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Legal Updates

New Hampshire Takes Aim At Unemployment And Layoffs

As unemployment continues to hover around nine percent nationwide, New Hampshire has taken steps to minimize layoffs, help the unemployed return to work, and provide unskilled workers with critical training.  Specifically, effective May 2010, the Granite State enacted the “New Hampshire Working” bill, which sets out to achieve these goals through three separate programs, “Stay at Work,” “Return to Work” and “Get Ready to Work,” as discussed below.

Stay At Work

Stay at Work, also known as New Hampshire WorkShare, allows employers to avoid layoffs by instead reducing employee hours on a company- or unit-wide basis.  The state makes up the difference in pay by providing an equivalent amount to affected eligible employees under its unemployment program.  Benefits paid by the state are charged to the unemployment insurance account of the employer, as they would be under any other unemployment claim.

Through Stay at Work, employers may reduce the hours of full- or part-time employees by ten to 50 percent for up to 26 weeks.  To illustrate, if a company with 200 employees wants to reduce payroll by one-fifth, it could reduce all employees’ hours by 20 percent, rather than lay off 40 workers.  Eligible employees could then apply for 20 percent of their former weekly earnings in unemployment benefits.  (Earnings received through other employment during this time may reduce an employee’s unemployment payments.)  Employee health insurance benefits must remain in effect as before the reduction in hours, though retirement contributions (and other fringe benefits) can be adjusted based on the hours actually worked.

There can be advantages to reducing employee hours instead of conducting a layoff, as the time, expense and possible litigation exposure of a layoff can be avoided.  Likewise, when business picks up, it may be easier to increase hours for current employees than to recall laid-off workers or hire new employees.  And equally important, this may serve to maintain employee morale and loyalty in difficult times.

To participate in Stay at Work, an employer must submit a plan to the New Hampshire Department of Employment Security (the “Department”).  The plan must certify that the reduction in hours is in lieu of a layoff and state the reason for the reduction and its expected duration.  Each affected employee must be identified by name and Social Security Number.  The employer also must specify both the present and the proposed reduced weekly hours of each affected employee.  The reduction can be for all employees or for any definable unit of more than two employees (such as a department or shift).  In either case, all affected employees must have their hours reduced equally.

The proposed WorkShare plan must be submitted at least 21 days before it is to go into effect.  The Department will approve or reject a plan within 15 business days.  Rejected plans cannot be appealed, but employers can submit revised plans.  Finally, if there is a union in place, the Stay at Work plan must be approved by the union.

Return To Work

Return to Work allows employers to provide unemployed workers with up to 24 hours of weekly unpaid training for up to six weeks.  The state continues to provide unemployment benefits to eligible individuals during this training period, which may allow employers to reduce hiring and training costs for potential new employees, as well as to assess whether a potential recruit would be a good fit with the organization.  In order to participate, an employer must certify that the Return to Work training program will not displace any current employee or have an impact on any employee’s promotion.  Similarly, participants must acknowledge that they are not guaranteed employment upon the completion of the training.

Participating employers must structure these programs carefully.  Under federal wage-and-hour laws, an employer can provide unpaid training to a person, but only if the following criteria are satisfied:  (1) the training is similar to what would be given in a vocational school or to academic educational instruction; (2) the training is for the benefit of the trainee; (3) the trainee does not displace regular employees; (4) the employer derives no immediate benefit from the trainee; (5) the trainee is not entitled to a job at the end of the training; and (6) the trainee understands that he or she will not be paid.  Failure to satisfy these criteria could lead to liability for the person’s time spent in training, attorneys’ fees, and even liquidated damages.

Notably, New Hampshire law further limits the circumstances in which businesses may employ volunteers (e.g., when the volunteers are performing work for public, charitable, or religious facilities, and when the volunteers’ duties do not necessarily or traditionally lead to paid employment).  However, the New Hampshire Department of Labor has indicated that such additional restrictions are not applied to Return to Work because the state treats participating workers as being in the state’s unemployment insurance program, as opposed to being in the participating businesses’ employ.

In light of this federal and state law overlay, employers are advised to consult with legal counsel before implementing a Return to Work training program.

Get Ready To Work

Get Ready to Work doubles the state’s Job Training Fund from $1 million to $2 million in 2011 and allows the Department to use those funds to train unemployed workers.  In this regard, Get Ready to Work provides basic-skills assessments, skill certification, and remedial courses through the Community College System of New Hampshire.

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The New Hampshire Working initiatives give New Hampshire employers additional ways to weather this difficult economy.  If you have any questions about implementing a Stay at Work reduction in hours, a Return to Work training program, or a Get Ready to Work arrangement, please do not hesitate to contact us.  We regularly assist employers with creative solutions to managing employment costs and would be happy to help.