But wage theft is rare in the state, review of cases finds

It wasn’t an easy time two years ago, when Terri McGuinness was running around the state setting up pop-up bars and mixing drinks at weddings and other events for Pour Me Bartending, a Manchester firm. She also was working at another bar and a medical assistance company, and she was studying for her real estate brokers’ license.

“It was a little crazy.

I was trying to juggle a lot of jobs to make ends meet.

Every dollar counted,” McGuinness, who is now an agent for Verani Realty in Londonderry.

Pour Me Bartending paid her about $10 an hour, but she hoped to make more with tips. A 10% gratuity was included in the contract with clients, “but I was wondering why I didn’t get the tips.” After she and other employees asked about it, she got a text message from the company: “I wanted to just touch base and let everyone know that under NO circumstances, if the client added tips, would I not pay it out to you.”

But the tips — and the wages for two events — never came, ruled the New Hampshire Department of Labor on Feb. 28, 2020. The company did not reply to the complaint in writing or show up to a scheduled hearing, or reply to NH Business Review’s email. (Its website is down, and there is no answer at its phone service.) The DOL awarded McGuiness $2,145 and a total of $5,360 to four other employees, but she hasn’t been able to collect the money.

Fortunately, McGuinness’ case is the exception not the rule in New Hampshire, even when it comes to labor violations.

Wage theft might be a national problem. According to an Economic Policy Institute study, in the nation’s 10 most populous states, an estimated 2.4 million people lose a combined $8 billion in income every year due to theft by their employers.

In New Hampshire over the last three years, the federal and state Labor Departments ordered companies to pay their workers about $7 million, ($4 million through the state and $3 million through the federal government). Both agencies issued a total of about $1.8 million in civil penalties to employers as well during the period.

But, at least in the case of state complaints, “That they are not paying anyone at all? That’s very rare,” said Deputy Labor Commissioner Rudy Ogden.

A lot of time, the issues are a matter of minutes than large sums of money — employers docking workers for short breaks that they should be paid for, not paying them the minimum of two hours when they have to come into work for less, tipped employees who don’t get enough tips to be paid the minimum wage when totaled with their current pay, workers getting paid for fewer hours than they worked, vacation time not being paid out after leaving a job, or being paid for those last few days after an employee quits or is fired.

Sloppy paperwork

Are all these examples of wage theft? Ogden isn’t sure, since the term is used in so many different ways. “We don’t use the term ‘wage theft,’” he said. “We say wage adjustments and wage claims.”

Those terms are not synonymous. The DOL’s award in McGuiness’ wage claim was one of 343 such awards, totaling $1.7 million, given by the state since 2018. Like her award, they were mostly in small amounts, though they may be large to the person receiving the money.

The smallest — paid by one Bertucci’s restaurant in 2020 — amounted to $5.80. But some can be substantial.

In August 2019, the state ruled that Triangle Park Capital Markets Data, an Exeter firm, owed James Rieger $152,250. Rieger was supposed to be business head of municipal information products and services in 2018, with an annual salary of $252,000, but he worked seven months without being paid and resigned at the end of the year. Rieger, who is currently owner and publisher of the Rieger Report, a bond market newsletter, declined to comment.

Triangle, which did not return phone messages left at the number on its website, did not show up at the hearing, but in another case the same year, it did contest the claim of a different employee, who had an initial base salary of $180,000 and worked for about five months. The company representative wrote that the claimant “knew that his compensation could change at any time at my sole discretion.

He had an understanding of where (the) company stood financially prior to requesting me to hire him to work for the company.”

The DOL awarded the employee $67,239.13. In 2018 and 2019, it awarded two employees of Global Financial Investors & Insurance Brokerage Inc., a financial firm in Windham, a total of more than $173,000 because of sporadic payments dating back eight years. (One award was limited because of the statute of limitations.) That company is no longer operating.

Unlike wage claims, wage adjustments are usually the result of an inspection, often sparked by a complaint. Many of these violations involve workers being paid under the table, allegedly as independent contractors, or allowing or pushing younger employees to work excessive hours, especially on a weeknight — both subjects that NH Business Review has reported on before.

At other times, the problem is sloppy or nonexistent paperwork, so inspectors can’t figure out how many hours employees worked and how much they are supposed to be paid.

