Are your employees classified correctly?
There have been enough legal cases pop up lately to make any HR professional or employment attorney cringe. Too often, company owners or senior-level managers assume that just because they hold a “manager” title, then they are exempt from overtime rules and regulations. THIS COULD NOT BE LESS TRUE, FOLKS!
Say it with me: “JOB TITLES DO NOT DETERMINE EXEMPT STATUS!”
Don’t take my word for it though! Let me break down the level of importance with some RECENT examples!
Barnes and Noble: Settled for $910,000 to resolve a lawsuit by cafe managers who alleged they were misclassified as exempt employees and denied overtime pay required by the Fair Labor Standards Act (FLSA). Their positions were titled as “manager” but did not perform the duties typically done by such a person. They did not have hiring/firing abilities, they cooked, cleaned, took care of customers; just about anything you would see or expect a typical coffee shop barista to do. [source]
Sarione Korean Restaurant: Incorrectly classified cooks and dishwashers as exempt from overtime requirements, and paying them fixed semi-monthly salaries, regardless of the number of hours they worked. This resulted in them owing $102,894 in back wages! They also didn’t maintain records of time cards so this rabbit hole could certainly get deeper if they wanted to. [source]
So…how do we know what’s right?
Hey…I get it. It can get super confusing keeping all your employees straight with regards to their pay requirements. All the different duties, expectations, situations, and needs to the company. It all stems from your business structure and how you design each position to support your business.
Here is an overview on rules determining exempt status: Typically, these are salaried employees. However, you can’t provide an annual salary just to avoid overtime requirements. To be an exempt employee, they must fall into these rules provided by the FLSA:
Executive: Must regularly direct the work of at least two or more full-time employees. Must have the authority to hire/fire other employees.
Administrative: Primary duty must be the performance of office or nonmanual work related to business operations. Exercises discretion and judgement with respect to matters of significance.
Professional: Performance of work requiring advanced knowledge (field of science or learning) through a prolonged course of specialized instruction.
Computer: Computer Systems Analyst, Computer Programmer, Software Engineer, or similar. The design, development, documentation, analysis, creation, testing, or modification of computer systems.
Outside Sales: Primary duty must be making sales or obtaining orders/contracts.
Highly Compensated: Compensated at $100,000 or higher performing office or nonmanual work and typically performing duties applicable to the previous categories.
How can Cobb HR Solutions help?
When it comes to compliance, you can never be too careful but it is super easy to get complacent! We can run a full compliance review on your current and future hires. This includes a deep understanding of your business and its operations, analysis of your job descriptions, and may even entail brief interviews/discussions with your employees. Between all that, we’ll dive into your company policies and a review of your employee records.
Once all needed data is collected, we’ll take a look at the big picture and provide a detailed report on findings. We’ll lay it all out on the table (good, bad, ugly, or otherwise). For any problem areas, we’ll recommend SOLUTIONS. No bandaids but tangible solutions to help you avoid future problems.
Additionally, we offer a HRIS and payroll solution that will give your business a level of automation you never knew you needed!
I assure you, checking your compliance in this regard is far less costly than getting in trouble by any government agency (see examples posted above)!