I have received several calls over the years by employees with the misapprehension that if they quit their job because they were not being paid they will not be able to collect unemployment compensation. This is incorrect. If you have been an employee of a company and quit because the employer states they can no longer afford to pay or has asked you to temporarily work without pay, in anticipation that the company will eventually come out of its financial crisis and pay you later, you may quit and still be as eligible for unemployment compensation as if you were laid off.
Furthermore even if the employer obtained permission from his employees to delay or forego payment of their wages, that agreement will be void under New Hampshire’s Wage and Hour laws and the officer who asks or even permits the employees to work without being timely paid could be personally liable under those laws. For example, if the president of a small company in financial dire straits requests that its employees work for free, with the anticipation that the company may later be able to reimburse them for their unpaid wages, the company and its president could be liable for the unpaid wages, the doubling of those wages in liquidated damages, and the attorney’s fees of the employees who pursue the company.
A company in such a situation should speak with its employment counsel in that wages or salary cuts, and other reorganizations may be accomplished lawfully if done right, but not paying the employees under their normal pay schedule would generally get the company and its participating officer into greater financial difficulty.
J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at [email protected].