Hiring and Documentation

March 16, 2018

Take time to know the DOL requirements when taking on a new employee

Published in NH Business Review (3/16/2018)

Your business advertised for an open position and you just interviewed the perfect person for the job. You need the person to start immediately and, in your rush, decide that you will tell her the rate of pay and benefits over the phone — you will follow up later. Is this a problem? Yes, unless you follow up in writing as planned. If things go wrong, and the employee files a claim for unpaid vacation and/or bonus at the NH Department of Labor, you will be challenged to show that proper notification was given to the employee and to show that the claim is invalid.

This is why it is important to know the statutory and NH DOL administrative rules regarding documentation of the terms and conditions of employment. All employers are required to provide to an employee, in writing at the time of hire, is the employee’s rate of pay or salary or commissions, method used to calculated wages (hourly, by piece), frequency of pay (daily, weekly, biweekly, etc.), the designated payday and place of payment, amount of vacation pay (and method of calculation), amount of sick leave and other fringe benefits, and maintain a copy, signed by the employee, on file.

Every employer in New Hampshire must give employees a written or posted detailed description of employment practices and policies related to paid vacations, holidays, sick leave, bonuses, severance pay, personal days, payment of employee’s business expenses, pension and all other fringe benefits.

If the business gives bonuses, the policy should be clear as to whether they are discretionary or earned as part of a compensation structure that includes, for example, sales revenue.

In addition, any changes to the employment information must also be provided to the employee in writing prior to the effective date of those changes. Any changes to the employee’s rate of pay and benefits must be made prospectively, not retroactively.

More specifically, any vacation pay, holiday pay, sick pay, bonus pay, personal day pay, employee expenses and any other benefits earned, accrued or vested prior to any policy change, must not lapse because of the change. Once earned, they cannot be taken away from the employee.

The NH DOL requires that the employer have on file a copy of all written notifications, signed by the employee, including policies provided to the employee. Compliance with these laws and rules will help to prevent future issues — when the employee is disputing her rate of pay or eligibility for a bonus, for example.

So what is the most cost-effective and consistent way to comply with these legal requirements? The answer is twofold: use a template offer letter that covers all possible terms and conditions of employment and contains basic pay information that is unlikely to change.

By doing so, you are more likely to be consistent in the communication of the terms and policies as to each employee. An offer letter should also include the job title and job description as a separate document. By including a job description, the employee will be clear as to the expectations of the position, including any physical requirements of the position.

The offer letter should also make reference to and provide copies of any ancillary agreements like confidentiality agreements, non-disclosure agreements and/or non-solicitation and non-competition agreements. Instead of including detailed information in the offer letter about benefits that the business offers, the offer letter could refer the employee to the employer’s employee handbook for more detailed information.

For example, the offer letter could state that the employee is eligible to participate in the health insurance offered by the company to similarly situated employees, including medical and dental insurance and refer the employee to the handbook and plan documents for more specific information. Most importantly, the offer letter would also include a space for the employee’s written acceptance of the job offer and for an acknowledgement receipt of the employee handbook and any ancillary documents.

While it might seem time-consuming on the front end, the expense and time that it will save if there is a dispute is priceless.

Beth Deragon, an attorney in the Employment Law Practice and Litigation Group at McLane Middleton, can be reached at beth.deragon@mclane.com or at 603-628-1490.