By James P. Reidy

Employers may be startled to see figures from the New Hampshire Department of Labor (NHDOL) revealing just how expensive wage and hour violations can be. In fiscal year (FY) 2021 (July 2020-June 30, 2021), the state proposed civil penalties in the gross amount of $2,711,500 after inspections. The amount was reduced through informal conferences and other means, so the actual amount collected was $415,783, but that was still more than was collected in civil penalties in FY 2020. Following is a countdown of the top 10 most common wage and hour violations and tips on how to avoid mistakes.

No. 10

Failure to have a written safety plan, joint loss management committee, and safety summary form, if required. Since the early days of the COVID-19 pandemic, employers have been asking if their new safety policies and responses to suspected and confirmed workplace coronavirus cases need to be recorded and if related safety issues need to be addressed by their safety committees. The short answer is “yes.”

What to do: Covered employers should be sure their safety committee is organized and that it holds regular meetings (for example, quarterly). Also, the committee should maintain meeting minutes and make sure plans and reports are up to date.

No. 9

Failure to pay minimum wage for all hours worked. During COVID-19, this was more of a challenge because many employees worked remotely at least part of the time. The challenge for employers is making sure work time is recorded, time records are properly maintained, and employees are paid for all hours worked.

What to do: Make certain all employees are paid at least the current minimum wage and any exceptions provided for in the law (for example, special rates for student learners, tipped employees, and so on) are carefully reviewed and followed consistently.

New Hampshire doesn’t have its own minimum wage. Instead, it applies the federal minimum wage, currently $7.25 per hour. For employers with operations in other states, the minimum wage law in those states (and in some municipalities, too) must be closely monitored.

No. 8

Failure to provide written notice 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. Even before COVID-19, some employers were a bit lax when completing new hire/onboarding paperwork. When the pandemic struck and hiring became largely remote, some new-hire documents were even less carefully communicated.

What to do: When hiring, you need to put in writing the employee’s wage rate, pay period, pay date, and a general description of fringe benefits. When those terms change, you need to put the change in writing. Employees need to sign an acknowledgment of receipt of the notices, and the notices should be kept in their personnel files.

No. 7

Improper deductions from wages and not following list of approved deductions. Failure to make sure deductions align with the law can result in civil penalties and wage adjustments.

What to do: Under state law, there’s a list of approved deductions from wages. The list expanded with 2011 amendments that allow employers and employees to agree on deductions for just about any reason. The deduction must still be based on the employee’s voluntary request, however, and be for the individual’s (not the employer’s) benefit.

No. 6

Failure to secure and maintain workers’ compensation coverage for misclassified workers. During COVID-19, unemployment benefits were relaxed so out-of-work self-employed individuals and independent contractors could receive benefits. That wasn’t the case with workers’ compensation. Only employees are eligible to receive those benefits.

What to do: A problem arises when employers misclassify employees as independent contractors. The NHDOL and New Hampshire Employment Security, as well as the U.S. Department of Labor (DOL) and the IRS, are always searching for misclassified workers.

The time spent conducting an internal audit to identify and correct any misclassifications will likely prevent or reduce potential fines and penalties. Just a hint: “But we’ve always done it that way” isn’t a strong defense.

No. 5

Failure to pay two hours of minimum pay at the employee’s regular rate on a given day when the individual reports to work at your request and work isn’t available. This is an odd phenomenon, given that many employers reduced workplace density with furloughs or remote work over the last two years. The issue came up when employees reported to the workplace, but it also applied to remote work when an employee engaged in off-site work.

What to do: Notify hourly employees when they aren’t needed. If the notice is unsuccessful and the individual reports to work, you must provide a minimum of two hours’ pay or put them to work and pay for the hours worked. One exception is when the person’s job regularly requires less than two hours of work that day. The employee, in those cases, needs to be paid only for the time worked.

No. 4

Employment of undocumented workers (and others who don’t have proper documentation on file). The NHDOL hasn’t relaxed its standards regarding the documents needed to support a legal hire.

What to do: While the matter 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 isn’t a citizen or doesn’t have a valid work authorization. Be certain the required paperwork is in place before an employee starts work and, in the case of foreign guest workers, that the person doesn’t continue to work beyond a visa/authorization expiration date.

No. 3

Illegal employment of workers under 18 (not having proper paperwork, hours violations, or working in a hazardous environment). This is related to the challenges of remote hiring and the disruption of administrative practices in the past year.

What to do: Don’t employ workers under 18 unless they strictly comply with the laws and regulations. If a worker is under 16, you must obtain a youth employment certificate within three business days of the worker’s first day of employment. If a worker is 16 or 17, you must obtain written permission from their parent or guardian before they can begin employment. All workers under 18 must be restricted in the number of hours, days of work, and types of work.

No. 2

Failure to keep accurate records of all hours worked (not recording meal breaks taken or paying for breaks of less than 20 minutes). This is a common violation, but in 2021 it took on a new dimension because of split shifts and remote work.

What to do: New Hampshire employers 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. Meal waivers are possible, but exceptions to the waivers must be noted on time records.

Be sure the daily time records entered by employees are accurate. Changes are permitted only if initialed by the affected employee. If the records aren’t handled properly, you can face fines for not permitting meal breaks as well as wage adjustment orders for unpaid overtime and other wage liabilities. Avoid automatic meal deductions because the NHDOL usually doesn’t consider them to be accurate time records.

No. 1

Failure to pay all wages due for hours worked (including paid short breaks, overtime, shift differentials, and fringe benefits). Take several of the other violations on this list, and the failure to comply with any of them usually resulted in the employee not being paid all wages due for hours worked.

What to do: If time isn’t properly recorded, how can proper wages be paid? With the advent of smartphones and remote access, employees are working time off the clock. Also, as courts continue to focus on preliminary and postliminary activities, you have issues knowing when the clock starts and stops.

Requiring employees to seek approval in advance for extra work is helpful, but they also should be instructed to alert supervisors when they perform additional work so time records will be accurate.

Jim Reidy is a partner at the Sheehan Phinney and chair of its labor and employment law practice group. Jim practices in the areas of management side labor and employment law with an emphasis on assisting employers in effectively avoiding, or defending against, employment disputes. He may be contacted at jreidy@sheehan.com.