The challenge of complying with N.H. wage and hour laws
A recent review of New Hampshire Department of Labor wage claim decisions reveals the ongoing compliance struggles that employers doing business in New Hampshire are having.Ignorance of the lawMost employers do not intentionally try to circumvent state wage laws to their employees' disadvantage. However, the state has unique wage laws, which means that any company doing business in New Hampshire -- even if headquartered in another state -- needs to understand and follow applicable state laws.Cordial post-termination relationships and the lack of bad intentions will not save a company that does not, for example, comply with state laws regarding the payment of accrued, unused vacation upon termination from employment. A company that fails to comply with this law should expect that in addition to having to pay for vacation days, it will also be ordered to pay liquidated damages in an amount equal to, and in addition to, the vacation pay owed.In Ruszczyk v. Advanced Software Systems Inc., the state Labor Department awarded a successful wage claimant $6,665 in liquidated damages for the employer's failure to timely pay the claimant vacation pay at separation.The employer tried to avoid liquidated damages by arguing that once it realized that the worker was owed the vacation pay, it eventually paid the outstanding wages. The department rejected the employer's defense that it did business in multiple states and found it hard to keep track of the laws in each state.The Labor Department explained that while the employer's delay in this instance was not "willful," the employer did not have good cause for failing to timely pay the wages due.According to the ruling, "the burden is on the employer to coordinate the laws with company policies. In this case the employer did not do this until reminded by the claimant ... There should be better employment practices in place when working in multiple jurisdictions."This case demonstrates the importance of taking time before terminating an employee to learn about the nuances of the employment laws in the state in which the worker is employed, particularly final pay rules.In this case, a five- to 10-minute call to experienced New Hampshire employment counsel would have avoided the underlying error in failing to pay vacation upon termination and would have saved the company over $6,000 in liquidated damages and the negative employee and public relations resulting from their mistake.Tips and pooling of tipsIn New Hampshire, tips shared with other workers in circumstances that are not entirely voluntary leave an employer vulnerable to claims for the unretained tips. While state law permits tip pooling, the decision whether or not to pool tips must be left entirely up to the worker, and employee participation in the tip pool must be voluntary and without coercion.The Labor Department considers any process in contravention of these provisions to be an illegal diversion or withholding of wages.For example, employers are cautioned that the use of a tip disbursement sheet or other tip disbursement process, such as "tipping out," is likely to run afoul of New Hampshire law.In Greaney v. Ichiban Japanese Steakhouse Inc., the employer pooled tips and disbursed them to other workers. The Labor Department determined that this violated wage law and ordered the employer to pay $8,390. This amount represented the tips earned by the former employee that were retained by the employer and disbursed by the employer to other workers.CommissionsThe company's lack of a clear and comprehensive written policy on the payment of commissions resulted in commissions being owed to a probationary employee in MacDonald v. Pelmac Industries.The employer argued that the sales agreement governing commissions did not become effective until after completion of the 90-day training period. The employer also argued that per its policies/practice, no commissions were due for the quarter in which the separation occurred. These details, however, were not set forth in the sales agreement. The Labor Department found that the worker earned commissions and was entitled to be paid for all commissions earned during the 90-day training period and thereafter.This case reinforces the importance of making sure that policies and practices regarding the payment of wages and benefits, including but not limited to commission payments, be in writing and that these policies be carefully drafted to include expectations of the parties regarding payment upon termination.Karen S. Aframe, an attorney with the Manchester office of Bernstein Shur, is a member of the firm's Labor and Employment Practice Group. Andrea Johnstone, a shareholder at Bernstein Shur, co-chairs the Labor and Employment Practice Group.