Background Information

In September of 2010, Governor Lynch established a "Joint Agency Task Force on Employee Misclassification Enforcement" by Executive Order. This Task Force succeeds the "New Hampshire Task Force to Study Employee Misclassification", which was established by statute in 2008 and which studied the issues around misclassification and helped put in place some changes as well as recommending further actions to be taken. Task Force reports are included on the 'Reports and Other Resources' tab of this website.

There are multiple aspects to the issue of misclassification, and the issue affects employers and employees throughout New Hampshire, New England and countrywide. Correct classification of workers has important implications with regard to labor standards such as minimum wage and overtime requirements, unemployment insurance, federal and state payroll taxes, business profits taxes, compliance with workplace safety and health requirements and workers' compensation insurance.

Several types of misclassification exist. Within the arena of workers' compensation insurance, workers are classified by the type of work they actually do, and workers' compensation rates depend on that classification. Workers' compensation insurance for a clerical worker will cost much less than workers' compensation insurance for a drywaller or a logger. If an employer misrepresents or otherwise misinforms its insurer about what type of work their workers are actually doing, the insurance premium will be incorrect for the exposure. While this would likely get adjusted eventually, it certainly has an effect on the cost of doing business for the employer and may affect its competitive position in their marketplace - and the result is that honest employers who correctly represent their workers may end up paying more than their fair share.

In addition to this type of misclassification there is also the issue of the underground economy. In some cases workers are paid in cash for work they do and never appear on the books and in the records of any employer. They aren't so much misclassified as not classified at all since there is no documentation of their work status. The same issues of workers' protections and benefits that are mentioned above obviously apply to workers who are part of the underground economy.

Perhaps the most high profile misclassification issue here in New Hampshire is the determination as to when someone can qualify as an independent contractor under the set of criteria that New Hampshire uses. For Department of Labor/Workers' Compensation purposes, an entity or individual must meet all twelve of the criteria listed under NH RSA 281-A:2 VI(b) in order to be considered an independent contractor. If they fail to meet even one of the criteria they can not qualify as an independent contractor and are subject to the requirements of the law, as is anyone who hires them.

There is much more material available regarding the issue of misclassification. Please refer to the other sections of this website as well as the NH state website and the websites of the individual state agencies.