2024 Top Ten List of Wage and Hour Violations in New Hampshire

Note: This outline focuses on violations of state (NH) wage laws. The USDOL enforces the Federal Fair Labor Standards Act (FLSA) and USDOL investigators have also been busy with workplace investigations in New Hampshire. While USDOL investigations can involve some of the same issues, this outline focuses on the most common violations under state (NH) law and how to avoid them in the new year.

It was Another Busy Year for the NHDOL

Wage Claims/Hearings
In FY 2024 (July 1, 2023 – June 30, 2024) there were 965 wage claims filed with NHDOL by individuals against their employers. That was an increase in claims from the year before. Under NHDOL administrative procedures if the employer objected to the claim, the matter proceeded to an administrative hearing at NHDOL – claimants have a right to a hearing even if the claim seems meritless.

When wage claim rulings go in favor of the claimant, awards of back pay can be significant. That is because back pay awards can be liquidated (doubled) in some circumstances if the NHDOL finds that the employer willfully and without good cause refused to pay wages due. While the total amount awarded through wage claim hearings isn’t available from NHDOL, the numbers from the NHDOL audits are available and those should cause employers to want to stay off of NHDOL’s Naughty List.

Inspections/Civil Penalties
In FY2024, NHDOL inspectors conducted 963 onsite inspections at New Hampshire workplaces. This was a significant increase (nearly 3 times) from FY2023. Some of those inspections resulted in warnings but most of those interactions with NHDOL resulted in assessments of civil penalties and wage adjustments. Civil penalties are fines imposed by the NHDOL to punish noncompliance. Wage adjustments are the NHDOL’s calculation of back wages due to employees.

Civil penalties alone can have a substantial impact on an employer’s bottom line and operations especially given other challenges over the last few years. The wage adjustments on top of those civil penalties can also be substantial. In the past NHDOL tracked and reported out the gross total of civil penalties assessed each year. They are no longer doing that but it doesn’t matter. All that matters is how much was actually collected by NHDOL.

Thankfully, through negotiated resolutions at informal conferences with NHDOL and otherwise, the total amount of civil penalties actually collected by NHDOL in FY2024 was $230,736.57. That was a fairly significant decrease (by nearly half) in what NHDOL collected in civil penalties in FY2023. Hopefully, that shows employers are more focused on compliance with state wage laws.

Wage Adjustments Paid by Employers
During FY2024, the wage adjustments collected and distributed to employees by NHDOL following inspections totaled $865,306.59. This too was a good sign as it constituted a fairly significant decrease from the wage adjustments NHDOL collected in FY2023. While civil penalties can sometimes be negotiated down through the Informal Conference process, wage adjustments are rarely reduced by NHDOL. In fact, NHDOL often asks the employer to pay the wage adjustments in full to employees – and provide proof to NHDOL - before NHDOL will negotiate the civil penalties.

Better Watch Out, Better Not Cry….
If, after all of this, 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 to and expensive for your organization. Whether as a Naughty List veteran or if you have so far avoided a NHDOL inspection or wage claim, in the words of that familiar 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 2024 Top Ten worst (most common) wage and hour violations in New Hampshire, along with tips on how to avoid these issues and costly violations:

10. Imposing a Mandatory Tip Pooling Arrangement *RSA 279:26-b

Problem: Tips, meaning money given by a customer to an employee for service performed, by law, are the property of the employee. Tipped employees of certain employers can be paid $3.27/hour (45% of minimum wage) if when added to the tips received the total equals or exceeds $7.25 for all hours worked. This is referred to as taking a “Tip Credit.” COVID and the advent of the counter “Tip Flip Screen” complicated matters about who is a tipped employee, but a true tipped employee works in a restaurant, cigar bar, hotel/motel/inn/cabin, or ballroom and receives at least $30/month in tips directly from customers.

Tip pooling (shared tips among tipped employees in the same job category) and tip sharing (tipped employees sharing a percentage of tips with their employees who participated in providing service) arrangements are possible but supervisors are not eligible to participate, and the pooling or sharing arrangement needs to be voluntary (not mandatory or coerced). The employer can administer the voluntary pooling or sharing and even suggest customary amounts to contribute to the pool, but the employee must be able to decide what to share, with whom to share and to opt out of the pool at any time.

