State law dictates rules of compensation with specific criteria
Published 01/16/01

Under New Hampshire statute, RSA 275:45, employers must pay all wages due to their employees. When an employer has failed to pay wages when due, the employer may be liable for up to twice the wages, plus an award of costs and reasonable attorney’s fees.

Under RSA 275:42, wages means compensation, including hourly health and welfare, and pension fund contributions required pursuant to a health and welfare trust agreement, pension fund trust agreement, collective bargaining agreement, or other agreement adopted for the benefit of the employee and agreed to by the employer, for labor or services rendered by an employee, whether the amount is determined on a time, task, piece, commission, or other basis of calculation.

If the employer has an independent contractor working for it that the employer fails to pay, the independent contractor’s rights are generally determined under the contract, not under RSA 275. It is important to note that just because an employer calls a worker an independent contractor and the employee acquiesces, this will not end the analysis of the New Hampshire Department of Labor or the Court in determining whether or not a wage is due under RSA 275. Particularly, under New Hampshire Labor Regulation 803.01 the Court or the Department of Labor determines the following criteria on a case by case basis:

• An employee is permitted, suffered, required or directed by an employer, in consideration of direct or indirect profit or gain, to engage in employment of the employer;
• An employer provides an employee with instructions, training, or orientation as to when, where and how the work is to be performed to the employer’s specifications;
• An employer supervises the work of an employee;
• The work performed by the employee is part of the regular business of an employer;
• An employer supplies an employee with the instrumentalities, tools or a place of work, without a quantity investment by an employee;
• An employee is paid by the hour, week, month, piece, or commission, and does not submit competitive bids on the work to be performed;
• An employee is not able to hire, supervise, or pay assistants to complete the specific goal, in the manner of a subcontractor;
• An employer is able to discharge an employee, who then has a right to no more than wages already earned at the time of the discharge;
• An employee can terminate the relationship without incurring any liability such as a breach of contract;
• An employee does not present himself/herself as a business entity; and
• Any other factor which contributes to the nature of the relationship that the parties believe they are creating.

The greater the number of criteria noted above that exists in a given case, the higher the likelihood it shall be that the employer/employee relationship exists, and therefore wages have to be paid in conformity with RSA 275. These factors are similar to those used by the IRS and other state and federal authorities to determine whether the employer has sufficient control over the worker so that the worker is actually an employee rather than an independent contractor.

An individual classified by an employer as an independent contractor who is later found to be an employee may be entitled to a whole host of employment advantages, including possible participation in the employer’s pension plan or other employee benefits, as well as federal and state employment protective legislation. Copyright and tort laws also make distinctions between employees and independent contractors.

Therefore, it is important for an employer who chooses to deal with independent contractors to review with its employment legal counsel the facts and circumstances of an employment relationship so that the employer can properly assess that the employee/independent contractor status.

J. Daniel Marr is a director and shareholder at Hamblett & Kerrigan, PA whose legal practice includes counseling businesses and business persons on a variety of legal issues and advocating on their behalf. Attorney Marr is also an adjunct professor at Daniel Webster College where he teaches business law. You can reach Attorney Marr by e-mail at: dmarr@hamker.com

This information is general information and may not reflect the most current legal developments, verdicts or settlements. The information provided should not be relied upon as an indication of the actual state of the law or of future developments. The information contained on the Hamblett & Kerrigan website is for informational purposes only and does not constitute legal advice. If the information referenced may be of legal importance to you, you should consult with an attorney to provide you with legal guidance and opinion as the the effect of the current law upon your situation.