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Too often, we speak with companies that have not given much consideration to basic wage and hour issues. These companies operate under the assumption that as long as they pay their employees and comply with federal minimum wage and overtime requirements, they are in compliance. However, while they may be in compliance with the economic requirements of wage and hour law, they may not have satisfied state law requirements regarding payroll administration and recordkeeping.
Given the small size of the New Hampshire Department of Labor’s inspection staff and the infrequency with which routine inspections are conducted, some companies have been in technical non-compliance for many years. This tends to reinforce their mistaken belief that they are actually in compliance. Imagine their surprise when an employee files a wage claim or they are the subject of an inspection which exposes the company’s mistakes. The company may find that it is not only liable for unpaid wages and liquidated damages, but also for significant civil penalties.
We often tell clients that the best defense is preventative maintenance. One way to stay ahead of the curve is to pay attention to the list of the ten most common mistakes published annually by the New Hampshire Department of Labor (“NH DOL”). The most recent list highlighted the following common deficiencies:
- Failing to keep accurate records of all hours worked by non-exempt employees as required under RSA 279: 27 and LAB 803.03;
- Failing to provide written notice to employees of their wage rate, pay period, pay day and a description of fringe benefits, including any changes a required under RSA 275: 49 and LAB 803.03;
- Employing Illegal Aliens (not having proper documentation) as prohibited under RSA 275-A: 4-a;
- Failing to pay all wages due for hours worked, fringe benefits, breaks less than 20 minutes, etc., as required by RSA 275:43 and LAB 803.01;
- Failing to pay employees 2 hours minimum pay at their regular rate of pay whenever an employee reports to work at the request of the employer as required by RSA 275:43-a and LAB 803.03 (h),(i),(j);
- Employing workers under 18 without proper paperwork, in violation of hour restrictions, or in hazardous environment. See RSA 276-A: and LAB 1000;
- Failing to pay minimum wage for all hours worked as required by RSA 279:21;
- Making illegal deductions from wages as prohibited by RSA 275: 48 and LAB 803.02(b),(e),(f);
- Failing to secure and maintain workers compensation coverage (and misclassification of employees) as required by RSA 275:42 I & II and RSA 281-A; and
- Failure to have a written safety plan, joint loss management committee and safety summary form filed biennially, as required by RSA 281-A:64 and LAB 602.01, 602.02, 603.02, and 603.03
Companies should take time to ensure that their regular wage and hour practices and policies are in compliance and that they are not unknowingly making any of these common mistakes. A review of recent NHDOL wage and hour decisions reveals just how easily companies can get themselves in trouble for mistakes they may not have known were problems.
Failing to Keep Accurate Records (#1 most common wage and hour violation according to the NH DOL)
In Carvalho v. Actionphotos.com LLC, (Decided July 16, 2011), the employee was hired in 2010 to perform exempt office work. On the weekends, the employee performed additional work in the field for the employer and was told that he would be paid at a separate (and additional) rate for this weekend field work. As of January 2011, the employer stopped paying the employee an additional amount for the weekend work.
The employee brought a claim for the wages he felt he were due for the weekend work. The employer argued that the employee had been told that as of January 1st, he would no longer be able to pay the employee additional wages for the weekend work because it was the company’s “slow” season, and that any work he did would be covered by his regular salary.
The Department of Labor found for the employee, noting the employer’s obligation, under RSA 275:49, I, to notify employees in writing of the rate of pay at the time of hire and prior to any changes and to have that notice signed by the employee. See RSA 275:49 and Admin. Rule LAB. 803.03. As the employer did not maintain a signed copy of the notification, as required under Admin. Rule LAB. 803.03(f)(6), the employer was unable to prove that he had notified to the employee that he would not be paid extra wages for additional field functions.
In Jacobs v. Jic-Elco, Inc., (Decided July 10, 2012), the employer changed the employee’s salary without providing written notice. Although the employer claims to have met with the employee in February 2012 to inform him of his salary change, the employer failed to specify the dollar amount of the change. The employee filed a claim to recover the difference between the rate of his old salary and his new salary. The Department of Labor found for the employee and the employer was required to pay the employee at the higher rate for the period between when the rate was changed until the employee became aware of the change.
In both these cases, the employee was able to credibly testify that he was not aware of the change in his pay rate. In both cases the employer testified that the employee had been informed of the change ahead of time. Ultimately, the Department of Labor found for the employee because the employer could not prove the notification, despite the employer’s requirement to place the notification in writing.
These types of easily-avoided mistakes are all too common. These types of administrative deficiencies are often not picked up by payroll services, accountants or auditors. Employers are encouraged to review their recordkeeping and payroll administrative practices for compliance. If you would like assistance in auditing your personnel practices, please contact a member of the Devine Millimet Labor, Employment & Employee Benefits practice group.
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The Devine, Millimet & Branch Labor, Employment and Employee Benefits Group offers this free Friday E-Mail Alert service to provide information on recent developments in labor, employment and employee benefits law. If you have any questions about this e-mail, or if you know of anyone else who may be interested in receiving these alerts, please send us an email at employment@devinemillimet.com.
This is not a legal document nor is it intended to serve as legal advice or a legal opinion. Devine, Millimet & Branch, P.A. makes no representations that this is a complete or final description or procedure that would ensure legal compliance and does not intend that the reader should rely on it as such.
© Copyright 2012 Devine Millimet & Branch, Professional Association
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