Are you making mistakes when classifying workers as exempt for overtime?
Overtime exemption classification errors are more prevalent than you might think. The Fair Labor Standards Act (FLSA) sets the parameters for overtime classification and exemption. In addition, some states and local areas have their own laws.
Even so, the U.S. Department of Labor (DOL) determined close to 200,000 employees failed to receive overtime wages under the FLSA in 2021. As a result, the DOL collected $234 million in back wages.
Most common overtime exemption classification errors
Some of the most common errors include:
- Automatically classifying salaried employees as exempt. Aside from exemption based on a minimum salary of $35,568 or more per year, other criteria also exist. For the salary test to count for exemption, employees must also meet the other qualifications.
- Automatic position title exemption. A title may seem like a reason to make an employee exempt from overtime. A job description may even seem to make the worker qualify. However, the actual tasks the employee performs could show the worker does not qualify for overtime exemption. Similarly, it is a mistake to consider all administrative positions or supervisor positions qualify for exemption. Likewise, not all employees who work with computers qualify for the computer employee exemption.
- Deciding exemption based on occasional or incidental duties. Many employees perform jobs that are a combination of exempt and non-exempt work. The determining factor is whether the employee’s primary duty is exempt or non-exempt work.
- Failing to consider local or state laws as well as federal laws. Some states and local areas have enacted their own laws that determine employee classifications. Employers must also take such laws into consideration.
(Reference: JD Supra)
Do you have questions or concerns about paying employees overtime?
If you have employee-related questions about NYC, NY state or federal employment laws, our firm can help. Discuss your concerns with an attorney at Stephen D. Hans & Associates, P.C. Call (718) 275-6500.