All businesses, especially those just starting out, must make basic decisions
regarding the payment of employee wages. In New Hampshire, the term
“wages” includes more than just an employee’s fixed salary or hourly
income. Wages also include vacation pay, severance pay, personal days,
holiday pay, sick pay, and expense reimbursement due by agreement or company
policy. Some employers pay employee wages weekly, some pay
bi-weekly, and others pay monthly. This decision is usually a function of
both the employer’s accounting methods and personal preferences. However,
there is a component to the decision over which employers have no control:
the law. Understanding the laws applicable to the payment of employee
wages is critical in avoiding or minimizing the risk of a New Hampshire
Department of Labor (“DOL”) inspector finding violations during a wage and hour
inspection, for which employers may face civil and criminal penalties.
New Hampshire law requires that an employer keep each employee fully apprised
of his or her rate of pay. In fact, the employer must inform the employee
in writing, at the time of hiring, of the employee’s rate of pay and the day and
place that payment will occur. In the event the employer decides to make
any changes, the employer must again give the employee prior written notice of
any change in the rate of pay or the day and place of payment. Employers
must also post, in a place accessible to their employees, an abstract of the law
on these payment issues, which the DOL makes available to employers.
Of course, the form in which employers may pay wages is also
significant. The law permits an employer to pay an employee’s wages in
cash or by check or direct deposit. When making payment by check, the
employer must draw its employee’s pay check on a bank convenient to the place of
work so the employee has the opportunity to cash the pay check for the full
amount due. As an alternative to making payment by cash or check,
the employer may pay the employee’s wages via direct deposit through an
electronic fund transfer. This option, however, is only available when the
employee has authorized this form of payment in writing, the employer does not
charge the employee for this form of payment, and the employee has the choice of
being paid by check.
In addition to the above requirements, the law also regulates the timing and
frequency of wage payments... New Hampshire law requires that every employer pay
its employees “ all wages due…within 8 days including Sunday after expiration of
the week in which the work is performed.” Therefore, unless otherwise
authorized by the DOL, an employer may not pay its employees less frequently
than biweekly unless making payments in advance and full for the work
period. Even then, biweekly payment of wages has its limitations, as
the payday must be within eight (8) days of the last day of the first week in
the pay period. Thus, the requirement is met when an employer uses a
biweekly pay cycle, during which “the last day of the second week falls on the
day immediately preceding” the payday. Unless authorized by the DOL,
an employer could not, for example, pay an employee biweekly by making payment
to an employee on the third Friday of a month for wages earned during a 2-week
pay period ending on the second Friday of the same month. Why?
Because, when the payday is the third Friday of the month and the pay period
encompasses the first two weeks of the month, the third Friday payday is clearly
eight (8) days beyond the last day of the first week in the pay period.
If an
employer finds these pay frequency limitations too constraining for its business
needs, the employer may petition the DOL in writing, requesting to pay its
employees less frequently than the law permits. The employer’s
request must include the proposed method of payment, the desired frequency of
payment, the designated payday, as well as employee classifications and salary
ranges. The DOL reviews these requests on a case-by-case
basis. However, the DOL will likely grant the request if the employer has
supplied all necessary information, the designated paydays are at least monthly
for salaried employees and biweekly for hourly employees, the employer has no
history of wage and hour violations, and the employees will not endure financial
hardship as a result of the decrease in pay frequency. Granted requests
continue in effect indefinitely so long as the DOL does not receive employee
complaints, the employer’s payroll is regularly satisfied, and the information
provided remains the same.
Situations involving an employee who self-terminated (quit or resigned) his
employment or an employee, whom an employer laid off or discharged, give rise to
additional considerations regarding the frequency of payment. In cases
where the employer discharges an employee, an employer should be mindful that it
must pay a discharged employee in full within 72 hours of the discharge.
On the other hand, when an employee quits, resigns, or is laid off, the employer
generally need not pay the employee within 72 hours, but must pay all
outstanding wages – including accrued vacation pay -- no later than the next
regular payday.
New Hampshire law on payment of wages is relatively straightforward and sets
specific requirements and parameters for employers. Nonetheless, there is
some flexibility in payment frequency for employers who can show the DOL “good
and sufficient reason” to designate an otherwise unlawful payday.
When employers are unsure whether they are properly complying with New
Hampshire’s labor laws in regard to the payment of employee wages or other wage
and hour issues, such as when employers may take deductions from employee wages
and how employers must maintain records of hours and wages, they should contact
labor law counsel, who can assist them in these matters. Compliance with
these laws will help to ensure that an employer is adequately prepared when a
wage and hour inspector comes knocking at its door and can avoid criminal and
civil penalties for violations of New Hampshire’s wage and hour laws.
