New Hampshire: Senate clarifies definition of employee

On March 22, 2006, the New Hampshire Senate passed Senate Bill 267, which establishes a uniform definition of “employee” and clarifies the criteria for exempting a worker from employee status.

The act would establish a presumption that any person who performs services for pay is an employee and further provides that “employee” includes every person who is permitted, required, or directed by any employer, for direct or indirect gain or profit, to engage in any employment. “Employees” would not include any person exempted from the statutory definition of employee or any person who is found to be an independent contractor.

The act sets forth specific criteria for establishing independent contractor status including:

• The person possesses or has applied for a federal employer identification number or Social Security number;

• The person has control and discretion over the means and manner of performance of the work, and the employer does not direct or supervise the means or manner of performance.

• The person has control over the time when the work is performed, and the time of performance is not dictated by the employer.

• The person holds himself or herself out to be in business for himself or herself.

• The person has continuing or recurring business liabilities or obligations.

• The person is responsible for satisfactory completion of work and may be held contractually responsible for failure to complete the work.

• The person supplies the principal tools and instrumentalities used in the work.

• The person is not required to work exclusively for the employer.

The factors for determining independent status would be considered on a case-by-case basis, and no one factor is determinative. However, the greater the number of criteria that exist in a given case, the more likely the individual will be deemed an independent contractor.

Evidence that independent contractor status has been shown could be established by a written agreement, signed by the employer and the person providing services, describing the services to be performed; or by a person's representations about his or her self-employed status to the Internal Revenue Service or other local, state or federal agencies.

The new definition of employee would apply to several state statutes, including the Equal Pay Law, the Whistleblowers' Protection Act, the Minimum Wage Law, and the Workers' Compensation Law.

The bill is pending before the House Labor, Industrial, and Rehabilitative Services Committee. If passed by the House, and signed by the governor, the act would take effect on Jan. 1, 2007.