File No. 244
Substitute House Bill No. 6871
House of Representatives, April 10, 1997. The
Committee on Labor and Public Employees reported
through REP. DONOVAN, 84th DIST., Chairman of the
Committee on the part of the House, that the
substitute bill ought to pass.
AN ACT CONCERNING LIVING WAGE.
Be it enacted by the Senate and House of
Representatives in General Assembly convened:
Section 1. (NEW) (a) As used in this act:
(1) "Covered employer" means a person engaged
in business who employs one hundred or more
employees at any time in the preceding
twelve-month period which has not been adjudicated
bankrupt and (A) receives any form of state or
local aid in the form of loans or grants or loan
guarantees whose total value is greater than ten
thousand dollars or (B) seeks to contract with the
state or is eligible for tax incentives whose
total value is greater than ten thousand dollars.
(2) "Mass layoff" means the permanent layoff
of twenty-five or more employees employed in a
facility located in Connecticut by a covered
employer during any continuous period of one
hundred eighty days, but does not include any
layoff caused by a relocation or termination
necessitated by a flood or other natural disaster,
national emergency or act of war.
(3) "Permanent layoff" means the layoff of an
employee by an employer without a written
commitment to reinstate the employee within one
hundred eighty days of the layoff, but does not
include any layoff of any construction worker upon
the completion of a construction project or of a
seasonal employee.
(b) Any covered employer who conducts a mass
layoff shall pay each employee, who is permanently
laid off in the course of the mass layoff,
severance pay at the rate of two months' pay for
each year of employment of the employee by the
employer. The monthly rate of pay shall be
one-twelfth of the gross wages paid to the
employee during the twelve-month period
immediately preceding the layoff of the employee.
The severance pay shall be in addition to any
final wage payment to the employees and shall be
paid in a single lump sum, not later than the last
day of employment. For the purposes of chapter 567
of the general statutes, the severance pay shall
not be counted as income during the employee's
benefit year established in connection with the
layoff, and shall not reduce the employee's
unemployment compensation benefits during any week
of the benefit year.
(c) If twenty-five or more of the employees
who are laid off in connection with the mass
layoff are employed in facilities located in a
single municipality, the covered employer shall
pay to the municipality, not later than the date
of the layoff, a penalty equal to two thousand
dollars for each employee who is permanently laid
off in the course of the mass layoff. After
residents of the municipality and the laid off
employees have been provided an opportunity to
testify regarding the use of the penalty moneys in
one or more public hearings before the governing
body of the municipality, the municipality may use
the penalty moneys to fund efforts to ameliorate
the impact of the mass layoff, including: (1) The
development of alternative economic development
plans for the municipality or for any facility
closed in connection with the mass layoff; (2)
infrastructure development; (3) tax relief; and
(4) educational, environmental, public safety or
other local services that will preserve or improve
the quality of life for residents of the
municipality.
Sec. 2. (NEW) A covered employer shall not be
required to pay severance pay to an employee
pursuant to section 1 of this act if the employer
offers each laid off employee, at a location not
more than fifty miles from the previous place of
employment, the same employment or a position with
equivalent status, benefits, pay and other terms
and conditions of employment.
Sec. 3. (NEW) Each covered employer shall
conspicuously display notices describing the
employer's obligations pursuant to the provisions
of this act and in the event of a mass layoff
shall, at the time that the employees are first
notified of the layoff, provide written
notification of those obligations to: (1) Each
employee who is laid off; (2) any labor
organization representing the employees; and (3)
the governing body of any municipality in which
the layoff occurs.
Sec. 4. (NEW) Nothing in this act shall be
construed as diminishing or limiting in any way
any rights, privileges or remedies of any employee
provided under any collective bargaining agreement
or employment contract, or under any law,
including any federal law. The requirements of
this act concerning the amount of severance pay to
be provided shall be regarded as a minimum
standard and shall not be construed as prohibiting
an employer from providing severance pay or other
compensation in amounts exceeding the amounts
required by the provisions of this act.
Sec. 5. (NEW) If a covered employer fails to
make any severance payment or pay any penalty
required pursuant to the provisions of section 1
of this act to a municipality or to an employee,
the plaintiff may institute a civil action in a
court of competent jurisdiction for relief which
shall include: (1) The payment of any unpaid
penalty to the municipality; (2) the payment of
any unpaid severance payment to the employee; and
(3) the payment of reasonable costs and attorney
fees of the plaintiff. The court shall assess a
civil fine of not more than one thousand dollars
for a first violation of this act and not more
than five thousand dollars for each subsequent
violation, which shall be paid to the State
Treasurer for deposit in the Unemployment
Compensation Fund. Each failure to pay an employee
or municipality shall constitute a separate
violation. The court may also order the payment of
punitive damages to the plaintiff and an
injunction to restrain any continued violation of
this act. As used in this section, "plaintiff"
means an aggrieved municipality or employee or any
labor organization representing the employee.
Sec. 6. (NEW) (a) No covered employer shall
pay any of its employees an hourly wage less than
sixty per cent of the average production wage in
the state as determined by the Labor Commissioner
under the provisions of section 31-309 of the
general statutes.
