The General Assembly this year enacted many laws this year affecting Connecticut businesses, some of which take effect on Oct.1. These new laws include measures on taxes, the workplace, and business law. Here is a brief rundown:

Taxes

Electronic reporting and payment of taxes
Public Act 11-145
allows taxpayers (including employers) who are required to pay taxes by electronic funds transfer to seek a hardship waiver from the Department of Revenue Services (DRS). The DRS may also waive the electronic filing or payment requirement. Approved taxpayers will be allowed to file a signed paper return or make payments other than by electronic funds transfer. The law applies to tax periods starting on or after Oct. 1, 2011.

Nonresident contractor status and security requirements
Public Act 11-61
explains who a nonresident contractor is and sets forth what the DRS must verify related to a nonresident contractor or subcontractor. It also changes tax security requirements for nonresident contractors in several ways:

  • Clarifies that the bond requirement is only for nonresident general or prime contractors, and the hold-back obligation is only on nonresident subcontractors that aren’t DRS verified.
  • Changes the hold-back provisions so that general contractors, not customers, are required to hold back funds from their unverified subcontractors.
  • Requires customers that contract with unverified general or prime contractors are required get proof that the contractors posted the required bond.

Customer liability is limited only to those people that do business with an unverified prime or general contractor and fail to get proof that the contractor has posted the required bond. The customer’s liability is capped at 5% of the contract price (applicable to contracts of $ 250,000 or more) and only of the contract in question.

The law splits nonresident contractors into two groups—“prime or general”; and subcontractors—and requires every unverified prime or general contractor with a contract in Connecticut priced at more than $250,000 to post a bond with DRS equal to 5% of the contract price. It also imposes hold back provisions on any resident (or verified or unverified nonresident) general or prime contractor doing business with an unverified subcontractor. It also specifies how bonds and hold backs must be released, and addresses certificates of compliance and certain DRS disclosure requirements.

Business Law

Model Business Act
Public Act 11-147
promotes uniformity with other states by amending the Connecticut Business Corporation Act to align it with the Model Business Corporation Act in the areas of remote participation in shareholder meetings, bifurcated record dates and electronic technology.

Offers of compromise

Public Act 11-77 changes the timing and eliminates plaintiff’s obligation, in medical malpractice actions, to provide the defendant with certain information before filing an offer of compromise. The offer to compromise cannot be filed less than 365 days after the suit was filed. It also will be considered rejected if not accepted within 60 days and before the jury renders a verdict or the court issues an award.

Public Act 11-149 creates a procedure for parties in arbitration proceedings related to certain construction contracts to send the opposing party an offer of compromise as an offering to settle the underlying claim for a specified amount. (The procedures are similar to those in existing law for offers of compromise in civil actions.) The bill also accords contractors, potential contractors, and consultants due process before they are prohibited from bidding on state contracts because of alleged past unethical bidding practices.

Labor

Penalties for repeat violators of the Personnel Files Act
Public Act 11-12
increases penalties and makes employers liable for even unintentional violations of personnel records law. The first violation will incur a $500 penalty and subsequent violations will be $1,000 each.

Good cause for late filings of unemployment compensation appeals 
Public Act 11-36 clarifies the unemployment compensation appeals process by allowing claimants to appeal after the 21-day deadline if they can demonstrate a good reason for the late filing.

Use of credit scores in hiring decisions

Public Act 11-223 preventsemployers from requiring an employee or applicant to consent to a credit check as a condition of employment, unless the employer is a financial institution, the employee is in certain financial occupations, or it is required by law. The legislation also imposes a penalty of $300 for each violation.

However, the law allows employers to use credit reports in hiring decisions whenever the use of the information is “substantially related” to the job function. “Substantially related” is presumed when the position:

  • is a managerial position that involves setting the direction or control of a business, division, unit, or agency of a business
  • involves access to customers’, employees’, or the employer’s personal or financial information other than customary retail transaction information
  • involves a fiduciary responsibility to the employer, including authority to make payments, collect debts, transfer money, or enter contracts
  • provides an expense account or corporate debit or credit card
  • provides access to confidential or proprietary business information
  • provides access to information (such as a formula, pattern, compilation, program, device, method, technique, process, or trade secret) which has actual or potential independent economic value because it is not generally known or readily ascertainable by proper means by others who could obtain economic value from the information and there are reasonable efforts under the circumstances to keep the information secret
  • involves access to the employer’s nonfinancial assets of at least $ 2,005 in value, including museum and library collections and prescription drugs and pharmaceuticals.

Commission on Human Rights and Opportunities
Public Act 11-237
institutes new systems for improving case processing, reducing agency costs and streamlining the functioning of the CHRO.

Environment

Remediation standards
Public Act 11-162
ensures that individuals, businesses, municipalities or other entities that enter into agreements with the DEEP to clean up contamination according to state requirements will not be adversely impacted if those standards change after the date of the agreement.

Economic Development

Tax credit under Neighborhood Assistance Act (NAA)
Public Act 11-140
extends NAA tax-credit eligibility to companies subject to the state’s business entity tax, and doubles the total amount of credits that a company may claim annually under the NAA.

CBIA’s complete Summary of Business-Related Legislation can be downloaded at gov.cbia.com. For more information, contact CBIA’s Bonnie Stewart at 860-244-1925 or bonnie.stewart@cbia.com.