United States: 2015's Top 10 Wage And Hour Violations

Originally published in the New Hampshire Business Review on 1/22/2016

David Letterman is retired, but the end of every year brings a new, or not so new, top 10 list of wage and hour violations. The list is prepared by the NH Department of Labor's Wage and Hour Division, which dutifully keeps track of the various infractions committed by employers. Large and small employers alike find themselves owing back wages and subject to civil penalties. Yes, what you don't know, does hurt you – and your business.

Sadly, very few of the violations change from year to year. The order from last to first switches, and the dollar amounts collected by the DOL in its enforcement efforts rise and fall. However, the cost of noncompliance remains significant, both in terms of dollars spent and time taken to correct deficiencies. For those who have been subject to audits, the process is time-consuming, disruptive and expensive.

It therefore bears taking a few minutes to review the list and think about whether your company is in compliance. A review of last year's top 10 violations:

1. 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 company's employee handbook with a signed acknowledgement is sufficient at the time of hire. Written notification signed by the employee is, however, required every time the employee's pay or benefits change, and the notice should be provided in advance of any change.

2. Failure to have a written safety plan, joint loss management committee and safety summary form, if required.

Employers with 15 employees must have a written safety plan, a committee made up of managers and employees which meets quarterly to review safety issues and a summary safety plan on file with the DOL.

3. Failure to pay minimum wage for all hours worked.

Most New Hampshire employers pay at least minimum wage of $7.25 per hour. However, employers frequently get into trouble by improperly classifying workers either as independent contractors or as salaried exempt employees when their jobs do not meet the tests for these exemptions. For example, an inside sales employee paid on commission must still earn minimum wage for every hour she works every week, even if she doesn't earn sufficient commissions each week.

4. Improper deductions from wages.

The list of allowable deductions, set forth in RSA 275:48, 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.

5. Employing illegal aliens.

Although the federal government is primarily responsible for ensuring compliance with immigration laws, the state also looks for technical compliance by timely obtaining documentation from new employees and properly completing I-9s.

6. Failure to secure and maintain workers' compensation coverage for all workers.

This issue comes up most often with workers who are deemed to have been misclassified as independent contractors. New Hampshire's laws are strict, and it is difficult to pass most workers through as independent contractors. The costs of non-compliance with this rule are high. An employer could find itself responsible for all medical expenses incurred by a misclassified employee injured on the job.

7. 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, either parental consent for workers between the ages of 16 and 18 or certifications for younger workers. Students are also restricted in the hours, days and tasks they can perform. The prohibitions vary depending upon age of the minor. Know the rules.

8. Failure to pay two hours minimum 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.

9. Failure to keep accurate record of all hours worked.

This rule is really to the benefit of employer and employee. Each should know exactly the hours worked in order to pay accurately, to ensure that proper meal breaks are taken and to see that overtime is paid when owed. 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.

10. Failure to pay all wages due for hours worked, 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.

The new year is an excellent time for a refresher. Undergo a precautionary self-audit, review your personnel files, job descriptions and pay practices; and start 2016 off with a clear conscience and a clean desk.

Charla Bizios Stevens is director and chair of the Employment Law Practice Group at the law firm of McLane, Middleton

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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