(b) Each covered employer shall provide
health insurance coverage to all of its employees,
except that covered employers shall provide
part-time employees such coverage on a prorated
basis. Each covered employer shall make the best
health plan available to any employee available to
every other employee under the same financial
terms.
(c) Each covered employer shall provide to
all of its employees, a portable pension plan that
includes an employer contribution of at least
three per cent of gross pay, except that covered
employers shall provide part-time employees such
plan on a prorated basis.
(d) No covered employer shall pay any
employee of the employer more than fifty times the
average compensation of any other employee of the
employer in the prior year.
(e) No covered employer shall pay any
employee a severance package, during the time it
is receiving any form of state or local aid, of
total value in excess of three million dollars or
one million dollars per year of service, whichever
is less, unless an agreement to provide such a
severance package was entered into between the
employer and employee prior to the effective date
of this act.
(f) Each covered employer shall have a
written policy, available for public inspection,
to the effect that it will not close, relocate or
eliminate jobs without exploring alternatives in
direct consultation with state and local
government officials.
(g) Each covered employer that violates any
provision of this section shall reimburse to the
state or political subdivision of the state, as
the case may be, with interest at the rate of five
per cent per annum, the full value of any state or
local aid received in the tax year of the
violation.
(h) No contract shall be awarded by the state
or any of its political subdivisions to any
covered employer which is not in compliance with
federal, state or local laws.
(i) The Labor Commissioner shall have
authority to investigate and ascertain whether the
provisions of this section are being complied
with. If the Labor Commissioner finds a covered
employer in violation of this section such
employer shall be ineligible for state or local
aid.
Sec. 7. This act shall take effect from its
passage.
LAB COMMITTEE VOTE: YEA 8 NAY 5 JFS
* * * * *
"THE FOLLOWING FISCAL IMPACT STATEMENT AND BILL
ANALYSIS ARE PREPARED FOR THE BENEFIT OF MEMBERS OF THE
GENERAL ASSEMBLY, SOLELY FOR PURPOSES OF INFORMATION,
SUMMARIZATION AND EXPLANATION AND DO NOT REPRESENT THE
INTENT OF THE GENERAL ASSEMBLY OR EITHER HOUSE THEREOF
FOR ANY PURPOSE."
* * * * *
TOP
FISCAL IMPACT STATEMENT - BILL NUMBER sHB 6871
STATE IMPACT Potential Cost, Workload Increase
(General Fund), Indeterminate
Revenue Gain (Unemployment
Compensation Fund), see
explanation below
MUNICIPAL IMPACT Potential Savings, Potential
Revenue Gain, see explanation
below
STATE AGENCY(S) Department of Labor, Department of
Economic and Community
Development, Connecticut
Development Authority
(quasi-public), Connecticut
Innovations, Inc. (quasi-public),
Judicial Department, Unemployment
Compensation Fund
EXPLANATION OF ESTIMATES:
STATE IMPACT: There is a workload increase for the
Department of Labor as a result of the passage of this
bill associated with determining which companies
violate the minimum pay and benefit standards specified
in the bill.
It is indeterminate as to whether this workload
increase can be handled within the anticipated
budgetary resources of the Department of Labor.
There is an indeterminate revenue gain for the
unemployment compensation fund as the result of civil
penalties being assessed on companies and going to the
fund.
To the extent that the requirements in the bill
concerning employee pay, employee benefits, employee
severance and penalties reduces applications for state
financial assistance or increases reimbursements to the
state through the Department of Economic and Community
Development, Connecticut Development Authority, or
Connecticut Innovations, Inc.'s various financial
programs, there could be a savings to the state. The
exact impact is indeterminate.
The bill could reduce the number of Connecticut
companies that seek to contract with the state because
that could subject them to the bill's provisions.
Reducing the number of companies competing for state
contracts could result in additional costs to the state
that cannot be determined at this time.
It is anticipated that any additional civil suits that
may be brought in superior court can be handled within
the budgeted resources of the Judicial Department.
MUNICIPAL IMPACT: To the extent requirements in the
bill reduce applications for local economic development
assistance, there could be a savings to municipalities.
The exact impact is indeterminate.
There is a potential revenue gain for municipalities
associated with towns receiving $2,000 per employee
permanently laid off if 25 or more employees are laid
off from a single town.
* * * * *
TOP OLR BILL ANALYSIS
sHB 6871
AN ACT CONCERNING LIVING WAGE
SUMMARY: The bill requires that certain large companies
meet minimum standards for employee pay and benefits,
pay severance to affected employees if they permanently
lay off 25 or more over a six-month period, and pay
penalties to any affected municipality if 25 or more of
the laid off employees work in one town. It also bars
the state and political subdivisions from awarding
contracts to such companies if they are not in
compliance with federal, state, or local laws.
The bill covers companies that have employed at least
100 people at any time in the preceding 12 months, have
not been found bankrupt, and are (1) receiving state or
local grants, loans, or loan guarantees with a total
value of more than $10,000; (2) eligible for tax
incentives whose total value is more than $10,000; or
(3) seeking state contracts.
