Top Labor Law Violations: Are You in Compliance?

Published:
January 19, 2018

New year brings new opportunity to revisit pay, recordkeeping practices.

Published in NH Business Review (1/19/2018)

At the end of 2017, the New Hampshire Department of Labor (DOL) published its annual list of “Top 10 New Hampshire Labor Law Violations.”  While the list does not change that much from year to year, it is a good opportunity to review pay and record keeping practices to ensure compliance with NH law. Below is a more in-depth look at a few and some tips to avoid contributing to the DOL statistics for this year!

The top violation is an employer’s “failure to pay all wages due for hours worked, fringe benefits, breaks less than 20 minutes, etc.” Employers often forget that “wages” can include vacation pay, severance pay, personal days, holiday pay, sick pay, and payment of employee expenses, when such benefits are a matter of employment practice and/or policy.  To avoid any confusion, employers should have a written policy, acknowledged by employees, that states whether accrued unused vacation, sick, personal and/or paid time off days will be paid upon termination of employment.  Without such a written policy, the DOL will examine the employer’s practice regarding payment upon termination and will be relying on the testimony of witnesses.  Therefore, it is more prudent and cost-effective method to have a written policy that is clear and given to and acknowledged by all employees.

Another important requirement of this law requires that employers ensure that when employees are paid by check that the checks are drawn on a financial institution that is convenient to the employees’ place of employment and that employees can cash their paychecks without incurring any charge/fee.  Even if the employer has agreed to reimburse employees for any fees charged by the financial institution, the employer is not in compliance with the law.  However, the employer could have an arrangement directly with the financial institution that the company will pay for any check cashing fees charged to its employees as long as the employees receive the full amount of their paycheck when cashed.  

The second most cited violation is an employer’s “failure to keep accurate record of all hours worked.”  Simply put – it is the employer’s responsibility to keep accurate records of the hours that employees work and of wages paid to employees.  Accurate records include notations for meal periods and for times when the employee leaves the workplace early.  Records can be kept in paper format, via time clock and/or electronically.  NH law requires that changes to an employee’s hours worked must be acknowledged in writing by the employee.  If an employer uses an electronic system to keep track of hours worked, there must be a system in place for the employee to acknowledge changes to his/her hours worked.  If that system includes an electronic signature verification program, then the employer must be able to prove that the employee only can access and use his/her electronic signature.  There have been instances where employers have unilaterally changed an employee’s electronic time entry without the employee’s knowledge – thus the necessity for this rule.  Employers with electronic timekeeping systems should consult with employment counsel as to how best to comply with this rule.

The third most cited violation is an employer’s “failure to provide written notice to employees of their wage rate, pay period, pay day and a description of fringe benefits, including any changes.”  Many employers give the above information to newly hired employees orally.  However, the law requires that employers not only provide this information in writing, but also update any changes to that information in writing.  The best practice is for employers to provide employees with a letter upon hire that sets forth the information above and is acknowledged by employees.  If there is any change to the employee’s rate of pay (e.g. a raise) then the employer must provide written notice of that change to the employee. 

The fourth violation is the “illegal employment of workers under 18 (not having property paperwork, hours violations, or working in a hazardous environment).”  With the multitude of young people employed, it would be easy to assume that the rules related to their employment are straightforward.  That is not the case: State and Federal laws are very specific as to the number of hours and type of work that are permissible, by age group.  There is a mandatory fine for a violation – the DOL does not have discretion to reduce the fine.  Before employing workers under 18, carefully review both state and federal requirements in order to avoid civil penalties.

The fifth violation is the “failure to pay 2 hours minimum pay at their regular rate of pay on a given day that an employee reports to work at the request of the employer.”  If an employee reports to work as instructed by the employer and the employer sends him/her home for any reason within 2 hours of reporting to work, the employee must be paid for 2 hours work.  In the case of inclement weather, employers should have a system in place to alert employees before they come into work that they are not required to report to duty, thereby avoiding the obligation to pay the 2 hour minimum. 

These top 5 violations can be fairly easily avoided with an understanding of the nuances of the rules.  It is well worth taking the time now to revisit pay and record keeping practices, and to review the remainder of the violations that can be found at the DOL website.