Employers want to be sure to properly classify their employees to ensure that salaried employee overtime exemption status is correct. Misclassification of employees can be costly, as back-pay can add up quickly for an employee who was classified as exempt from overtime improperly and later deemed to be due overtime pay.
What can prompt an overtime exemption analysis? 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 most common issues that prompt employers to perform this analysis:
- Jobs in the headlines. Perhaps a class action lawsuit story runs in the newspaper, prompting employers with employees of similar titles to review their exemption status.
- Salaried worker overtime. When salaried workers work a lot of extra time, it is a risk factor. You want to be sure they meet the overtime exemption since it adds up quickly.
- Gut feeling about jobs. Sometimes HR professionals have an instinct, based on experience, that some of the jobs may be misclassified.
- Regular audit schedule. Some companies are proactive and do regular audits.
If your company wants to perform an overtime exemption audit, how do you get started? One option is to consider combining the overtime exemption analysis project with another related project. For example, it could be combined with a total compensation review, an update of job descriptions, or a new HRIS system rollout. Combining the audit in this way creates efficiencies by addressing multiple issues and provides more context for job changes.
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.