FoxHire has blogged numerous times about the dangers of misclassifying contractors as exempt from overtime. It appears that properly classifying employees is becoming more important as more employers are being called into court for their misinterpretations of the Fair Labor Standards Act (FLSA), according to a recent report by the Society for Human Resource Management (accessible only by SHRM members).
The article cited attorney Steven Hymowitz, who pointed out at the recent National Employment Law Institutes’s Employment Law Workshop that the Department of Labor (DOL) received 23,845 wage and hour complaints in 2009. He stated that collective actions filed under the FLSA are continuing to rise, as are wage and hour class action lawsuits under state laws.
According to Hymowitz, one of the biggest reasons for these increases is that employers are still not clear on the proper classification of employees as exempt or nonexempt from the overtime regulations. Specifically, many of the employers were targeted for misclassifying outside sales employees as exempt from overtime. When it doubt, it is important that your clients refer to the DOL’s requirements for exempt employees before they decide that a contractor is not eligible for overtime pay.