Inexact Use of Labels to Avoid Wage-Hour Liability A Dangerous Game

December 9, 2010, 11:58 AM

One of the most common mistakes employers make in the wage-hour area is giving an employee a salary and classifying that employee as exempt from overtime without considering that employees duties. Employers sometimes find out the hard way that paying an employee a salary of at least $455 a week is only one of a number of requirements that must be met before an employee will be considered exempt from overtime compensation. When employees are misclassified and not properly paid for overtime, the liability to employers can be dramatic when one considers that all misclassified employees have a right to back pay going back two or three years.

Lawyers who sue employers are recognizing that this type of mistake is common and not particularly hard to prove in court. Add to that the availability of double damages for willful violations and attorneys fees and you can see why wage-hour lawsuits are fast increasing, as are the television commercials soliciting such claims.

The U.S. Department of Labor (DOL) is also sensitive to this common employer mistake. The DOL stated in its new strategic plan that it intends to focus on employee misclassification as a key part of its wage-hour enforcement efforts. These efforts are going to be bolstered by the 250 new investigators the DOL has hired recently, including three new investigators in the Norfolk DOL office. --Burt H. Whitt