Recommendation: Proceed with caution! Make sure your employees are eligible to receive tips and if your organization can take advantage of the tip credit. Adopt a policy, explain it during onboarding, deal with questions and disputes in a timely fashion, make sure all wages due are paid, and avoid pressuring or retaliating against employees who decide not to participate in a pool. Make sure you are familiar with NH requirements which are stricter than USDOL requirements.

9. Failure to have a Joint Loss Management (Safety) Committee. *RSA 281-A:64, III

Problem: Employers with fifteen (15) or more employees must have a Joint Loss Safety Committee to review and address workplace accidents and related safety issues.

Recommendation: Covered employers should ensure that their safety committee is organized, they hold meetings at least quarterly, and they properly maintain meeting minutes (posted and then filed). Those records must be available for NHDOL inspection.

8. Failure to pay 2 hours minimum pay at the employee’s regular rate of pay on a given day that an employee reports to work at the request of the employer and work isn’t available *RSA 275:43-a and Lab 803.03 (h),(i),(j)

Problem: This issue came up, as it has in past years, when employees reported to the workplace, even for a short while, at the employer’s request, and then were sent home because there was no work for them. This is also known as the “bad weather rule” or “show up” or “reporting pay”. More recently, NHDOL has expanded its approach to this rule and applied it to remote work when an employee engaged in off-site work. While we have challenged the new NHDOL interpretation, it is helpful to be aware of NHDOL’s position. We are working with NHDOL on a legislative fix to address this matter.

Recommendation: This applies principally to hourly employees in the private sector. Employers should notify hourly employees in advance when they are not needed at work on a particular day so they don’t show up. If the notice is unsuccessful and the employee leaves their home and reports to work, 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 to the 2-hour reporting time obligation is when the employee’s job regularly requires less than two hours of work that day and that is clear when the employee is hired. The employee, in those cases, only needs to be paid for the time worked but this arrangement needs to be clear, in writing, in advance.

To avoid the issue with after-hours work or remote work, employers should make it clear when the employee is required to perform those tasks. In all instances, the employee should record and report all time worked.

7. Failure of employers to report or obtain a workers’ compensation policy 
*RSA 281-A:5

Problem: Employers in New Hampshire with at least one employee need to secure workers’ compensation insurance. Failure to secure or maintain that insurance could result in civil penalties and it could also result in unfunded liabilities to cover the employee’s medical bills and lost wages.

Recommendation: Along with other items on your risk management checklist, this item should be the top priority for your organization. Insurance should be secured, premiums timely paid and information requests as required by the carrier should be provided to avoid gaps in coverage.

6. Failure to pay all wages due for hours worked *RSA 275:43 and Lab 803.01

Problem: Failure to comply with several of the other violations on this list (e.g. timekeeping, short breaks, meal breaks, and reporting time) usually resulted in employees not being paid all wages due for hours worked.

Recommendation: Focus on making sure all hours worked are recorded so that pay can be properly calculated. Use technology to help ensure time worked remotely is recorded. Requiring employees to seek advance approval for extra work hours is helpful but supervisors should independently monitor extra hours of work (including overtime, short breaks, etc.) to be sure that it is recorded and paid as hours worked.

5. Failure to have a written safety plan and safety summary form, if required
*RSA 281-A:64, II and Lab 602.01, 602.02, 603.02 and 603.03

Problem: In addition to recording injuries, illnesses, and the response to workplace hazards, employers must document their safety policies and compile them in a written safety program. Many employers neglected to maintain their safety committees, written safety programs, and to ensure they had a safety summary form on file with NHDOL.

Recommendation: Employers with 15 or more employees must maintain a written safety program. The written safety program must be reviewed and updated at least every 2 years, and the employer must keep records of the dates on which the written safety program is reviewed and updated. Employers with 15 or more employees must file a safety summary form with the NHDOL. The safety summary form can be filed with NHDOL electronically and must be available for inspection by NHDOL. Employers with a current (2011 or later) safety summary form on file with NHDOL do not have to file again.

4. Paying later than the designated payday *RSA 275:43, I, RSA 275:48 and Lab 803.01; 02

Problem: This is a perennial feature on the Top Ten list. Employers need to be sure deductions from wages align with the categories outlined in state law AND all late time entries (meaning missed time entries after the close of payroll) are paid on a timely basis. Failure to pay an employee the full amount due, on the designated pay day, could result in civil penalties and wage adjustments.

