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November 09, 2009
Most Employers Confident Employees Are Classified Correctly

A vast majority of employers say they are either somewhat or very confident that their organization’s exempt employees are classified correctly under the Fair Labor Standards Act, according to a poll on Compensation.BLR.com and HR.BLR.com.

Half of respondents reported that they are very confident employees are classified correctly under the Fair Labor Standards Act. Another 32 percent of respondents said they were somewhat confident.

The remaining 18 percent of respondents said they had no confidence at all that exempt employees are classified correctly.

Under the Fair Labor Standards Act, an employer must pay overtime to employees who work in excess of 40 hours per week unless they fall under several “white-collar” exemptions. The FLSA exempts broad categories of "white-collar" jobs from minimum wage and overtime requirements if they meet certain tests regarding job duties and responsibilities, are paid on a salary basis, and are paid a certain minimum salary.

Despite employers' confidence, many employers are still accused each year of misclassifying workers, with some forced to pay significant penalties for doing so.

BLR recommends that employers regularly review their classification of employees, especially when the company has gone through a round of restructuring or downsizing as many duties change during these periods of transition. It’s important to note that when determining whether an employee is exempt or nonexempt, employers should look at the actual job duties of the employee and not the job title. Employers won’t be able to rely on a job title to prove the employee is exempt from overtime.

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