Everything Old is New Again – NHDOL’s List of Top Ten Wage and Hour Violations is Similar Every Year

December 7, 2012

Published in the Portsmouth Herald

Each year the NHDOL issues a list of the top ten violations inspectors find in wage and hour audits, and every year the lists are strikingly similar. As a result of violations discovered in audits, employers are often required to pay significant civil penalties and back wages to employees. Why then, do New Hampshire employers continue to make the same mistakes and worse, fail to correct them once they are discovered? There are many explanations:  too many regulations, rules are too hard to understand, regulations have not kept pace with the electronic information age, small companies can’t afford human resource managers, human resource managers can’t get middle managers to monitor compliance. Whether these statements are true or not, the reality is that there are very specific laws and regulations with which employers need to comply.

A review of last year’s top ten violations:

1. Failure to keep accurate record of all hours worked. Really? How does a company know what to pay its employees if it does not have an accurate record of all hours worked? A weekly pay record showing eight hours per day of work is insufficient. The employee must record (by written or electronic means) the exact time work began, time out for lunch, time back in and time out at the end of the day.

2. Failure to provide written notice to employees of their wage rate, pay period, pay day and a description of fringe benefits, including any changes. It seems obvious that employers must inform their employees of their rate of pay and the way their pay will be calculated. The regulation requires more. Each employee must receive the required information in writing and must sign an acknowledgment of receipt of the information. An offer letter and a copy of the employee handbook with signed acknowledgement works when an employee is hired.  However, the written notification signed by the employee is required every time the employee’s pay is changed.

3. Employing illegal aliens. Certainly businesses employing undocumented workers will have serious problems with both the state and federal authorities. The more common problem, however, is the lack of technical compliance by timely obtaining documentation from new employees and properly completing I-9’s.

4. Failure to pay all wages due for hours worked, fringe benefits, breaks less than 20 minutes. The problems related to this regulation are endless: failure to provide final pay in a timely manner, docking employees for short breaks or upon early return from lunch, docking salaried employees for sick time in pay periods in which they perform work, etc.

5. 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 an employer. If an employee is scheduled to work a shift of two hours or more and leaves early other than at the employee’s request, a minimum of two hours of pay must be provided.

6. Illegal employment of workers under 18. The Department is unforgiving of violations of youth employment laws. It is critical for employers to have proper consent before employing minors. Students are also restricted in the hours, days tasks they can perform. The prohibitions vary depending upon age of the minor. Know the rules.

7. Failure to pay minimum wage for all hours worked. Of course most NH employers pay at least minimum wage. However, employers frequently get into trouble by improperly classifying workers either as independent contractors or as salaried employees when their jobs do not meet the tests for these exemptions. For example, if an employee is paid by salary or commission, earnings must still reach minimum wage per hour if he or she is not exempt.

8. Illegal Deductions from Wages. The list of allowable deductions is specific as is the methodology. Pay cannot be docked for things like cash shortages and lost cell phones, and deductions must be authorized by the employee in writing.

Rounding out the top ten are perennial favorites failing to secure worker’s compensation coverage (especially for people misclassified as independent contractors) and failing to comply with the requirements for safety plans and committees. Many of these problems can be rectified with a self-audit of payroll and procedures. An ounce of prevention …….

Charla Bizios Stevens is a shareholder in the Employment Law Practice Group at the law firm of McLane, Graf, Raulerson & Middleton, P.A. Charla can be reached at charla.stevens@mclane.com.