Recommendation: Under state law, employees must be paid their wages within eight (8) days from the end of the period in which they are earned, and must be paid on the pay day designated by the employer. This typically comes up when there are improper deductions from wages or when an employee enters time after the close of payroll. To avoid improper deductions employers should strictly adhere to and follow the procedures found on the list of approved deductions in RSA 275:48. And in the case of missed or late time, the NHDOL says the employer should cut a manual check for the additional time, and not wait for the next payroll. If an employee is perennially late with their time sheet, consider using the disciplinary process so that a tardy employee is not exposing you to NHDOL fines.

3. Employment of Undocumented Workers (and others who don’t have proper documentation on file) *RSA 275-A: 4-a

Problem: This is a hot-button issue on the national, state., and local level. Over the last few years, employers have been desperate to fill vacant positions. As a result, some employers weren’t as diligent about compliance with this state law and federal I-9 requirements. However, NHDOL didn’t relax its standards regarding the documents needed to support a legal hire. Whether the employee is a U.S. citizen or not, all are required to complete I-9 forms and provide acceptable support documents (e.g. proof of identity and authorization to work in the U.S.). These must be fully completed at the time of hire and maintained by the employer.

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 States OR someone who doesn’t have a valid U.S. 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.

Please note: To avoid confusion or misunderstanding, in case they weren’t already doing so, many employers are now keeping copies of I-9 support documents to review with an NHDOL inspector in case of an audit.

2. Failure to keep accurate records of all hours worked. (Not recording meal breaks taken; not paying for breaks of less than 20 minutes in duration)
*RSA 279:27 and Lab 803.03

Problem: This is a common violation but in recent years it has taken on a new dimension because of split shifts and remote work. State law requires employers to keep a daily “true and accurate record” of all hours worked for employees (specifically hourly and salaried nonexempt employees). These records must be maintained for at least 3 years and be available to NHDOL upon request. The problem in recent years has been tracking and accurately recording those hours. This issue comes up in a number of different ways including: not accounting for meals and other short breaks, as well as time spent working on a hybrid or remote basis.

Recommendation: 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 unless it is feasible for the employee to eat while working and they are permitted to do so. Meal breaks must be recorded on daily time sheets just like the start and end times for all hourly and salaried non-exempt employees. Note that if an employee eats while working and does not take a break of at least 20 minutes, all that time must be paid.

Timekeeping is the employer’s obligation even when the employer expects the daily record to be kept by the employee. Therefore, employers have to be sure the daily time records entered by employees are accurate and changes are only permitted if agreed to (NH law says the change must be initialed) by the impacted employee.

The issue with meal breaks recording errors and other time recording mistakes is that employees may not have received all wages due which means the employer could be fined for not permitting the breaks and not recording time properly and ordered to pay back wages. If the NHDOL looks back at all of your covered employees for each workday over the last 3 years, these fines and wage adjustments can really add up. This can be both expensive and unnecessary (because the employees likely took breaks). (Note: If the employer can prove meal periods were actually taken there might be civil penalties for incomplete records but wage adjustments may not be due.)

...And The Number One Worst (most common) Wage and Hour (NH) Violation From 2024 is...

1. Failure to have written notifications of rate of pay or changes *RSA 275:49 and Lab 803.01(g)(1)

Problem: Employers don’t always have the documentation to prove that an employee was notified in writing at the time of hire – and before any subsequent changes – of their rate of pay. This information is usually contained in an offer letter but especially with rushed hires or transitions in HR, this documentation has been overlooked. State law requires a written notice at the time of hire, signed by the employee, that contains the employee’s wage rate, pay date, pay period, and general description of fringe benefits. This must also be documented in the same manner in advance of any changes to those arrangements. Those documents must be maintained in personnel files and available for inspection.

Recommendation: This is an easy fix. Make sure that all involved in hiring and onboarding and those involved with subsequent pay changes are aware of this requirement and this is included in your HR compliance audit checklist.

Thank you to NHDOL General Counsel John Garrigan, NHDOL Director of Inspections Division Lexie Rojas, and the NHDOL Wage and Hour Division staff for the useful information and statistics for this year’s list. A special thanks also to my law partner, Attorney Jen Moeckel, for her assistance with this update. This outline is intended as a general summary only and is not a substitute for specific legal advice.

Author: Attorney Jim Reidy, Sheehan Phinney, an NHADA Silver Partner