Change in status not recommended?

LoriP

I am curious as to how many ERs are not going to change exempt to non-exempt status due to fear of litigation regarding previous overtime worked while exempt. An HR mgr from another Co. was telling me that their attorney advised them not to change from exempt to non-exempt because it would encourage the employee sue for back wages for the hours worked over 40 during the time they were classified as exempt. Have any of you run into this advice as well?

durasupreme

A legal firm that presented a seminar on this suggested handling changes from exempt to non-exempt in this way: tell the ee that the DOL has issued new regulations governing overtime exemption status under the Fair Labor Standards Act. The company has conducted a review of the exempt positions to ensure compliance with the new regulations. Our review of your job description indicates that it should be classified as a non-exempt position. Effective August 23, 2004 your job classification will be changed from exempt to non-exempt, and you will be eligible for overtime for hours worked in excess of 40 per week.

They also recommended not focusing on "your position should have been non-exempt all along but we screwed up", which might incite the ee to make claims for overtime they should have been entitled to, but to stress that this review was prompted by the new regulations, and XYZ Company intends to be compliant with the new regs.

One more thing, the attorneys indicated that it's never wrong to classify a position as non-exempt (and OT eligible) in most situations, especially if it's somewhat "gray".

We have one position that will definitely need to be reclassified as non-exempt (and the ee won't be happy as he's enjoyed a certain amount of "freedom" with his hours for many years), and another that we will be reviewing job responsibilities closely, as it appears it might also need to be non-exempt. Hope this information helps!

Hunter1

Pay me now, or pay me later. If a position should be classified as non-exempt, the incumbent will always have a claim for OT as long as they remain classified as exempt. Do the reclass, blame it on the new regs, and take the chance now rather than have this hanging over your head for the forseeable future. Or, you could 'come clean' and pay an obviously non-exempt position for the OT worked for the last two years. : ) How's that for a novel approach?

System

Let me get this straight -- a lawyer told an employer to intentionally violate the law on a daily basis because someone might file an unfounded lawsuit?

I agree with Hunter1 and durasupreme. Since this would be a willful violation of the FLSA, you could be sued for three years of OT pay by every misclassified ee. And when I say "you" could be sued, I mean LoriP, in addition to your employer.

th-down th-down th-down th-down th-down th-down th-down

James Sokolowski
HRhero.com

LoriP

I think I need to clarify - I don't know if this lawyer told the HR mgr to "willfully" violate the FLSA. The context was concerning new Adminstrative duties that would change an executive assistant's position. Salary was one hitch as well - in rationalizing their decision to up the salary and keep her exempt was this information they had gotten from their attorney.

I am pretty confident that we have not misclassified our employees - almost 100% of changes are going to be caused by the salary basis test. I just couldn't believe that an attorney would give advice like that, and I wondered if perhaps I had missed something in my research.

Thanks for your response, it is a relief to know after all this work we have been doing (reviewing 200+ employee positions) that I have not missed a liability risk - at least as far as I know *grin*

Lori

Shadowfax

[font size="1" color="#FF0000"]LAST EDITED ON 08-05-04 AT 07:12AM (CST)[/font][br][br]A perfect example why every ee - including exempts - must be time tracked. If you havn't, and these guys win one of these cases (yep, there will be a lot of them) the only time records will come from the ee, and the er has no way to counter the evidence. Make thje appropriate change, reclassify, tell them why, and follow the current requirements. And whoever said you might consider paying the ee about whom you may have a legitimate question of his earlier classification, is dead right. Look hard at where you were, and if you think you were wrong, pay up now and avoid the substantial legal costs of litigating a loser. Forgot to add; If you decide you were wrong and are going to pay back unpaid o/t, get you labor lawyer in on it, otherwise you may make a payment, and even if you get a homegrown release, find out it won't hold up. This is no area to go off on your own.