In FY 2009 the New Hampshire Department of Labor’s Wage and Hour Division collected $5,301,620 ($3,479,973 in wage claims, $368,892 in wage complaints/audits and $1,452,755 in wage adjustments). That was an all-time high collection rate for NHDOL and that enforcement initiative sent shock waves throughout the state. Employers scrambled to comply with state wage laws. NHDOL also spent more time on education and training. Those efforts paid off as NHDOL’s collection numbers decreased in FY ’10 to $2,569,662 ($1,054,375 in wage claims, $319,316.78 in wage complaints/audits and $1,195,970 in wage adjustments). Those numbers decreased again in FY ’11 to $1,731,359 ($982,018 in wage claims, $225,465.24 in wage complaints/audits and $523,876 in wage adjustments). In FY 2012 the downward trend in fines and collections continued as the Department collected $1,195,970 in civil penalties and wage adjustments. In FY 2013 the Department collected $2,052,201 in civil penalties and wage adjustments. This amount confirms that NHDOL, perhaps as a function of a new Commissioner and Wage and Hour Administrator, issues inspectors have identified in the field, the wage claims for the last year, or a combination of these elements, has stepped up its enforcement activities.
If you are one of those employers who has been on NHDOL’s Naughty List you know that an unfavorable NHDOL audit or wage claim decision can be disruptive and expensive to your organization. If you have so far avoided a NHDOL inspection or wage claim, in the words of that holiday song, “You better watch out … … because [the Inspectors] are coming to town”. In other words, the time spent on compliance before the NHDOL comes knocking, as you will see, is always time well spent.
The following are the 2013 Top Ten worst (most common) wage and hour violations in New Hampshire, along with tips on how to avoid these problems:
- Failure to have a written safety plan, joint loss management committee and safety summary form filed biennially, as required.
*RSA 281-A:64 and Lab 602.01, 602.02, 603.02, and 603.03
Recommendation: This was once a bigger issue on the naughty list. However, as of January 1, 2013 employers with fifteen (15) or more employees (used to be 5) need to have a joint loss safety committee to review and correct workplace safety problems. Also, employers, as of January 1, 2013, with 15 or more employees (used to be 10) must file a written safety plan with the state (NHDOL) and then file updates every two years. These reports can be filed with NHDOL electronically. Covered employers should check to be sure that their committee is organized, they properly maintain meeting minutes and their plans and reports are up to date.
- Employing illegal aliens (and others who don’t have proper documentation on file).
*RSA 275-A: 4-a
Recommendation: While this is commonly thought of as an issue involving federal law, many states, including New Hampshire, have laws prohibiting hiring or continuing to employ someone who is not a citizen of the United StatesOR someone who doesn’t have a valid work authorization. NHDOL audits involve inspections of I-9 forms and all supporting documents. These are required for all employees, not just those who are here on work visas. All employers therefore should be certain that all required paperwork is completed and in place before the employee starts work and in the case of foreign guest workers that the employee doesn’t continue to work beyond her/his visa/authorization’s expiration date.
- Failure to pay 2 hours minimum pay at the employee’s regular rate of pay on a given day when he/she reports to work at the request of the employer.
*RSA 275:43-a and Lab 803.03(h),(i),(j)
Recommendation: This is also known as the “bad weather rule”. This applies principally to hourly employees in the private sector. Employers should notify hourly employees when they are not needed at work on a particular day. If the notice is unsuccessful and the employee reports to work and his/her services aren’t required, the employer must pay the employee a minimum of two hours pay for reporting to work or put the employee to work and then pay for the hours worked. One exception is when the employee’s job or task requires less than two hours of work that day.The employee, in those cases, only needs to be paid for the time worked but this arrangement needs to be in writing in advance.
- Improper deductions from wages. Not following list of approved deductions.
*RSA 275:48 and Lab 803.02(b),(e),(f)
Recommendation: The list of approved deductions from wages expanded with the August 2011 amendment to state wage law which provided that, in addition to the list of specific deductions permitted, employers and employees can now agree on deductions for just about any reason. However, the deduction must still be based on the employee’s voluntary request and be for the employee’s (not the employer’s) benefit. Remember: These arrangements should be in writing before the deductions commence.
- Failure to pay minimum wage due for all hours worked.
