by Nicole D. Spaur, Esq.

New Hampshire employers should take note of changes to existing wage and hour laws that took effect January 1, 2005.  These changes deal with withholdings of wages and the payment of salaried employees.

Prior to this year, RSA 275:43-b permitted employers to prorate a salaried employee’s salary under only two circumstances: (1) when the employee was hired after the beginning of a pay period; and (2) when the employee terminated his/her own employment prior to the end of a pay period.  Effective this year, the legislature has broadened this statute to additionally allow an employer to prorate a salaried employee’s salary when the employer terminates the employee for cause. 

As New Hampshire’s law on withholding of wages has long been recognized by both employers and employees as too restrictive, the legislature also amended RSA 275:48.  Prior to this year, RSA 275:48 and Lab. 803.03 (the administrative rule promulgated by the Department of Labor pursuant to RSA 275:48) provided for very limited deductions from an employee’s wages.  In addition to payroll taxes, an employer could deduct from an employee’s wage for the following items, if the employee had authorized the deduction in writing: installment payments of legitimate loans made by the employer to the employee; union dues; health, welfare pension and apprenticeship fund contributions; voluntary contributions to charities; housing and utilities; payments into savings funds held by someone other than the employer; voluntary rental fees for non-required clothing; voluntary cleaning of uniforms and non-required clothing; employee’s use of a demonstrator vehicle; and group insurance benefits.

Because the law was so restrictive, employers could not make deductions for items not specifically identified in the statute or rule, such as parking or childcare fees, even when it was for the benefit of the employee and with the employee’s consent.  As of January 1, 2005, the statute has expanded to permit employers to deduct for voluntary contributions into cafeteria plans or flexible benefit plans, child care fees by a licenses child care provider, and parking fees.  Moreover, hospital employees may now authorize their employer to deduct from their wages for their on-site purchases of pharmaceutical items, gift shop, and cafeteria items.  In addition to the changes set forth in RSA 275:48, we anticipate the Department of Labor will also amend Lab. 803.03 to provide more flexibility regarding withholdings of wages.

In light of these changes, employers should review their employee handbooks or other relevant personnel policies to ensure the documents continue to be consistent with the law and consult counsel with any questions.