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November 16, 2010
Overtime Exemption Status: Handling and Communicating Changes

How do you communicate changes in overtime exemption status to your employees and shareholders? In a BLR webinar titled "Advanced Exemption Audits: Evaluate Your Overtime Classifications Now To Avoid Costly Trouble Later," Mary Topliff, Esq., outlined some key considerations.

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Release Agreements

Can you have a release agreement to reduce future liability on this front? In general, if the wages are owed, you cannot condition payment of wages owed on release agreement. A release agreement has to be based on an actual dispute on the wages owed. This cannot be done simply as a result of the audit; ensure to get your legal counsel involved in this to determine your best course of action.

Public Relations Issues

Changes in status can also result in an HR “public relations” problem and the need to explain why we didn’t get this right the first time. In this case, the bigger question might be to determine and to communicate what you're going to do differently in the future. Perhaps you're going to do more regular audits or look more closely at new hires to ensure that they qualify for any exemptions.

Communicating the Results

Ensure you have manager training regarding the changes. There are a lot of options, such as making a general announcement to the employees, holding a meeting, or making a formal announcement to employees. FAQ’s are helpful in this case. It is important to assure employees that changes in exemption do not mean a demotion or that their job is not important.

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. ( 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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