Labor and Employment Law Basics
All employers need to be aware of the labor laws and be in compliance with all payroll, employee time tracking and other labor rules. The cost of non-compliance can be quite steep. The information provided in this article attempts to create awareness of some of the more basic rules employers should be aware of. This in no way attempts to cover all of the rules employers are exposed to. It is always advisable to consult with legal counsel or your CPA if you have specific questions regarding your obligations as an employer.
Federal vs. State Labor & Employment Laws
Employers must be aware of two sets of labor and employment laws when running their businesses: federal law and state law. There are some areas of overlap between federal and state law. Where there is overlap, the law that is most favorable to the employee is the one that applies in most cases.
Under the doctrine of employment at-will, both the employer and the employee are free to terminate the employment relationship with or without cause or notice. As employment at-will preserves maximum flexibility for the employer, the employer should be careful not to undermine it through poorly drafted offer letters, policies, or other documents.
There are many exceptions to the at-will employment rule. For example, employers may not terminate employees for discriminatory or other illegal reasons.
Federal Fair Labor Standards Act (“FLSA”)
The FLSA regulates the activities of employers and employees covered by its provisions. Three areas of employment and pay practices governed by federal wage & hour law are:
A helpful resource on child labor restrictions under the FLSA (and also under New Hampshire’s child labor laws) can be found at: https://www.nh.gov/labor/documents/child-labor-14-17.pdf
The New Hampshire minimum wage law has been amended to eliminate the state minimum wage. So New Hampshire employers must comply with the federal minimum wage. The federal minimum wage is currently: $7.25/hour. Under New Hampshire minimum wage laws, employers who pay tipped employees that meet certain criteria must be paid at least 45% of the minimum wage.
- FLSA minimum wage resources: http://webapps.dol.gov/dolfaq/go-dol-faq.asp?faqid=218
- NH minimum wage resource, NH RSA 279:21: http://www.gencourt.state.nh.us/rsa/html/XXIII/279/279-21.htm
The FLSA and New Hampshire law generally require that employee receive pay at 1.5 times their regular rates for hours worked in excess of 40 per week.
Exemptions from the overtime provisions of the FLSA are listed below.
Note: It is the employer’s burden to prove that an employee meets one or more of the following exemptions.
An employer cannot just “make” a person exempt from overtime by paying them on a salary basis.
Executive, administrative, professional and outside sales employees
These “white collar” exemptions from minimum wage and overtime are available for employees who meet the duties tests of one or more of the categories (executive, administrative, and professional) and who are also paid on a salary basis, with a minimum salary of at least $455/week (pending Supreme Court ruling, could increase to $913/week). Outside sales employees may be exempt if they meet the duties test even if they are not salaried. A complete fact sheet on this exemption can be viewed here:
What does “Salaried” mean?
In the context of FLSA, when we talk about Salaried vs. Hourly employees, this does not mean that the salary must be an annual salary. A salary is simply a promise to pay an employee a pre-defined amount for work performed during a pre-defined period of time, regardless of the number of hours of work performed. The salary amount and the pre-defined period of time are decided upon between the employer and the employee. For example, an employer can hire someone and pay them a salary of $500 per week, or a salary of $2000 per month or a salary amount of $24,000 per year. So long as this employee meets one of the exemption categories below, and agrees to receive pay on a salaried basis, the employee would be exempt from the overtime pay requirement of FLSA.
