By Jeffrey Siegel

Employers doing business in New Hampshire must now be aware of a state law requiring employers to provide written notice to employees in advance of a mass layoff or plant closing.  The New Hampshire Worker Adjustment and Retraining Notification Act (“NH WARN Act”), took effect on January 1, 2010.  See RSA 275-F:1, et seq.  The NH WARN Act is patterned after the Federal WARN Act; however, there are some important differences between the two laws.  For example, the NH WARN Act applies to employers who employ 75 or more employees, whereas the Federal WARN Act applies to employers who employ 100 or more employees. 

The NH WARN Act requires covered employers to give 60 days advance, written notice to employees if there is an employment loss at a single site during a 30 day period of at least 250 employees or at least 25 employees if that constitutes 33% of the full-time employees.  Employers must also give notice if there is a permanent or temporary shutdown of a single site of employment in New Hampshire if the shutdown results in a loss of 50 or more full-time employees.  Employers must give notice to the affected workers, their union, the chief elected official of the municipality in which the mass layoff or plant closing occurs, the New Hampshire Attorney General, and the New Hampshire Commissioner of Labor.  The NH WARN Act provides limited exceptions to the notice requirement in the following circumstances:  (1) the employer is a faltering company and was actively seeking capital;  (2) the need for notice was not reasonably foreseeable; (3) the plant closing is the result of completion of a particular project and the employees were hired knowing that their employment was limited; (4) the mass layoff or plant closing was necessitated by a natural disaster, act of terrorism, or physical calamity; or (5) the layoff or closing constitutes a strike or lockout not intended to evade the NH WARN Act.   

An employer who fails to give proper notice is liable to each employee who lost his or her employment for back pay, the value of the cost of any benefit that the employee would have been entitled to, including the cost of medical expenses incurred, that would have been covered under an employee benefit plan, and attorneys’ fees.  In addition, the Commissioner of Labor may asses a civil penalty of up to $2,500 and/or $100 per employee for each day of noncompliance.  Lastly, unlike the Federal WARN Act, failure to provide sufficient notice under the NH WARN Act allows state officials to place liens on the business revenues and real and personal property of violators.

Employers must carefully review the requirements of the Federal WARN Act and state plant-closing laws, including the NH WARN Act, when determining the proper course of action during a mass layoff or closing of a facility. 

About the Author

Jeffrey S. Siegel, Esq. is an attorney with Morgan, Brown & Joy, LLP and is a member of the bars of Massachusetts and New Hampshire.  Jeff may be reached at (617) 523-6666 or at jsiegel@morganbrown.com.  Morgan, Brown & Joy, LLP focuses exclusively on representing employers in employment and labor matters.

On January 13, 2010 a new bill was introduced to Congress, HR 4437, under the name Hiring Incentives to Reinvest and Incentivize New Growth Act of 2010, or HIRING Act of 2010.  Intended as an addition to the same section of the IRS Code that provides credits to first-time homebuyers, its intent is to grant a 15% tax credit to any employer who expands their payroll by 3% in any calendar quarter of 2010 and a 10% tax credit to any employer who expands their payroll by 5% in any calendar quarter of 2011.  The credit would be paid quarterly so benefits would accrue to businesses more quickly.  The intent, of course, is to get businesses to hire more employees, restore or increase employee pay and increase employee hours.

According to the wording of the bill (see link in preceding paragraph), if my company's total gross payroll in Q1 2009 was $100,000 (for easy number's sake) and my total gross payroll in Q1 2010 was $110,000, then I would be eligible for a credit of $300.00 under the following formula:

• Wages Q1 '10 $110,000 - Wages Q1 '09 $100,000 = $10,000
• 3% of $10,000 = $300.00

What isn't so clear is that whether this credit will be against taxes to be paid to the IRS on a corporate return, or perhaps some form of a credit against employment-related taxes. Since the bill explicitly states that the benefit will be paid quarterly so the business realizes the benefit more quickly, that leads me to believe that it would be against employment-related taxes.  So is the intent to short the employer-paid portion of FICA?  Unlikely.  That is the only portion (other than Federal Unemployment Tax) that could be credited on a quarterly return.  The text of the bill is notoriously unclear on this point. 

Since most small and medium-sized businesses (those that constitute the largest portion of taxpayers and employers in the US) only file tax returns with the IRS on an annual basis, this leaves me to wonder whether this is a credit that would have to be explicitly filed for on a quarterly basis-separate from the process that is the status quo- which in itself may make the time and effort not worthwhile.  And as is standard practice with many S Corporations, many try to show no profit at the turn of their fiscal year so to avoid double-taxation, so there would be again, nothing to credit. 

To be fair, this bill was introduced less than a month ago, will be subject to much debate and evolution, and could have a very positive effect on the employment situation in the US.  But this is a classic example of the devil being in the details.  If the resulting change to the Tax Code is a SMB friendly process for both earning and realizing the credit, then it should be very effective and a win-win for employers and employees.  But should it become a credit not worth persuing, or "toothless" in its benefit, then like much of the other recovery legislation proposed or enacted, its potential benefit will have been lost in translation. 

