court affirmed the commission’s decision and dismissed the appeal. The plaintiff then appealed to the appellate court, and the case was transferred to the Supreme Court.

Again applying principles of statutory construction, the Supreme Court reasoned that the plaintiff was not entitled to double payments. The applicable statute, Section 7-438(b) provides “such member shall receive no retirement allowance while so employed.” The plaintiff primarily argued that the statute did not apply to him because as a mayor he was not an employee for purposes of the Act. The court disagreed because a member of the retirement system was defined as “any regular employee or elective officer …” Thus, the court reasoned for purposes of the Act there are two classes of employees: elected officials and regular employees. The court rejected the plaintiff’s additional arguments.

Collateral Estoppel Does Not Bar Superior Court Litigation Over Claims Previously Resolved in Grievances

In Spiotti v. Town of Wolcott, 326 Conn. 190 (2017), the issue before the court was whether it should overrule its decision in Genovese v. Gallo Wine Merchants, Inc., 226 Conn. 475 (1993), holding that under General Statutes § 31-51bb, a factual determination made in a final and binding arbitration conducted pursuant to a collective bargaining agreement does not have preclusive effect in a subsequent action claiming a violation of the state or federal constitution or a state statute.

The plaintiff was employed as a police officer with the Town of Wolcott and was a member of the International Brotherhood of Police Officers, Local 332 (union). She filed a complaint against the department, alleging they had engaged in retaliatory conduct against her. In the course of its investigation, the department concluded a portion of the statement plaintiff made in her complaint was false. In light of these false statements, the police department recommended the Town of Wolcott terminate plaintiff’s employment, which it did. The plaintiff then filed a grievance, and the Connecticut State Board of Mediation and Arbitration found she had been fired for just cause due to false statements made in her complaint. The plaintiff then brought a private action alleging sex discrimination and for engaging in protected speech due to her previous complaint against the department. The department filed a motion for summary judgment arguing collateral estoppel prevented the suit because the factual underpinnings of those claims had already been decided against her by the Connecticut State Board of Mediation and Arbitration. The trial court denied the motion for summary judgment, and the defendant appealed.

On appeal, the defendant argued Genovese should be overruled due to the Legislature’s enactment of General Statute § 1-2z or alternatively because Genovese was wrongly decided. General Statutes § 1-2z provides: “The meaning of a statute shall, in the first instance, be ascertained from the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extra-textual evidence of the meaning of the statute shall not be considered.”

The court rejected defendant’s position. In support, the court noted it had previously held the Legislature did not intend that the enactment of § 1-2z would overrule the prior interpretation of any statute because the courts had not previously applied the plain meaning rule. The court held collateral estoppel does not bar claims of statutory and constitutional violations brought after a claim involving the same issues had been finally resolved in grievance procedures or arbitration which was its holding in Genovese. The court also rejected the proposition that Genovese was wrongly decided because, in the 24 years since its decision, the Legislature had not revised § 31-51bb and stare decisis favored not overruling established precedent. Therefore, collateral estoppel did not bar the plaintiff’s claims.

Connecticut’s Tip Credit Limited to Waitstaff and Bartenders.

In Amaral Bros. v. DOL, 325 Conn. 72 (2017), the court decided the Connecticut Department of Labor’s regulations, which limit the tip credit to bartenders and traditional waitstaff, cannot be extended to other employees such as restaurant delivery drivers. The tip credit provision allows employers to pay certain tipped employees less than the full minimum wage if the tips received compensate for this reduction.

The plaintiff operates Domino’s pizza franchises in Groton and Mystic, Connecticut. As part of its operation, it employs approximately 40 delivery drivers. These drivers often receive tips. The plaintiff filed a petition for a declaratory ruling with the commissioner, seeking a determination that it could pay a reduced minimum wage to its delivery drivers because they regularly receive gratuities that, on average, result in the drivers earning in excess of the minimum wage. In other words, plaintiff asked for the Connecticut tip credit to be applied to more than traditional waitstaff. The commissioner declined finding the exclusion of restaurant employees other than waitstaff from the application of the tip credit regulations was valid. The plaintiff appealed and the trial court affirmed the commissioner’s decision and dismissed the appeal.

The Supreme Court affirmed the dismissal. In reaching its decision, the court walked through the history of the tip credit regulations back to the 1950s and emphasized the ultimate discretion the commissioner is afforded in carving out exceptions to the tip credit regulations. Therefore, restaurant employees other than waitstaff are not subject to the tip credit regulations. For employers who employ delivery drivers, if they take advantage of the “tip credit,” they must discontinue this practice immediately in light of the court’s ruling in Amaral.

