Season 2, Episode 5: Employment Law in 2024

Nina Pirrotti: Sure, of course. My law firm is Garrison, Levin-Epstein, Fitzgerald & Pirrotti and we're located in New Haven, Connecticut. Our practice is devoted virtually exclusively to representing employees from every aspect. From guiding them behind the scenes and empowering them at work to make decisions that are in their best interest in the workplace and also mindful of their obligations under the law to surfacing and actively advocating for them and negotiating on their behalf to assisting them during the course of workplace investigations, and then, of course, filing complaints of discrimination, of harassment and retaliation in the CHRO, the Connecticut Commission of Human Rights and Opportunities, and also in federal and state court.

Daniel Schwartz: Yeah, and I should note for the listeners, our law firms will come up against each other, but if you're looking for gossip, you're not going to hear any of it today because this isn't about the cases that we're handling, but instead, we're going to talk about some of the developments that we've seen in employment law. So Nina, as we start this, I thought we'd talk about a bill that got a little bit of press a couple weeks ago and that is expected to be introduced in the Connecticut General Assembly this year on non-disclosure agreements.

You and I have talked about this in the past that it's been a trend ever since really, Gretchen Carlson and the incidents at Fox News had really publicized this but now we're starting to see legislation as a result of that, right?

Nina Pirrotti: Yeah, it's actually a very exciting time because of course we employee advocates are in favor of banning such requirements or such muzzles on employees. My understanding is that state senator Matt Flexer and representative Matt Blumenthal are essentially spearheading, proposing this ban, which as you mentioned, is being publicly supported by Fox News.

So, this is Gretchen Carlson and Julie Roginsky, who brought sexual harassment claims, as through their not-for-profit Lift Our Voices. Essentially, it's designed to ensure that the Me Too movement actually has an opportunity to realize its full potential, and it really doesn't when we have voices being silenced or censored as a result of workplace non-disparagement provisions and requirements.

Daniel Schwartz: So, from your perspective, what's the current state of nondisclosure agreements--typically valid, right?

Nina Pirrotti: It's a little murky particularly in light of the McLaren decision that came down last year by the National Labor Relations Board, the NLRB, which has talked about confidentiality provisions, but also touching on non-disparagement as well anything that would chill concerted activity, right. Because the whole idea behind section eight, which applies to non-union employees as well as union employees, not to supervisors, is to encourage a robust conversation among employees so that they can engage in a concerted activity, speak freely among themselves about workplace conditions and effectuate change. That's more challenging to do if some of the employees who are in the know about things that are going on at work that may not be all that they should be, are not permitted to talk about it.

Daniel Schwartz: Yeah, and to your point on the McLaren decision, that's really impacted separation agreements that you're reviewing and that we've been reviewing as well, right?

Nina Pirrotti: Absolutely, this has really been a sea change in terms of that particular aspect of our work. The McLaren decision was addressing separation agreements and the ones that I've seen since the decision have come down, have expressly referenced the decision and said that nothing here is designed to in any way detract from or hinder an employee's rights and opportunities under the McLaren decision.

Daniel Schwartz: Yeah, and it's just a reminder, these agreements, for employers that might be listening or others, agreements are not this thing that's set in stone, right. They continue to develop and evolve and that's really your point--something that we've seen over the last year or two on that. There are some states that have had some of these rules as well outside of Connecticut; so it really requires employers to review the agreements and make sure it's state specific and really up to date, right?

Nina Pirrotti: There's no question about it. It really requires us all to be vigilant and ensure that what we are proposing to agree to is actually still lawful. As a matter-of-fact the idea behind the McLaren decision is it's even unlawful for employers to even proffer a requirement of confidentiality, even if it isn't accepted. It's something that requires careful analysis and obviously conferring with lawyers like you, Dan, who do this for a living, to ensure that they're on the right side of the law.

Daniel Schwartz: That's always a good plug for more work, Nina. That's why we invited you on. So, one of the other bills that we've seen over the last couple years, and I think you may have even submitted testimony about it is, non-compete agreements and whether they should still be allowed.

So, let me give the listeners just a minute of background, which is some states Washington state, for example, and California have passed either wholesale bans or more limited bans on non-compete agreements. We’re now starting to see other states pick up on this, and then the Federal Trade Commission has also indicated they're going to get involved. So, Nina on the state level, we haven't quite seen a ban on non-competes here in Connecticut yet, right?

