2016’s Primary Issues for Business

By Kevin M. O’Shea and Christopher J. Pyles

New Hampshire celebrates the 100th anniversary of our state primary on February 9, 2016. Politics aside, the beginning of the year is also an appropriate time to consider some trending legal issues facing our business clients. While there are many, three are of “primary” interest: cybersecurity, common (and consistent) labor law violations, and, changes to traditional handbook language and employee classifications.

Cybersecurity

Most small or midsized businesses in New England are not surprised to find out that their home states have a statute requiring a notification to a regulator in the event of a cyber breach. What is surprising to many of these same business is that they may be subjected to regulation by states far from their home state, without respect to how few people may be affected by a given breach.

The New Hampshire Department of Justice’s website helps to make the point. In 2015, an Ohio based company was subject to RSA 359-C because a single New Hampshire employee used the company’s human resources portal.1 In contrast, sometimes a discrete event a continent away, can impact a significant number of New Hampshire residents. For example, a burglary of a laptop at a California franchisee of a national rent-to-own company potentially exposed the protected information of over a thousand New Hampshire residents.2 Even when a vendor is used to provide services, there is risk, such as when multiple charities used a third party vendor to process vehicle donations and the vendor suffered a breach that put donors’ data at risk.3

What’s the take away? Breach notifications are not just for the Targets of the world. And, small to midsized business may have to comply with multiple regulatory regimes, with different requirements and deadlines simultaneously. So, the time to counsel clients and help them prepare an effective breach notification plan (and perhaps to explore insurance coverage for cyber breach) is now.

Common Labor Law Violations

It is also time for businesses to review wage and hour policies. The New Hampshire Department of Labor periodically publishes a list of the most common labor law violations, and that is a useful starting-point. While the order of the most common violations may change from time to time, most of the categories remain the same. Local businesses are therefore well served to pay attention to these common violations, because despite warnings from the Department of Labor (and defense lawyers), the same violations are frequently repeated. These are listed below, with citations to applicable New Hampshire Statutes and Department of Labor regulations:

  1. Failure to pay all wages due for hours worked, fringe benefits, breaks less than 20 minutes, etc.*RSA 275:43 and Lab 803.01
  2. Failure to keep accurate record of all hours worked. *RSA 279: 27 and Lab 803.03
  3. Failure to pay 2 hours minimum pay at their regular rate of pay on a given day that an employee reports to work at the request of the employer. *RSA 275:43-a and LAB 803.03 (h),(i),(j)
  4. Illegal employment of workers under 18 (not having proper paperwork, hours violations, or working in a hazardous environment). *RSA 276-A: and Lab 1000
  5. Failure to secure and maintain workers compensation coverage and misclassification of employees. *RSA 275:42 I & II and RSA 281-A
  6. Employment of Undocumented Workers Prohibited *RSA 275-A: 4-a
  7. Illegal deductions from wages. *RSA 275: 48 and Lab 803.02(b),(e),(f)
  8. Failure to pay minimum wage for all hours worked. *RSA 279:21
  9. Failure to have a written safety plan, joint loss management committee and safety summary form, if required. *RSA 281-A:64 and Lab 602.01, 602.02, 603.02, and 603.03
  10. Failure to provide written notice to employees of their wage rate, pay period, pay day and a description of fringe benefits, including any changes. *RSA 275: 49 and Lab 803.03

The Department also answers frequently asked questions, and all of this information can be found at the Department of Labor website: www.nh.gov/labor/ . It is an excellent resource for lawyers and businesses alike, and should help put employers on notice of common pitfalls that can be easily avoided through a self-audit of wage and hour policies.

Changing Standards

Finally, employers must pay close attention to on-going changes in definitions that were previously deemed to be fairly standard. The recent evolution of the term “employees” and changes in the interpretation of employee handbook provisions provide two notable examples. The New Hampshire Department of Labor has made it a point of emphasis to prevent misclassification of workers, and is following a nationwide trend to define “employee” more broadly. According to New Hampshire’s 2012 Joint Agency Taskforce on Employee Misclassification, the goal is to reduce the number of workers who are wrongly classified as independent contractors when their labor is truly employment. With that in mind, businesses should be aware that the general presumption is for every worker to be considered an employee under New Hampshire law, unless proven otherwise. The statutory test is set forth under NH RSA 281-A:2 VI(b), and sets forth twelve different factors to be considered. The presumption may only be rebutted if all of the factors are satisfied. Those include criteria such as whether the individual possesses or has applied for a federal employer identification number or social security number, or has agreed in writing to act as an employer; a showing that the person has control and discretion over the means and manner of performance of the work; evidence that the person has control over the time when the work is performed; whether the person holds himself or herself out to the public as being in business independently, or is registered with the state as a business; and, if the person is required to work exclusively for one employer. The issues of employee misclassification is now a frequent topic of review by federal agencies as well, so business must be diligent in how they classify workers, and how such classifications are documented. Another evolving issue involves the language used in employee handbooks. Traditional “at will” statements, confidentiality provisions regarding workplace investigations, and even the analysis of conduct policies have all changed over the last few years. The National Labor Relations Board has led the charge. These terms and definitions were assumed to be “standard” for many years, but now require careful scrutiny. As defense lawyers, we will serve our clients well by highlighting these issues to them proactively.

Please let us know if you have any questions about these trending issues, or providing employment advice to your clients.

Kevin O’Shea focuses on commercial litigation and cybersecurity issues, and can be reached at (603) 223-2829 with any questions.

Chris Pyles practices employment law and can be reached at (603) 223-2834.
http://doj.nh.gov/consumer/security-breaches/documents/abercrombie-fitch-20150415.pdf

http://doj.nh.gov/consumer/security-breaches/documents/aarons-20111018.pdf

http://doj.nh.gov/consumer/security-breaches/documents/automotive-recovery-services-20150706.pdf