Many employers assume that their salaried employees are not entitled to overtime pay. Misclassifying non-exempt employees as exempt is an all to common mistake.
Did you know that paying an employee a salary doesn’t necessarily mean the employee is exempt from the minimum wage and overtime requirements under the Fair Labor Standard Act (FLSA) and state laws?
Business Owners must consider the job duties of the employee and whether they qualify for an exemption. I often see employers misclassifying positions to try and avoid paying overtime. To assess whether and employee is properly classified as exempt, the US Department of Labor is a good starting point. Before classifying any employee I recommend a Human Resource consultation, particularly because the method of telling an employee they are reclassified may be essential to minimizing the risk.
Misclassifications can result in liability of two years of back pay and three years if it is a willful violation. Often times you will need to engage an Employment Attorney to prevent you from paying double damages. Typically then the US Department of labor gets involved it is usually too late!
Watch for my next post about Misclassification of Employees as Independent Contractors.