Companies which the labor commissioner determines
violate the minimum pay and benefit standards specified
in the bill, are not eligible for state or local aid
and must repay any aid received for the year of the
violation, with interest. Those that fail to make
required severance and penalty payments may be sued by
affected employees or their unions or by affected
municipalities. They are also subject to civil fines,
payable to the state Unemployment Compensation Fund,
punitive damages, and injunctions.
EFFECTIVE DATE: Upon passage
FURTHER EXPLANATION
Corporate Standards
The bill requires covered companies to:
1. pay all employees an hourly wage at least
equal to 60% of the state average production
wage (about $353 per week or $8.80 per hour
for a 40-hour week);
2. provide health insurance to all employees,
with part-time employees receiving insurance
on a prorated basis;
3. make the best health plan available to any
employee available to all employees on the
same financial terms;
4. provide all employees with a portable pension
plan with an employer contribution of at least
3% of gross pay, and a prorated pension for
part-time employees;
5. not pay any employee more than 50 times the
average compensation that any other company
employee received in the preceding year;
6. not, while receiving state or local aid, give
any employee a severance package valued at
more than $3 million in total or $1 million
for each year of service, whichever is less,
unless required by an agreement between the
employer and employee concluded before the
bill's effective date; and
7. have, and make available to the public, a
written policy that it will not close,
relocate, or eliminate jobs without consulting
directly with state and local government
officials about alternatives.
Mass Layoff
Under the bill, a "mass layoff" occurs when a covered
company permanently lays off 25 or more employees from
a Connecticut facility during any 180-day period, for
any reason other than a plant shutdown or relocation
caused by a natural disaster, national emergency, or
war. A layoff is considered permanent if the employer
makes no written commitment to recall a worker within
180 days. Construction workers laid off at the end of a
construction project and seasonal workers, at the end
of a season, are excluded.
Severance Payment
The bill requires a covered company that conducts a
mass layoff to pay each laid off employee severance
equal to two months' pay for each year he worked for
the company. The employee's monthly pay is one-twelfth
of his gross pay for the 12 months immediately before
the layoff. The severance must be paid in a lump sum
not later than the employee's last day. It is in
addition to any final wages the company owes him.
A company does not have to pay the severance if it
offers each laid off employee the same or an equivalent
position at another plant within a 50-mile radius of
where he used to work.
The severance payment required by the bill must not
delay or reduce the employee's eligibility for
unemployment compensation benefits as a result of the
layoff.
Municipal Penalty
If 25 or more employees are laid off from facilities
located in a single town as part of a mass layoff, a
covered company must pay the affected town a penalty
equal to $2,000 for each permanently laid off employee.
The town must hold a public hearing and give laid off
employees and municipal residents a chance to testify
on uses for the penalty money.
The bill allows the municipality to use the money to
ameliorate the effects of the layoff, including for
alternative economic development plans, infrastructure,
tax relief, or services that will preserve or improve
the town's quality of life.
Enforcement
Corporate Standards. The bill requires the labor
commissioner to investigate and determine whether
covered companies are complying with the standards of
conduct specified in the bill. Any company the
commissioner finds to be violating the standards is
ineligible for state of local aid. Violators must also
reimburse the state or political subdivision for the
full value of any aid received during the tax year the
violation occurred, plus 5% annual interest.
Penalty and Severance Provisions. The bill allows laid
off employees, their unions, or an affected municiplity
to sue a covered company that fails to make the
required payments. The court must require the company
to pay (1) any unpaid severance to the employees, (2)
any unpaid penalties to municipalities, and (3) the
plaintiffs' reasonable costs and attorneys fees.
In addition, the bill requires the court to impose a
civil fine of up to $1,000 for a first violation, and
up to $5,000 for each subsequent violation. Each
failure to pay an employee or a municipality
constitutes a separate violation. Fines are payable to
the state treasurer, who must deposit them in the state
Unemployment Compensation Fund.
Finally, the bill allows the court to award punitive
damages to plaintiffs and to grant injunctions to
restrain further violations.
Other Rights and Privileges
The bill specifies that its requirements do not
diminish or affect employees' rights under collective
bargaining agreements, employment contracts, or other
laws. And it does not prohibit an employer from paying
greater severance or compensation than the minimum
amounts the bill requires.
Notice Requirements
The bill requires covered employers to display notices
describing their obligations. If a company carries out
a mass layoff, it must also provide written notice of
its obligations to each laid off employee; the labor
organizations representing the laid off employees, if
any; and the municipal governing body where the layoffs
occur. The latter notice must be provided when the
employees are first notified of the layoff.
BACKGROUND
Related Bill
sHB 6795, favorably reported by the Labor and Public
Employees Committee, contains the same severance and
penalty provisions as this bill. That bill applies to
any profitable company with 100 or more employees,
whether or not it receives state or local aid.
COMMITTEE ACTION
Labor and Public Employees Committee
Joint Favorable Substitute
Yea 8 Nay 5