Now onto healthcare! 

In my last entry, I pontificated about the pro's and con's of the Social Security Administration's eVerify system.  I solicited your commentary on the program, and whether you thought it was a good or bad thing for our employers, and our country.

Well, indirectly the SSA has chimed in.  In a January 18 article published in the Washington Times, an audit conducted by the Inspector General concluded that during 2008 and 2009, the Social Security Administration itself did not eVerify its nearly 20% of its own prospective and new hires.  It also failed to eVerify another 18% within the three days of hire allotted time frame by the program.

What makes this so bad is that all government agencies are supposed to run their new hires through this system, and the SSA is the agency responsible for the program.  It seems to be a classic example of "Do as I say, not as I do".  I am not sure this is the kind of Government role modeling the Department of Homeland Security had in mind when it launched the program.  They either 1.  Believe they are above the very regulation they are tasked with implementing or 2.  Are so procedurally inept that they cannot comply with their own mandate.  You be the judge.

Jim Harper, Director of Information Policy Studies at the Cato institute was quoted in the article.  He states quite accurately, "When this happens in the Government sector, well the upshot is an IG report.  But in the private sector, you are talking about investigations and penalties."

It used to be that when you hired an employee, you relied on the information they provided with their I9 as proof that they had the right to work in the United States.  This proof took the form of various sources of identification issued by the federal government, like a passport, a driver's license or a social security card.  In other words, if they could meet the criteria of the I9 that would be enough for the employer to have "done their part".  In reality what this meant was that you could hire an employee in January who provided you with his or her "proof".  If you were in compliance, you would then retain copies of the W2 and I9 (as well as copies of the identifiication), report this information to your payroll provider and they in turn would report the employee to the State in which the employee was working, to meet that State's (and this is the case in all 50 states) New Hire Reporting requirement.  The chief purpose of the State's New Hire Reporting requirement was to track down deadbeat parents who have not fulfilled their child support duties, and other individuals whom the state and federal government. 

Given the assumption that the employee in question did not have an outstanding obligation to fulfill from the State or another state (they keep a nationwide database with this information), the employee was allowed to work, and be paid for a significant amount of time.  But come the next January, when W2 files are transmitted for the previous year and the IRS and Social Security Administration compare notes, they verify whether or not the SSN provided by that employee matches the employee in question.  Over the last 10-20 years however, there has a dramatic increase of instances of what the Social Security Administration calls an "SSN Mismatch" , and now that the department of Immigration and Naturalization has become part of the Department of Homeland Security, things have changed.  This meant that the employer, having potentially paid this individual over the course of the year, invested time and effort in training, etc, now has to deal with the termination of what may be a good employee, as well creating turnover in a position that was supposedly stable.  It costs time, money effort and hassle for the employer who was in compliance.

There is a new system now in place with the now U.S. Citizenship and Immigration Services, called eVerify, which is similar to the State's New Hire Reporting but with some important and dramatic differences.  It is the child of the IRCA-Immigration Reform and Control Act of 1986, and the IIRIRA-Illegal Immigration Reform and Immigrant Responsibility Act of 1996, and like most things government-mandated, has taken some time to evolve.  First, as of now, it is a voluntary for more employers, and is only required by  federal agencies but also any company who is engaged in business with the U.S. Government.  Every participating employer is required to sign a Memorandum of Understanding that requires the employer to safeguard the information it receives and acknowledge that this information is governed by the Privacy Act and Social Security Act.  The employer or their reporting agent (like a payroll company) would submit data upon hire of new employees for verification, or an "instant match" of the employee's Social Security Number against the Social Security and Department of Homeland Security databases to make sure the employee is authorized to work in the U.S.  The mandated employer would be required to do so as soon as a job offer is accepted and no later than three days after the start of employment. 

The returned result can be an "Employment Authorized"-when there is a match, or a "Tenative Non-Confirmation"-when the information does not match and then the employee is given the opportunity to contest the result.  Whether contested or not, if the final ruling is a "Final Non-Confirmation" then the employer must terminate the individual immediately or notify the DHS that they cotinue to employ the individual. 

On paper, this solves the problem of investing in an employee only to find out they are not eligible to work in the U.S.  Why not mandate it for every employer, or connect it to the New Hire Reporting system?  I suppose that there are a group of employers whose labor pool has a tendency to gravitate to foreign nationals or recent immigrants, but does this not protect them as well?  Doesn't it ensure that jobs do not go to those who are not authorized to work?  There is always the question of accuracy, but according to the eVerify website, from July 2008-Sept 2008 there were 96.9% of individuals became work-authorized within 24 hours, while .3% were "Tenative Non-Confirms" who later resolved to "Employment Authorized", while 2.8% were confirmed mismatches.  If these statistics hold tight in a larger sample, then the program is an absolute success.

What do you think?  Is the eVerify program so good for the country, and its employers that this system should be fully mandated as a step perhaps to replace or accompany the I9 process?  Or is it a violation of our privacy and our civil rights, imposing more requlation and red tape on employers many who are struggling as it is?  Let me know.