Proof that Putative Employee Performs Services for a Third Party not Required for ABC Test for Purposes of Unemployment

In Southwest Appraisal Grp., LLC v. Adm’r, Unemployment Compensation Act, 324 Conn 822 (2017), the Supreme Court clarified the test for independent contracts under the unemployment statute. The specific issue before the court was whether Part C of the ABC independent contractor test requires proof that the putative employee perform services for third parties other than the putative employer.

The ABC test governs whether an employment relationship exits for purposes of the Unemployment Compensation Act. Part C considers whether the putative employee “is customarily engaged in an independently established trade, occupation, profession or business of the same nature as the one involved in the service performed …” The state agency found the company liable for unemployment taxes for three individuals it classified as independent contractors rather than employees because the employer could not show these workers performed services for other companies. The court held performance of services for a third party is merely a single factor to be considered in light of the totality of the circumstances rather than a requirement to prove Part C. Therefore, it reversed the judgment of the trial court, which had held that proof was required.

In Breach of Loyalty Cases, Monetary Relief is within the Broad Discretion of Trial Court

In Wall Sys. v. Pompa, 324 Conn. 718 (2017), the primary issue before the court was the range of monetary remedies available to an employer once it has proven its employee breached the common law duty of loyalty.

William Pompa worked as a division head for the plaintiff, a building contractor. After a change in ownership, Pompa began working for the plaintiff and simultaneously for a competitor. He also began demanding kickbacks from several of plaintiff’s customers. Upon discovery of Pompa’s dual employment, the plaintiff terminated Pompa’s employment and sued him for breach of the duty of loyalty. The plaintiff sought Pompa’s forfeiture of all of the money he made during his period of disloyalty, but the trial court awarded a lesser amount because the plaintiff failed to put on proof that it had been harmed by his work for the competitor. The trial court also put a constructive trust on an account jointly owned by Pompa and his wife. The plaintiff appealed, arguing that the trial court did not award the appropriate amount of damages; and Pompa cross-appealed, arguing the constructive trust was improper because there was no evidence he’d deposited any funds generated by his disloyalty into the account he shared with his wife.

The Supreme Court held that the trial court had discretion in awarding monetary relief and therefore affirmed the award of damages to plaintiff but reversed the implementation of the constructive trust because there was no evidence to support any of the improper funds had been deposited in the particular account. The court reiterated the general principles that, while employed, an employee’s duty of loyalty includes not competing with the employer and not disclosing confidential information. However, the court cautioned that the nature of the duty of loyalty may vary based on the employee’s relationship with the company. This case remains helpful precedent for employers who lack restrictive covenants and find themselves with employees who go to work for competitors.

Retailers and Any Business in the Mercantile Trade Cannot Use the Fluctuating Workweek Model to Calculate Overtime for Employees in Connecticut

In Williams v. General Nutrition Centers, Inc., 2017 Conn Lexis 241, (2017), the court held the fluctuating workweek method could apply in other cases not involving retail employees but that it would no longer be allowed in Connecticut when it came to retail workers paid on commission. The court held that, while Connecticut law does not prohibit the use of the fluctuating method in general, the Connecticut Department of Labor regulations that govern overtime pay for retail employees and mercantile trade businesses do prohibit the use of the fluctuating workweek method for those employees.

The plaintiffs were managers at GNC stores in Connecticut. They were paid a base weekly salary, plus commissions, on sales of certain premium merchandise, and they received overtime pay whenever they worked more than 40 hours in a week. Their base salaries were fixed, but their commission payments fluctuated week to week, based on their sales. GNC calculated their overtime using the fluctuating workweek method, which is allowed under federal law. Because these employees do not have a consistent hourly rate of pay, their regular rate is calculated each week by dividing their total weekly pay by the number of hours they worked during the week. This formula yields their regular rate for that week, which is used to determine their overtime pay.

The plaintiffs argued that the fluctuating workweek method violated a Connecticut Department of Labor wage order governing the calculation of overtime pay for mercantile (or retail) employees. The wage order required that mercantile employees be compensated at a rate of one-and-one-half times their regular rate of pay for all overtime hours worked in a week and that overtime pay be based on the employee’s regular hourly rate of pay. For employees who earn commissions, the wage order provides a formula for determining their regular hourly rate each week to be used in calculating overtime.

The court held that as a general rule Connecticut’s wage laws do not preclude use of the fluctuating workweek method, but the plain meaning of the text in the wage order, however, does for mercantile employees. Therefore, the fluctuating workweek method is no longer allowed for retail employees subject to the wage order.

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.