Overtime claims aren’t going away. A marginal claim filed by one disgruntled employee can easily turn into a class action involving dozens of workers. To help avoid such claims, follow these guidelines:
- Make sure employees that are appropriately classified as exempt. The FLSA and the State of California have done a great job defining the scope of these classifications. Unfortunately, many employers ignore them entirely or simply try to get by with a quick self-serving analysis. You’ll find the links to these definitions at http://www.dol.gov/elaws/esa/flsa/screen75.asp and http://www.dir.ca.gov/dlse/FAQ_Overtime.htm. HR That Works Members can also view the Wage and Hour Training Module.
- Don’t blow a legitimate exemption by docking pay. Remember, you must pay an exempt employee for the whole week, if they work any part of it. There are exemptions in which employees purposely decide not to come to work, etc. If you treat somebody like a non-exempt employee, so will regulators, regardless of their title.
- Job descriptions alone won’t cut it. Regulators will look at actual job duties and ask claimants to fill out timesheets describing their activities. Under Federal law, this is a qualitative analysis in which the “primary” activity is most important. Under California law, there is also a quantitative analysis which requires the employee to be engaged in their primary activity at least 50% of the time to be exempt.
- Watch out for unauthorized overtime. Assuming someone is classified properly as non-exempt, are they abusing overtime? One printing company that began using the HR That Works Overtime Authorization Form reduced its overtime exposure by $5,000 the first month! Ask yourself: If there is overtime, is it legitimate, and if so, how do we minimize it?
- It’s almost impossible to have more exempt employees than non-exempt employees. Few types of businesses (other than law firms, medical offices, engineering or CPA firms, etc.) can get away with this. Remember, if a person isn’t an executive, a real boss, in outside sales, or highly paid as a computer professional, they are not exempt –no matter how smart they are, no matter how long they’ve worked for you, and no matter how little you control them.