New penalties, a new mandate, a new tax, and new burdens; a workers’ comp remedy and unemployment compensation tax relief. Those are among the many bad-news, good-news, business-related proposals the legislature’s Labor Committee approved this week.

The committee took final action on the following bills:

State-Run Retirement Plan

SB 249 requires employers (of five or more employees) that are not already providing their employees with access to a 401(k), IRA or pension plan, to facilitate access to a state-run retirement plan.  Businesses had questioned the committee on the proposal’s administrative burdens, potential for increased costs, and how it puts the state in direct competition with Connecticut businesses.    

Immigration: Employers Assumed Guilty

Employers in Connecticut will be “guilty until proven innocent” in certain personnel matters dealing with immigrant employees, through SB 371.

The proposal imposes fines, losses of licenses, and other penalties for employers for allegedly retaliating against immigrant employees for complaints made by employees about an employer’s supposed violation of labor and workplace laws.   

The problem is the bill presumes that an employer is guilty of retaliation against immigrant employees--which means that businesses are likely to have to expend considerable time and financial resources to prove their innocence. Even meritless claims would have to be defended, at employers’ risk of being forced to suspend business.     

Retaliation is defined as requiring documents other than what’s currently allowed under law to ensure someone’s employment eligibility, filing false police reports, or inappropriately contacting local or federal authorities to check on the employee’s status.

But the Immigration Reform and Control Act of 1986, or IRCA--a comprehensive federal law that regulates every aspect of immigration employment--already prohibits most of these actions. IRCA prohibits job discrimination based on citizenship or immigration status and establishes what immigration documents are required for employment eligibility verification.

Similarly, the discrimination and retaliation protections SB 371 seeks to provide are already found in existing law. Title VII of the Civil Rights Act and the Connecticut Fair Employment Practices Act prohibit discrimination and retaliation based on race, national origin, and ancestry, and Connecticut law prohibits employer retaliation for employee complaints regarding wages and hours, safety violations, and more.  

New Wage Tax

Larger businesses and many franchisors in Connecticut face a new punitive tax if they do not pay every employee at least 130% of the state’s minimum wage. HB 5069 applies to employers with 500 or more employees or franchisors whose franchisees collectively have 500 employees. The proposal sets a $1 per hour tax per any employee who is paid less than the required wage. 

Essentially, the bill imposes a new minimum wage--30% higher than the state’s actual minimum wage--for larger businesses. In addition to making it prohibitively expensive for employers to hire young and low-skilled workers for entry-level positions, HB 5069 targets owners of small franchises who will be required to increase prices and reduce hours for employees in order to pay the additional cost to the franchisors. 

Unemployment Comp Tax Relief

On a positive note, the Labor Committee approved HB 5314, which would apply an estimated $60 million of the projected state budget surplus toward the debt owed to the federal government for funds borrowed to shore up Connecticut’s Unemployment Compensation Trust Fund. 

This debt is being paid off by the business community in the form of federal unemployment taxes that increase on a yearly basis, plus an additional yearly special assessment.

While the bill would be a big helping hand to the business community, its fate is uncertain.  It did not receive the support of either of the Labor Committee chairpersons, or the Labor Commissioner–who is responsible for the departments that oversee the Unemployment Compensation Trust Fund. 

For more information, contact CBIA’s Eric Gjede at 860.244.1931 | eric.gjede@cbia.com | @egjede

Workers’ Comp Proposals  

Yes to Hospital Fee Schedule

By a unanimous (10-0) vote, the Labor Committee approved SB 61, which authorizes the state Workers’ Compensation Commission to establish a pre-determined fee schedule for the cost of workers’ comp medical services or procedures done at hospitals or surgical centers. 

Essentially, the bill remedies a ruling last year by the state Workers’ Compensation Commission that opened the door to out-of-control medical costs to employers in workers’ comp cases. It also aligns Connecticut with how similar fees are settled in most other states.

The bill now includes a 200% markup of Medicare cost for the commission to use when proposing a fee schedule.  By comparison, the Federal Employees' Compensation Act (FECA) provides federal employees injured in the performance of duty with workers' compensation benefits at a 150 % markup of Medicare.

No to Post-MMI 

Fortunately, the Labor Committee decided not to act on SB 319, a potentially very costly proposal.

The bill would have restricted employers and insurers from denying medical and surgical aid (including hospital and nursing services) to an injured employee for whom workers’ compensation is provided under current state rules and who has attained maximum medical improvement (treatment). 

But the bill would have caused workers’ comp medical costs to skyrocket in Connecticut because in effect, it required employers and insurers to provide for unlimited medical treatment and expenses.

For more information, email Faith Gavin Kuhn.

More Work Ahead

With several weeks left in the 2014 General Assembly session, businesses will have to continue to work hard to defeat proposals that make it harder for them to compete and succeed in Connecticut. 

For more information, contact CBIA’s Eric Gjede at 860.244.1931 | eric.gjede@cbia.com | @egjede

Filed Under: Employment Law

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