Employers can learn from the most common wage and hour mistakes of the past so they can prevent such trouble now. The second year of the COVID-19 pandemic featured violations involving timekeeping for remote workers, meal breaks, short breaks, reporting pay, payout of paid time off (PTO) and vacation time, salary proration, and workplace safety issues.

While employers of all sizes and types were recalibrating to adjust to novel workplace issues spurred by the pandemic, inspectors from the New Hampshire Department of Labor (NHDOL) as well as the U.S. Department of Labor (DOL) were conducting workplace inspections. The stakes for noncompliance with state and federal wage and hour laws are high, so employers must pay attention to avoid expensive civil penalties and wage adjustment orders.

This article focuses on violations under state wage laws, but it’s worth noting that federal investigators also have been busy with workplace audits in New Hampshire.

Wage Claims/Hearings

In fiscal year (FY) 2021 (July 1, 2020-June 30, 2021), 473 wage claims were filed with the NHDOL by individuals against their employers. Although that’s nearly a 50 percent drop from the previous year, many of the claims proceeded to administrative hearings, which were virtual or telephonic in 2021 because of COVID-19.

If rulings in the hearings go in the claimant’s favor, the back-pay awards can be significant, and there’s the potential for double damages if the employer is found to have willfully refused to pay wages due.

Inspections/Civil Penalties

During 2021, the NHDOL also conducted many wage and hour law compliance audits at employer worksites. Some of the audits were via e-mail or telephonic, but many were in person. The inspections resulted in assessments of civil penalties and wage adjustments to some extent.

In FY 2021, NHDOL inspectors conducted 820 on-site inspections at New Hampshire workplaces. That was down slightly from 847 audits in FY 2020. As a result of the audits, the agency proposed civil penalties in the gross amount of $2,711,500. Although the number of inspections decreased, the total assessed civil penalties increased substantially from FY 2020.

The penalties can have a substantial impact on an employer’s bottom line and operations, especially given other challenges over the last year. Thankfully, through informal conferences and other means, the total amount of civil penalties actually collected by the NHDOL in FY 2021 was $415,783.

The amount collected was an increase in what the NHDOL collected in civil penalties in FY 2020 but not nearly as much as was originally assessed. That shows the agency’s flexibility when employers take the time to explain their pay practices, point out mistakes, rebut findings, and commit to compliance with state wage laws.

Wage Disputes/Adjustments Paid

During FY 2021, the wage adjustments flowing from inspections that were collected and distributed by the NHDOL to individuals totaled $958,345. That was an increase from the wage adjustments the agency collected in FY 2020. Those amounts, once assessed in an audit, are rarely reduced, and they are paid directly to current and former employees.

Also, when an employer tries to reduce proposed civil penalties through an informal conference, the NHDOL often asks the employer to first concede, pay, and provide the agency with proof of payment of the wage adjustments.

Historical Perspective

A look at statistics from the NHDOL in past years provides some historical context. For example, back in FY 2009, the agency’s wage and hour division collected $5,301,620. That breaks down to $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, and the enforcement initiative sent shockwaves throughout the state.

Employers scrambled to comply with state wage laws. But the NHDOL spent more time on education and training, and those efforts paid off as the agency’s collection numbers decreased in FY 2010 to $2,569,662 ($1,054,375 in wage claims, $319,316 in wage complaints/audits, and $1,195,970 in wage adjustments).

The numbers decreased again in FY 2011 to $1,731,359 ($982,018 in wage claims, $225,465 in wage complaints/audits, and $523,876 in wage adjustments).

In FY 2012, the downward trend in fines and collections continued as the NHDOL collected $1,195,970 in civil penalties and wage adjustments. In FY 2013, the fines and wage adjustments increased as the department collected $2,052,201. In FY 2014, the agency collected a total of $1,275,134 in civil penalties and wage adjustments.

In 2015, the NHDOL collected a total of $1,004,239 in civil penalties and wage adjustments. In FY 2016, $1,004,300 was collected in civil penalties and wage adjustments. In FY 2017, the department collected a total of $1,020,168 in civil penalties and wage adjustments.

In FY 2018, the NHDOL collected a total of $1,767,634 in civil penalties and wage adjustments, substantially more than was collected the year before. In FY 2019, the agency’s collections fell to a total of $1,376,803 in civil penalties and wage adjustments. In FY 2020, a total of $1,334,997 in civil penalties and wage adjustments was collected, a slight decrease from the year before but still a significant amount.

NHDOL Resources/Training Sessions

Although the NHDOL enforces state wage laws meant to protect employees, the department isn’t out to get employers. In fact, the agency offers several services to assist employers in complying with state wage laws including:

• User-friendly website;
• Inspectors available to answer calls from employers;
• Informal conferences;
• Relief from civil penalties when employers partner with the NHDOL during inspections and perform self-audits/corrections; and
• Comprehensive training sessions throughout the state.

There were 41 training sessions in 2019. COVID-19 kept the NHDOL from conducting the sessions in 2020, but in 2021 the department was able to offer 15 webinars with approximately 2,164 people attending.

Advice for Employers

Employers should remember an unfavorable NHDOL audit or wage claim decision can be disruptive and expensive. So, the effort spent on compliance before the agency comes knocking is always time well spent.

James P. Reidy is a partner at the Sheehan Phinney and chair of its labor and employment law practice group. James 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.