Minimum wage, civil union laws will change N.H. workplace

Although the Legislature was hard at work this past session in considering many new employment-related measures with a potentially significant impact on New Hampshire employers, only two major bills successfully emerged from the lengthy list, along with a few more minor ones.

Companies large and small will be affected by the new legislation.

Topping the list is an increase in the state’s minimum wage at both the state and federal levels. The state minimum wage, as a result of the passage of House bill 514 will increase from $5.15 per hour to $6.50 effective Sept. 1, 2007, and $7.25 as of Sept. 1, 2008.

Tipped employees who customarily and regularly earn $30 or more directly from customers must receive a base rate of not less than 45 percent of the minimum wage then in effect. If the employee can show that he or she has not received minimum wage for the pay period, the employer is required to make up the difference.

Another key measure was HB 437, which permits same gender couples to enter into civil unions and have the same rights, responsibilities and obligations. New Hampshire is now the fourth state to recognize civil unions, joining Vermont, Connecticut and New Jersey. Employers should be aware of a number of different issues regarding this significant piece of legislation, including:

• Each benefit offered to employees will need to be looked at on a case-by-case basis in order to determine whether the employer can, should or must offer the same coverage to civil union partners as it does to spouses. For example, federal law (ERISA) still governs employer-provided benefits and pre-empts state law. ERISA and the Defense of Marriage Act (DOMA) prohibit the recognition of civil unions or same-sex marriages. Therefore, the term spouse, when used in benefit plans governed by ERISA, does not include civil union partners.

• State-mandated benefits, such as crime victim leave, must also be offered in scenarios in which it would be offered to spouses. If the employer provides medical, dental or other insurance benefits to spouses, the same coverage must be provided to domestic partners. Employers who provide self-insured medical, dental and other benefits must make sure the plan documents clearly identify whether or not domestic partners are covered as they are not covered by the same state laws that govern insured plans.

Other employment-related measures approved in the recently ended legislative session include:

• Payment of wages by automated pay card: This controversial bill has passed with significant amendments requested by the Department of Labor. The bill permits an employer to use automated pay cards in lieu of checks or direct deposit as long as the employee can withdraw his or her net pay from a bank or automated teller machine or other location convenient to the place of employment without any cost. [It will be known as RSA 275:42, VII.]

• Unemployment benefits for persons needed to care for disabled family members: This bill allows individuals who need to care for disabled family members to collect unemployment compensation benefits. A physician is required to have certified that the family member is physically or mentally disabled and is in need of care for the activities of daily living. The employee must be the only individual available to provide such care. [See RSA 282-A: 31, V (a).]

• Withholding from employees’ wages: This bill permits an employer to withhold a portion of an employee’s wages with the employee’s agreement to pay for the employee’s use of a health or fitness facility sponsored by the employer for the benefit of employees. The facility either needs to be on the premises of the employer or a private health club that offers discounts of 50 percent or more to all employees of the employer. The employee’s agreement must be in writing referencing the time payments will begin and end, the amounts to be deducted, and a specific agreement regarding whether the employer may deduct any balance from the final paycheck. [See, RSA 275:48, I.]

• Definition of employee: The Legislature has also passed a bill in an attempt to come up with a uniform definition of employee and to clarify the criteria for exempting a worker from employee status. As of this writing the bill has not been signed by the governor. There are currently at least three definitions used by the Internal Revenue Service, the state Department of Employment Security and the Department of Labor causing considerable confusion for employers. The purpose of the law is to prevent employers from improperly characterizing employees as independent contractors. The bill repeals and reenacts RSA 275:42, II and lists 12 criteria, all of which need to be met, for establishing an independent contractor relationship.

Employers should pay careful attention to making sure anyone who is not considered an employee is properly characterized in order to avoid potential liability for unpaid wages, taxes and lack of workers’ compensation insurance. In addition, businesses should be certain to document the relationship in a carefully drafted independent contractor agreement.

• Youth employment laws: This legislation amends RSA 276-A in two respects. The statute now excepts 16- and 17-year-old youths who have graduated from high school or received general equivalency diplomas from the requirement to show evidence of parental/guardian consent for employment purposes. Emancipated youths also are not required to obtain such permission. It also increases the maximum per violation penalty for violations of the youth employment law from $1,000 to $2,500 per incident.

The actions by the Legislature are varied and in many ways reflective of the change in control of both legislative houses. The trend toward more expansive rights and protection for employees is expected to continue at both the state and federal levels.

Congress also is focusing on increased workplace flexibility, such as more paid time off for employees to deal with illness and family issues and more protection against discrimination for various reasons including sexual orientation and genetic predisposition.

Businesses also can expect to see more legislation introduced in New Hampshire on immigration issues and workplace flexibility. It is therefore critical for employers to keep abreast of changes and to review employee handbooks and personnel practices frequently to accommodate changes in the law.

Charla Bizios Stevens is an attorney in the employment law practice group at the law firm of McLane, Graf, Raulerson & Middleton. She can be reached at 628-1363 or charla.stevens@mclane.com.