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May 06, 2010
How to Reclassify Exempt Status and Limit Litigation Risk

In a BLR webinar entitled "Exemption Audits: Prepare Now for Stepped-Up Department of Labor (DOL) Enforcement--Who's Entitled to Overtime and Who's Not," Cheryl D. Orr, Esq. partner and co-chair of the national Labor and Employment Practice Group at Drinker Biddle & Reath LLP described the best ways to reclassify an employee's exempt status with a minimum of legal risk.

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  • Find a tie-in to an innocuous event, e.g., updating a computer payroll system.
  • Track pay rates to confirm they are comparable.
  • Communicate with the workforce to maintain amicable relationships and reduce likelihood of litigation.
  • Consider whether to pay back wages depending on whether litigation is pending or imminent or if misclassification is related to employee performance.

Going forward, it is important to reduce risk by revamping job descriptions and considering management training when necessary.Future compliance can be ensured by maintaining open communication and addressing employee concerns.

Cheryl D. Orr, Esq. is a partner and co-chair of the national Labor and Employment Practice Group at Drinker Biddle & Reath LLP. She concentrates her practice on defending employers against FLSA collective actions and state and federal wage and hour class actions. She regularly litigates discrimination, harassment, and unfair competition claims, conducts high-level workplace investigations, develops plans for reductions in force and offers employer advice and counseling.

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