The state DOL issued more than $1.5 million in penalties during the last three years (the feds, over $250,000 in New Hampshire), but the above categories usually didn’t result in wage adjustments.

But the state did order close to $2.4 million in wage adjustments in the last three years. Some $873,000 of it was awarded in the last year, though that has nothing to do with the pandemic, since all the decisions related to wages that were unpaid several years ago.

Federal adjustments totaled more than $3 million, with nearly $2 million awarded in the last year. Some of them involve Family and Medical Leave Act violations.

Self-audits

In several ways, the figures are misleading. First, it is clear that both the federal and state Labor Departments don’t capture all the shortchanging that occurs. Many workers don’t complain, and the departments — which are short-staffed — don’t always investigate those cases it does receive in a timely fashion. Many complaints or claims can’t be verified because of the lack of paperwork or other reasons. On the other hand, some employers accept violations even though they don’t think they are justified.

Take Granite State Dispatch, one of six delivery companies that contracts with Amazon. An inspector cited the company for 170 violations, including not paying workers the minimum two hours and docking workers for taking a short break or even for inspect- ing their vehicle. A few employees were paid less than their offer letters. Workers complained that, despite the policy that they should take lunch breaks, “they were too busy delivering Amazon packages to take lunch,” and that they were “encouraged by the employer to work though their unpaid lunch in order to complete all deliveries on time.”

“We did not contest any of the inspections, even though we had problems with some of them,” said Jeff Sandler, manager of the business, which was launched in January 2020, shortly before the pandemic. “We resolved it to make sure that employees got every penny that was due, because we want to make sure that our people are treated fairly.”

Sandler said some of the problems came because of the unexpected surge in demand for online shopping. That was good for business but “very stressful,” said Sandler. As a result, there were some problems with the payroll system software, so the company switched to another, he said.

He also said he had to trust the workers to follow the rules. “If someone works though their lunch, how am I supposed to know that? We have to trust people to take breaks.”

The biggest wage adjustments were actually made by the companies themselves. Companies are allowed to complete a self-audit when they are only charged with one violation.

According to Ogden, that occurs “If we get the sense that they made a mistake, if they have the resources, if someone is dedicated to do all that work, and there is also a trust component. We spot-check it to make sure that they are doing it right.”

Connection, the publicly traded technology goods and services firm in Merrimack, conducted two such audits in 2020 that resulted in wage adjustments of $219,000. One took place in July and found that 322 employees were paid late, and the other in November found 196 employees were not paid accurate commission amounts.

“In the process of conducting an upgrade of Connection’s enterprise resource planning software, we encountered an issue that resulted in the inaccurate compensation of a small percentage of employees during the second half of 2020, specifically an underpayment of sales commissions,” said Heather J. Nehiley, Connection’s director of employee relations, in a prepared statement. “Our team promptly conducted a self-audit as soon as the issue was identified, implementing a resolution and working closely with the New Hampshire Department of Labor to compensate affected employees and acknowledge any penalties. All of those issues have been resolved.”

Dartmouth College which had the second largest wage adjustment, $109,261, which was also calculated by self-audit, but in its case, the college went above and beyond, said Ogden. When an inspector pointed out that the college was not paying employees for short breaks at the college-owned Dartmouth Skiway, the company offered to apply the change to all college employees over a threeyear period.

Some McDonald’s franchises were allowed to conduct self-audits. The Napoli Group, in Amherst, twice in 2019 was hit with one violation for not paying 587 employees under the required two-hour minimum rule. In 2020, JBK Management of Sudbury, Mass., which owns several McDonald’s in New Hampshire, was cited for 15 youth employment violations.

In February, Rucito Management, Jaffrey, another McDonald’s franchise owner, faced 94 violations after the DOL conducted an audit. The violations mainly related to youth employment and recordkeeping.

The DOL didn’t overlook Burger King. It cited the franchise Northeast Foods LLC for over 1,300 violations, almost one for each employee at its 24 stores, for youth and wage violations, resulting in more than $215,000 in fines. Bob Sanders can be reached at bsanders@nhbr.com.

Wage claims in NH often involve smaller sums stemming from breaks not paid or workers getting paid for less hours than they worked.