Misclassification -- OOOPPPS!

Ethel

Durning an audit for new regs, discovered that a job which had been classified as "exempt" several years ago, actually is NOT! (Seems that the job holders at the time convinced Manager to make the "job" exempt because of "prestige" factor. -- I know, stupid, stupid, stupid!!!!) Also, this is not an area that historically works any overtime.

My questions are:

1. How many years back would the company be liable for O/T (if there was any) 2 or 3 yrs and,

2. As an exempt, no record was kept of time worked or missed of less than a full day. So, when this classification is changed, how do we determine validity if O/T is claimed???

Really need some help on this.

Don D

My thought is that the DOL would probably go back five years, and, in the absence of time tracking records, would draw a happy medium between the estimation from the company and any record or knowledge that the employee offers.

But, your task is not to try to come up with an overtime amount at this point, or to even admit that any is owed. If it were me, I would simply tell the truth, which is: "Upon review, the job(s)listed below has been reclassified as non-exempt from the overtime provisions of the Fair Labor Standards Act." Period. And pay it from this point forward. You must also implement a tracking system or start applying your standard time recording system to this/these jobs as well, once you reclassify them.

Shadowfax

Two year look back unless the violation was determined to be 'willful' then 3 years. You have hit exactly on the head the reason I have said on this forum many times, it is absolutely essential for the co to keep some sort of time records on exempt employees. When co's mistake is discovered, you will be surprised to know every employee has a very precise record of each and every day and the amount of time he worked - and these records will go back, umm, lessee...about 3 years, yeh 3 years. It will be on a small notebook, the calendar on the refrig, the diary wife keeps, etc. And since ee has records, and you have none, guess which records are deemed to be absolutely accurate. Yep! And the ee will be paid for unpaid o/t at 2x the amount you didn't pay, plus you will pay all costs and the expense of his attorney. You will pay for two mistakes: misclassification and failure to be able to prove the employee worked very little, or no o/t, or in any event, way less than his records show. In this case, you're probably better off with the wage and hour people than in litigation, but it may not be your choice.

E Wart

Now is the perfect time to correct this mistake. You can easily say that you have reviewed the new FLSA updates and this is the finding. Then make sure from here on out you keep the records. (I have had this happen with 2 of our jobs and am fighting with the Manager to get it changed. He said the employees will be unhappy. I understand their feelings (been non ex in my lifetime and keeping up with time is a pain.) However, these people work overtime each week and I am not sorry that they will get paid a lot of money in overtime.)
In some ways the law change is a good thing. Makes us all look over our jobs and gives us an excuse to make the necessary changes.
Good luck.
E Wart

Ethel

Thank you for your informative responses. I wasn't thrilled with the changes involving the forum and then I "ponied" up the fee -- I couldn't do without the good direction, empathy, and information that I had gotten used to receiving.

What we decided to do is change the classification, ask for a listing of any over time they felt they were entitled to within the last two years and we would review. This person did not think they had had any o/t but is going to get back to us. It was never our intent to "do" the employee out of anything, nor was it going to influence the change, I just wanted to know what would come of it. You know how it is, you just hate to leap blindly!!

Thanks again, you were a big help.