By Susan E. Prince
There remains widespread noncompliance with the Fair Labor Standards Act's (FLSA) professional exemption despite recent rule changes, said attorneys Steven M. Gutierrez and Thomas E. J. Hazard in a recent BLR audio conference.
The revised FLSA regulations that became effective on August 24, 2004 were intended to provide new flexibility for employers in classifying their employees as either exempt or nonexempt. But, Gutierrez and Hazard explain that employers are still having problems with the new regulations, even though they were supposed to be easier for employers to apply.
The revised regulations eliminated the long and short tests, and created modification of those tests. The new tests are still confusing for employers, though, because there are different tests for learned professionals, creative professionals, computer professionals, lawyers, teachers, and doctors, all within the professional exemption. Because of the various tests, Gutierrez and Hazard argue that the professional exemption is the most difficult exemption for employers to apply.
They heed that it is important to classify your employees correctly, because improper classification of employees as exempt or nonexempt is an extreme liability of risk for a company. It takes only one employee to trigger a Department of Labor audit or class action lawsuit, which could cost an employer substantial amounts of money, including up to 3 years of backpay.
Gutierrez and Hazard explain that the FLSA stacks itself against employers, because there is a presumption that overtime must be paid. The law doesn't require that employees prove anything other than the hours in a workweek. Since employers tend not to keep detailed records on the hours exempt employees work, there is a lack of records for an employer to prove otherwise once an improperly classified employee claims he or she worked a certain number of overtime hours. Cases are fact intensive, and expensive, because they examine work done on a workweek basis. There may be overtime one week and not another.
Gutierrez and Hazard encourage you to audit all of your employees now, if you haven't done so recently, and continue to audit on a regular basis. By properly classifying your employees to begin with, you will avoid paying substantial amounts of money on the other end.
You can order a CD copy of the audio conference here.