Nina Pirrotti: We haven't but since we seem to be at the forerunner of changes that are protective of employees, I've seen it in a number of different contexts--so have you, Dan. Over the years, we're among the handful that come to the top and look at equal pay act laws and make sure that employees are being treated fairly. I expect that we will be part of this movement that is going toward banning non-competes in their entirety, or at least when it is involuntary termination on the part of the employee. It seems rather unfair to terminate--the FTC decided to fire an employee for performance reasons and then to also tie the employees hands with respect to going out there in the workplace and actually finding comparable employment in their chosen fields where their skills and experience are most relevant. So, the FTC actually estimated that a prohibition on non-competes would actually increase wages by 300 billion annually and expand career opportunities for over 30 million Americans. It's hard to argue with those kind of statistics, Dan, and I really see compelling arguments toward banning non-competes, at least when it comes to situations where the separation from the employer is involuntary.

Daniel Schwartz: I think where we've seen certain state laws, and I'll use Washington state is as an example, is using salary as at least a threshold question, that for lower level people, particularly those who aren't involved in the core function of an employer having a non-compete because that's what the employer does, strikes me as those provisions are going to get struck down, whether it's through the FTC or through state laws, because it's unnecessarily restrictive of an employee being able to go from one job to another, right? So, where I think there's going to be pushback from employers is in the sales space where you have sales people who have relationships with clients, but I think again, some of that can be handled through non-solicitation provisions, and you're also seeing it - it's higher level people, the high level executives. And so for employers narrowly tailoring their non-compete agreements not as overbroad, but really to protect the business interest is vital to seeing them being enforced the FTC where, I think I was at a conference last November where it's still in the works, right? The proposal has been floated around, but we keep hearing that they're closer to the end than the beginning, right?

Nina Pirrotti: I think again, as these laws began to emerge or pop up around the country and some of the more progressive states, you're going to find it, there's going to be a moment when the tide turns and that the FTC is going to have some wind beneath its wings to get this over the finish line. And I will say this with respect to higher compensated executives, their separations also often come with packages that are commensurate in time with the length of their non-compete--which certainly makes it a lot easier for them to sit it out because they're being paid--than it does for most of us who rely upon our income every day to pay our bills. So there is a distinction there. I wonder if that distinction might be drawn or not. There's certainly some fine tuning that could be done, but the overarching principle, I think, makes sense. And Dan, there is most definitely--I agree with you--a difference between a non-compete and a non-solicit. One can effectively prevent someone from working in their chosen field for a period of time and a geography that makes sense for them and their family. And the other one, is maybe they don't have as much of an edge as they would otherwise, because they can't use a customer list or they can't use customers or employees. And I don't put those in the same category as the non-compete itself.

Daniel Schwartz: Yeah, we've seen states, I think Massachusetts really talks about the notion of garden leave, which is if you're going to have someone out on a non-compete, you got to pay them for the period of non-competition. So that may be an area where the legislature decides to compromise on that to really ensure that someone wanted. And can afford to sit out and that it's not simply the employer who gets all the benefit from such provisions

Nina Pirrotti: and that it's not for so long a period of time that even if they are being paid, their resume has a giant gap in it because we're not able to do the work that they're doing for an extended period of time. So, I think the duration will also be a factor.

Daniel Schwartz: Yeah, and speaking about terminations, one of the other things that happened on January 1st was a change to Connecticut's unemployment laws. And I think this caught a lot of people off guard because the law itself was passed a few years ago, but only is getting implemented now. From your perspective, what's the big headline change on that?

Nina Pirrotti: The jury is still out on this one, Dan. I think we're still figuring it out. It took place January 1, 2024, and there are questions that remain. The way the law is written right now, it may very well be that the employee simply will not be able to collect benefits for the period of time in which the severance is paid itself and if severance is paid in the lump sum we're talking about you know that particular week, but I'm not entirely confident that I know how it's going to be interpreted. What do you think, Dan?

Daniel Schwartz: So, let me give the listeners even more information if they didn't know. So, prior to January 1, if an employee signed a separation agreement and their severance was contingent upon them signing the separation agreement, they could collect severance but also collect unemployment at the same time. A change to the law that happened January 1st is getting rid of the requirement that they have to sign it to be eligible to collect unemployment. So, employees that are getting severance for the time period in which they are receiving severance. I think under a fair reading of the new law, they're not going to be able to collect unemployment. And so there are questions that arise. If you pay someone in a lump sum and you then circumvent the law, so to say, because they're getting it just during one week. So, if you pay someone one year's worth of severance, but you pay it in one week, does that make them eligible then to recover unemployment during the other 51 weeks. It's an interesting question We'll start to see I think more guidance from the department of labor as to how they're going to handle that I think one of the other things that I’ve been wondering about is it's fine to talk about it in the separation agreement context what about in the settlement agreement context.