Recommendation: Make certain that all employees are paid at least the correct (current) minimum wage for all hours worked and any exceptions provided for in the law (e.g. special rates for student learners, tipped employees, etc.) are carefully reviewed and followed consistently. Employers should also note that New Hampshire no longer has its own minimum wage. New Hampshire now applies the federal minimum wage as the threshold wage in this state.
- Failure to keep accurate records of all hours worked. (Not recording meal breaks taken).
*RSA 279:27 and Lab 803.03
Recommendation: Does the NHDOL really care if employees get a lunch break? Yes, but they care more about the proper payment of wages than rest or nutrition. As you know, employers in New Hampshire must permit employees to take a 30 minute (unpaid) meal break after five consecutive hours of work in a workday. Meal breaks must be recorded on daily time sheets just like the start and end time for all hourly and salaried non-exempt employees. Meal waivers are possible, but exceptions to those waivers must be noted on time records.
The issue with meal breaks is that if improperly handled employers could face the imposition of fines for not permitting the breaks as well as wage adjustment orders for unpaid overtime and other wage liabilities. If the NHDOL looks back at all of your covered employees for each work day over the last 18 to 24 months these fines and wage adjustments can really add up. This can be both expensive and unnecessary (because the employees likely took the breaks).
Be careful to avoid automatic meal deductions because NHDOL usually doesn’t consider that to be an accurate time record for each employee. Employers should also educate their employees about meal breaks and time keeping policies as well as train supervisors to monitor meal breaks, waivers and time records.
Remember, while meal breaks can be unpaid, if employers don’t follow this law NHDOL says there’s no such thing as a free lunch!
- Failure to secure the proper youth employment paperwork or not abiding by work hours limitations or hazardous environment prohibitions for workers under age 18.
*RSA 276-A: 4 & 5 and Lab 1000
Recommendation: This is a perennial top 5 violation and NHDOL rarely abates fines for these violations. Employers should not employ younger workers (ages 15 to 18) unless they strictly comply with these laws and regulations. Workers who are under age 16 cannot start work before securing the required parental certificates. Once these certificates are on file, these and older youth workers must be restricted in the number of hours, days of work and types of work established under state (and federal) law. Occupations, hours of work, days of work and working conditions are particularly limited for 15 and 16 year olds.
- Failure to provide writtennotice to employees of their wage rate, pay period, pay day and a general description of fringe benefits when they are hired and in advance of any changes thereto.
*RSA 275:49 and Lab 803.03
Recommendation: This is an easy one but one where employers often get tripped up. When employers hire employees, they need to put in writing the employee’s wage rate, pay period, pay date and a general description of fringe benefits. This applies to all employers in New Hampshire. When those terms change, the employer needs to put the change in writing. Employees need to sign an acknowledgment of receipt of these notices. Employers should keep copies of those signed notices in the employee’s personnel file. This comes up in every NHDOL audit and it is easily remedied.
- Misclassification of exempt employees (overtime pay is due to hourly andsalaried employees unlessthey are exempt)
*RSA 279:21, VIII
Recommendation: While some might think this is only an issue under the FLSA (and it is still a serious issue under federal law) overtime is addressed under New Hampshire Wage and Hour law. Unless an employee is exempt under Federal or State law, overtime wages are due when the employee works more than forty (40) hours in a week. This can be an expensive mistake as claims can go back up to three (3) years. Great care should be taken when determining exempt status. This should also be revisited from time to time. Because these exemptions are narrowly construed, strict compliance with the FLSA and state law is recommended.
- Misclassification of independent contractors.
*RSA 275:42, II; RSA 275-E:1, I; and RSA 281-A:2, VI (b)(1)(A-G)
Recommendation: The NHDOL and NHES formed a task force to find misclassified workers. While their definitions of “employee” differ, they have several elements in common. With this task force the agencies are sharing information like never before. This means the likelihood of either Department discovering a misclassified employee has increased substantially. Likewise the potential fines and penalties have increased. This is not just a state law issue. In 2011 the USDOL budget included an additional $25 million as a part of its “misclassification initiative.” In short, the time spent conducting an internal audit to identify and correct any misclassifications will likely prevent or significantly reduce potential fines and penalties. Just a hint, “But we’ve always done it that way” isn’t a strong defense, especially in misclassification cases.
Our thanks again this year to Michele Small and the staff from NH Department of Labor as they provided useful information from the Department.