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November 16, 2010
Reclassifying Overtime Exempt Employees: Implementation Issues

Many potential logistics issues exist when a company is considering moving nonexempt employees out of exempt salary structure. This may occur after an overtime exemption analysis has been completed, resulting in a recommendation to make some previously exempt roles now non-exempt. In a BLR webinar titled "Advanced Exemption Audits: Evaluate Your Overtime Classifications Now To Avoid Costly Trouble Later," Mary Topliff, Esq., outlined some of the anomalies that may result:

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  • Employees may now be making more than their boss due to overtime.
  • Same job at different locations may have different exemption classifications. Do you treat them differently or make the job nonexempt for all locations?
  • How do you determine extent of “back” overtime that needs to be paid? Factors to consider: Has scope of job changed at particular time? Is job changing now? The answers to these questions can determine how much back overtime should be paid.

Other implementation issues can be faced surrounding the question of who is responsible for the ultimate decision of changing a position's classification. Typically, this should require a sign-off by the CEO or other member(s) of the executive team. There are pitfalls that can be faced when members of management below the executive level have decision-making authority on this topic, including:

  • Advocating for "pet positions." The worst thing that can happen is if there is an analysis advocating a change that is denied because of a manager not agreeing with the recommendation.
  • Not addressing back overtime issue; employee claims could come in the future.
  • Company decides to take “calculated” risks.

Mary Topliff, Esq. founded the Law Offices of Mary L. Topliff in San Francisco in 1997, after practicing civil and employment litigation for nine years. ( www.joblaw.com) The firm specializes in employment law counseling, training, and compliance, focusing on practical solutions to avoid costly legal issues. She has advised many organizations regarding overtime exemption analyses and strategies for minimizing the risk. Topliff is a published author and frequent speaker on legal issues impacting the workplace.

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