Nina Pirrotti: You read my mind and I was exactly thinking those thoughts because the rationale of the old law which permitted an employee to collect both was, hey, you know what? The employee is giving up something too in this arrangement. They are quote paying for their separation pay or their settlement agreement because they are giving up their right to sue the employer and that has value. And so both sides were giving value. The employer was giving up a settlement amount and the employee was giving up their right to sue.

So, I'm not sure what is going to happen here with respect to this particular law. But I do know this if it is interpreted very broadly. It potentially could have a chilling effect on employees wanting to enter into settlement agreements for the time period in which they're collecting unemployment because it essentially punishes them for doing so.

Daniel Schwartz: Yeah, and it may--on the flip side for employers--it may be more costly to employers because employees have factored in the unemployment that they were receiving. And so without that additional income, we might see higher demands for severance as a result.  Still to be determined, because we're only 11 days into the new year. But I think this is something to keep on the radar of counsel for both employees and employers. So, as we begin to wrap up, I know you were thinking that one of the other things on the horizon might be some laws on artificial intelligence. Anything else you think we might see in 2024?

Nina Pirrotti: Well, I think the artificial intelligence concept for we that are not of the--what generation would this be? The younger generations? What are they called now? XYZ?

Daniel Schwartz: There are lots of lots of things the older people go with these kids these days.

Nina Pirrotti: I'm not going to put myself in the category of the kid and I will tell you that AI just is this daunting, potentially horrific, but potentially obviously hugely beneficial new element in our lives. And there is an act that has been raised by Connecticut, an act concerning artificial intelligence. automated decision making and personal data privacy that essentially is proposing to establish an office of artificial intelligence in Connecticut and it's going to establish a task force and it's going to study artificial intelligence and develop an artificial intelligence bill of rights and I think that makes a lot of sense, especially Dan in the employment arena.You can just imagine in terms of hiring decisions, in terms of firing decisions, in terms of monitoring employees during their day to day work, the implications are huge. And as a matter of fact, you and I are both attending the ABA Employee Rights and Responsibility Conference in sunny--hopefully sunny--Puerto Rico, and Marsh and I will be on a panel speaking about this very important topic.

Daniel Schwartz: Yeah, I think it's really going to impact the employer employee relationship. You can see it from screening of resumes to as you say, monitoring employee performance, and I only think we've just started to scratch the surface. And it'll be interesting because there will be a certain arms race as employers begin to implement this. I'm not sure the laws are going to be able to keep up with some of the developments here. I know New York has been trying and has passed some, but with federal legislation, really at a gridlock. We're going to see a hodgepodge, which leads to my sort of last point, which is one of the things that I'm looking forward to in 2024 is a decision from the Supreme court. Now it might not get all the headlines for employees, but for employers, regulations that come about from department of labor and other agencies have historically been given some deference. And it's called the sort of Chevron Deference and in reference to a case that was passed or ruled upon many years ago. And now that sort of theory is under attack and what that can mean is some of the regulations that employers have grown accustomed to may be subject to attack and be struck down. And we saw this as early as the Obama administration with the white collar overtime exemption rules, we saw that with the Biden COVID regulations as well. And so that's something I think that we'll see before June is a decision from the Supreme Court as to whether this administrative scheme that allows for sort of consistency among the states is allowed to survive. I know the most exciting to employer council to employee council, but to employer council, it's going to be something to watch for.

Nina Pirrotti: I can see why it would be an important decision to keep your eye on.  

Daniel Schwartz: Nina, we have come to the end of time. I want to thank you for joining us. If people want to learn more about your firm, you guys have a website that they can go to.

Nina Pirrotti: Sure. It's www.garrisonlaw.com. Or you could just google any of our names and it will come up.

Daniel Schwartz: Nina, thanks so much for taking time out of your day to talk about this with us. And this concludes another episode of From Lawyer to Employer. You can hit the subscribe button on any of your podcast listening, whether it's Spotify or Apple Music. We love to have your subscriptions and your reviews as well. Thanks for joining us and we'll be back soon for another episode.