Remote work, flex time and independent contracting have reshaped the American workforce, creating new opportunities for both employers and employees. But in some states, including New Hampshire, outdated labor laws create obstacles to innovation, lost opportunities for employees and unnecessary costs for employers.
To modernize New Hampshire labor laws, legislators are addressing two outdated statutory regulations this week.
One statute from 1985 requires that an employee must be “paid not less than 2 hours’ pay at his or her regular rate of pay” any time he or she reports to work “at an employer’s request.”
The phrase “at an employer’s request” includes the regular work schedule.
The law has become challenging for small employers to navigate.
Alison Milioto, co-owner of New Hampshire-based BlueLion, a human resources consultancy, testified before the Senate Commerce Committee that different state Department of Labor officials have given different interpretations of the law’s scope over the years. In the past, employers were told it did not apply to remote employees. Then they were told it did. (The law doesn’t say.)
She also testified that the statute’s rigid requirement erodes trust and forces employers into defensive behaviors, such as constantly reminding employees of their work time expectations.
“It’s very hard for employers to have control while also having a good culture, while also creating an atmosphere that your workers want to show up to. I don’t want to be the bad guy. I don’t want to write someone up because they took 20 minutes on Sunday to prepare for their Monday.”
Milioto was in Concord last month to testify on House Bill 1043, which would let employers create their own required pay policies. If a business doesn’t create its own policy, then the state’s two-hour rule would govern.
This change is not a radical move. The state already handles unused vacation time this way, for example. Businesses can set their own policies on whether to pay out unused vacation time when an employee leaves. If they don’t set their own policy, then the state’s default—unused time is paid out—kicks in.
The Senate also takes up House Bill 1245, which would eliminate a needless prohibition on compensating independent contractors with contributions to their benefits plans.
Under current law, the state Department of Labor uses several factors to determine whether a person is legally classified as an employee or independent contractor. One of those factors is whether the individual receives benefits such as health insurance coverage or retirement plan contributions. If a hiring party pays for benefits, the hired party is considered an employee.
But the 21st century workforce is not as fixed as the 20th century one was. Increasing numbers of Americans want to work for themselves as independent contractors. They prefer the flexibility and independence. New Hampshire penalizes them by restricting how firms can pay them.
HB 1245 would let the party that hires an independent contractor make contributions to the contractor’s personal portable benefit account, provided that both parties agree to accept that form of compensation.
In practice, this would provide security for contractors. Currently, independent contractors can buy their own health insurance coverage or create their own retirement savings accounts. But in New Hampshire, contributions directly to those accounts by a hiring party would trigger reclassification of the contractor as an employee.
That nonsensical policy harms people who prefer the freedom and flexibility of working for themselves. Benefits are just one form of compensation. If a contractor would like to be compensated in part with contributions to his or her retirement or health plan, there’s no compelling state interest for prohibiting that.
