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August 16, 2010
Potential Impact of Worker Misclassification in Your Organization

Allen Kato discusses worker misclassification in a BLR webinar entitled ‘High-Tech Workers: Who’s Entitled to Overtime and Who’s Not; Avoid the Top 5 Most Common Mistakes’. He explains that there are consequences when a worker is wrongly classified. This wrong classification could take the form of classifying a worker as a non-worker or improperly classifying a worker as except from overtime. There is the potential for liability if such misclassifications occur.

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If workers are wrongly classified as non-employee or as exempt employee, liability for unpaid minimum wage, overtime, back pay, penalties that can be assessed by the government or by a court in litigation situations. Also, there is the potential for more payments such as attorney fees and interests from back pay. Litigation settlement costs from such litigation cases can end up in six figures. Additional fees such as interests and attorney fees can make the total cost to the organization reach seven figures or more. Recent cases and settlements involving high-tech workers include the following:

  • Wells Fargo
  • J.P. Morgan
  • Teleperformance USA
  • Charter Communications
  • Cadence Design Systems

Allen M. Kato, Esq., is an attorney in the San Francisco, California office of law firm Fenwick & West, LLP ( Allen’s practice concentrates exclusively on representing management in wage and hour, equal employment opportunity, unfair competition and trade secret matters, and privacy matters; and litigating individual and class action wage and hour, wrongful discharge, employment discrimination, and unfair competition matters before courts and agencies.

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