We often blog about how important it is for employers to carefully evaluate their practices to ensure they are not misclassifying employees who are legally non-exempt, as exempt employees, and failing to pay them overtime.
A large national shipping company was ordered to pay $2 million dollars to settle managers over time claims after it violated the FLSA when it mislabeled line-haul service managers as exempt from overtime and failed to pay them for the time they worked beyond 40 hours a week.
The argument against classifying the employees as exempt was based on employers' common misperception of how to classify employees. It's important for employers to know how to do it... The FLSA advises that some jobs are classified as exempt by definition. For example, "outside sales" employees are exempt ("inside sales" employees are nonexempt). For most employees, however, whether they are exempt or nonexempt depends on (a) how much they are paid, (b) how they are paid, and (c) what kind of work they do.
With few exceptions, to be exempt an employee must (a) be paid at least $23,600 per year ($455 per week), and (b) be paid on a salary basis, and also (c) perform exempt job duties. These requirements are outlined in the FLSA Regulations (promulgated by the U.S. Department of Labor). Most employees must meet all three "tests" to be exempt.
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