Employees Should Be Wary of Classification Enforcement

October 10, 2012 (Press-News.org) Employees Should Be Wary of Classification Enforcement

According to numerous reports, the U.S. Department of Labor has become more aggressive in enforcing wage and hour laws, and there are a number of cautionary tales that should keep employers vigilant in following employee classification rules. For instance, more DOL investigators are conducting unannounced wage and hour investigations, catching many employers unprepared.

According to the National Restaurant Association, the DOL collected $225 million in back payments for wage and hour violations last year. While 10 percent of the total involved restaurant-industry violations, the total amount was the largest number collected for any fiscal year on record. This suggests that employers in many other industries have employees who are not properly classified.

While most employers understand that executive and professional positions are exempt, many administrative employees are misclassified. Also, these employees may not even realize that they should be paid by the hour (instead of a salary) and are thus eligible for overtime under state and federal law. Part of this problem stems from the difficulty in determining whether specific duties meet the exemption criteria number of violations stem from misclassification of certain administrative employees. This issue is exacerbated when job titles (or duties) change without consideration of whether a status change is needed.

Under the Fair Labor Standards Act, administrative job duties may be exempt if the primary functions include:
-office or non-manual work,
-which is directly related to management or general business operations of the employer or the employer's customers, and
-a primary component of which involves the exercise of independent judgment and discretion about matters of significance

The basic distinction between "administrative" employees and "production" employees, for example, is that administrative employees support the company's business operations. They provide services instead of producing items for sale. However, mere clerical work is not sufficient to merit an exemption. Exempt administrative employees generally have major roles in the business' overall operations. These employees also have the authority to bind the company in contracts, provide high-level information, and may deviate from company policy without prior approval.

Exempt administrative employees commonly fall within the following categories:
-Labor relations
-Payroll and finance
-Records maintenance
-Accounting and tax
-Marketing and advertising
-Public relations

Nevertheless, it is prudent for employees to review their actual job functions. While their tasks may be administrative in nature, there may be questions about the level of discretion exercised, and whether they are significant enough to merit an exemption.

If you have questions about wage and hour exemptions, an experienced employment law attorney can advise you.

Article provided by Law Offices of Rheuban & Gresen
Visit us at www.rglawyers.com