A range of filings, notifications are required under state regulations
Published in the NH Business Review (3/17/2017)
Many businesses do not realize that when they hire employees in New Hampshire there are several filing requirements and regulations that must be followed.
NH Employment Security requires new employers (an individual or organization that employs one or more workers) to file an Employer Status Report within 30 days of first providing employment in New Hampshire, acquiring the assets of an existing employer, or acquiring the assets of a separate unit of an existing employer.
In addition, when an employer hires or rehires an employee, a New Hire Reporting form must be submitted to NHES within 20 days of the date of hire — the first day services are performed for wages or any other form of compensation, or under a contract.
A New Hire Report Form must also be submitted when a business enters into an independent contractor arrangement if the contract for services is with an individual or sole proprietor, and reimbursement for services is expected to meet or exceed $2,500 in a calendar year. Contracts for services include oral and written and formal or informal agreements.
The NH Department of Labor requires proof of workers’ compensation coverage when there is one or more full or part-time employee. The only businesses exempt from the requirement to purchase workers’ compensation coverage are sole proprietorships and corporations that have only three corporate officers and no employees other than these three officers. If an employer is found to be noncompliant with this law, it can be assessed a daily fine of $100 per employee for each day of no coverage.
Terms and conditions
New Hampshire law and NH Department of Labor rules require that employees receive written notification of the terms and conditions of employment. The written notification must be signed by the employee and should include the employee’s rate of pay, whether hourly or salary, whether commissions are paid, payday and whether any fringe benefits are provided, such as vacation days, sick days, and/or health insurance benefits.
The easiest way for an employer to comply with this rule is to provide an offer letter to the employee. Before giving offer letters to employees, employers should consult with employment counsel to ensure that the offer letter provides all of the essential information and that it does not convert an employee’s at-will status to that of a contract employee.
A copy of the signed, written notification or offer letter should be kept in the employee’s personnel file in the event that an audit takes place or that there is a dispute about an employee’s rate of pay.
Since vacation, sick or paid time off are considered wages under New Hampshire law, employees must be notified in writing of their entitlement to this benefit. The notification should include the method of accrual including whether the anniversary date of employment or a calendar year is used to compute accrual of time off.
Although New Hampshire law does not require that accrued, unused vacation, sick or paid time off be paid out upon termination of employment, employers are well advised to notify employees in writing whether that time will be paid out at termination. The notification should also specify whether unused vacation, sick or paid time off does or does not roll over from one year to the next.
Similarly, if an employee is eligible for a non-discretionary bonus or commission payment, the terms and conditions under which such payments will be made must be in writing. Disputes often arise when the employer has not clearly defined all terms.
Employers should run draft commission plans by their employment counsel to ensure that the terms regarding when a commission is earned and when it is paid are clear.
Employers often overlook the NHDOL requirement that changes to the terms and conditions of employment (e.g., rate of pay and other benefits) must be provided to the employee in writing and signed by the employee. Therefore, whenever an employee receives a pay raise, written notification must be provided and signed by the employee.
Cost of misclassification
Many employers skip these reporting requirements after making the erroneous determination that they do not have employees, but have independent contractors. While that topic is worthy of its own article, it is important to note that having an “independent contractor agreement” and/or meeting the IRS’s independent contractor test does not mean that the individual will be considered an independent contractor under Employment Security or the Labor Department’s different independent contractor tests. Misclassification is costly, including unpaid unemployment taxes and daily fines for lack of worker’s compensation coverage.
Hiring employees requires forethought in terms of proper classification of individuals as employees or independent contractors and compliance with filing requirements and other legal requirements. By taking the time to work through these issues, businesses put themselves in the best possible position.
Beth Deragon, an attorney in the Employment Law Practice and Litigation Group at the law firm of McLane Middleton, can be reached at [email protected] or at 603-628-1490.