For more information:
- Executive exemption: https://www.dol.gov/whd/overtime/fs17b_executive.pdf
- Administrative Exemption: https://www.dol.gov/whd/overtime/fs17c_administrative.pdf
- Professional exemption: https://www.dol.gov/whd/overtime/fs17d_professional.pdf
- Outside sales: https://www.dol.gov/whd/overtime/fs17f_outsidesales.pdf
- Computer professionals: Another white collar exemption exists for certain computer professionals paid at least $27.63 per hour (or a minimum salary of $455/week) if they meet specific duties tests: https://www.dol.gov/whd/overtime/fs17e_computer.pdf
- Commissioned sales employees of retail or service establishments are generally exempt from overtime if more than half of the employee’s earnings come from commissions and the employee averages at least one and one-half times the minimum wage for each hour worked. https://www.dol.gov/whd/regs/compliance/whdfs6.pdf
- Motor Carriers – Drivers, driver’s helpers, loaders and mechanics are exempt from the overtime pay provisions of the FLSA if employed by a motor carrier, and if the employee’s duties affect the safety of operation of the vehicles in transportation of passengers or property in interstate or foreign commerce. https://www.dol.gov/whd/regs/compliance/whdfs19.pdf
- Agricultural workers employed on small farms are exempt from both the minimum wage and overtime pay provisions of the FLSA: https://www.dol.gov/whd/regs/compliance/whdfs12.pdf
- Auto Dealers – Salesmen, parts personnel and mechanics employed by automobile dealerships are exempt from the overtime pay provisions of the FLSA. For more information: https://www.dol.gov/whd/regs/compliance/whdfs11.pdf
- Seasonal and recreational establishments: Employees employed by certain seasonal and recreational establishments are exempt from both the minimum wage and overtime pay provisions of the FLSA. https://www.dol.gov/whd/regs/compliance/whdfs18.pdf
- Highly Compensated Employees: Employees making $100,000 or more per year and meet specific duties tests: https://www.dol.gov/whd/overtime/fs17h_highly_comp.pdf
For more information regarding New Hampshire’s overtime exemptions, see NH RSA 279:21 and/or the section of the US Department of Labor’s website on overtime rules: https://www.dol.gov/whd/overtime_pay.htm
Employers are obligated under the FLSA and New Hampshire law, to keep accurate records of all hours worked, by hourly, paid employees. Further, the employer is at its “peril” in deciding which employees are covered by the law for record keeping purposes. Failure to keep records of employees actually covered because the employer thought they were exempt or otherwise outside the scope of the FLSA will not excuse a violation and may result in liquidated damages. The duty to keep records cannot be delegated to the employees. New Hampshire also has a number of detailed record-keeping requirements, which are included in the NH Department of Labor wage & hour regulations. A fact sheet with all record-keeping requirements can be viewed here:
Acceptable Pay Frequencies
Under New Hampshire law, every employer is required to:
“…Pay all wages due to employees within 8 days, including Sundays, after the expiration of the workweek [in which the work is performed] in regular paydays designated in advance.” Lab 803.01(a).
“Biweekly payments of wages shall meet the foregoing requirement if the last day of the second week falls on the day immediately preceding the day of payment,” and
“Payment in advance and in full of the work period, even though less frequently than biweekly, also meets the foregoing requirement.”
Employers may also request permission from the NH Department of Labor to pay less frequently than weekly.
Prorating Pay for Salaried Employees
In most cases, if a salaried employee reports to work for any part of a pay period, they are owed the entire salary amount for that pay period. Exceptions include the pay period during which the employee is hired or during which they are voluntarily terminated.
Both federal and state laws provide restrictions on when a salaried employee’s salary may be docked in a workweek (federal law) and pay period (New Hampshire law).
Payment of Wages Upon Discharge
Under New Hampshire law, whenever an employer discharges an employee, the employer must pay the employee’s wages in full within 72 hours. If an employee voluntarily terminates or quits, the final paycheck is due on the next scheduled pay day.
New Hampshire Specific Wage & Hour Requirements
New Hampshire employers are encouraged to read the applicable wage & hour laws (NH RSA Chapter 275 and Chapter 279) and regulations (Lab 800). These resources are readily available from the NH Department of Labor website.
Employers are also encouraged to sign up to receive free informational alerts from the NH Department of Labor, which include announcements of valuable training sessions offered by the Department’s Wage & Hour Division.
The materials contained in this article have been prepared by Checkmate Payroll Services, Inc., and is for informational purposes only and does not constitute legal advice and the information is not guaranteed to be correct, complete, or up-to-date. Before taking action on any of the information in this article it is advisable to speak with a licensed attorney.