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Employee Misclassification Receiving Increased Scrutiny from DOL

By Samuel Cordes

Pittsburgh employees know the importance of receiving overtime pay. When they sacrifice time with their family to put in more hours at work they expect to be compensated for that time. They also know disputes over receiving correct overtime can sometimes be common.

Whether an employee qualifies for overtime depends on how they are classified. Because of a number of misclassifications, the Department of Labor (DOL) is currently focusing on this problem. The result is an increase in the number of wage and hour lawsuits.

The DOL recently stated that they are pursuing coordinated efforts to combat the misclassification of workers. The purpose is to help employers realize the complete effect of breaking the law.

Target Lawsuit

A recent lawsuit against the mega retailer Target dealt with the issue. An employee sued Target for unpaid overtime wages under both the Fair Labor Standards Act (FLSA) and the Illinois Minimum Wage Law.

When the employee initially began working for Target, she was exempt from the overtime requirements of the FLSA because she was employed in a “bona fide executive, administrative, or professional capacity.” She was later promoted and alleged she was no longer exempt and therefore entitled to overtime pay.

The court found for Target, stating that the employee satisfied the three-part test discussed below. Therefore, she was properly classified as an exempt employee under the FLSA and not entitled to overtime pay.

Three-Part Exemption Test

There is a three-part test to determine whether an employee falls under this exemption. This test assists employers with correctly classifying their employees.

The test is important because employers are the ones responsible for proving certain employees exempt. Additionally, if an employee alleges they are misclassified, it is up to the employer to prove the employee is properly classified.

First, the employee must make a salary of $455 or more per week. Next, the primary duty of the employee must involve non-manual, office work. The work must be directly related to the management or general business operations of the employer.

Finally, the primary duty must also involve independent judgment and the exercise of discretion with important matters. This means the employee may make decisions and take action without deferring to anyone else.

Employer Duties

Despite the favorable outcome for Target, the case emphasizes the need for employers to correctly classify their employees. Misclassified employees are entitled to bring wage and hour lawsuits.

Employers who are found liable are responsible for overtime, attorney fees and other penalties. Additionally, employees may also bring a class action lawsuit on behalf of other misclassified employees, leading to even greater employer liability.

Not receiving proper overtime often results in severe financial distress and is illegal. An employee who is not receiving overtime due to employer misclassification needs to speak with an experienced employment attorney. An attorney can provide review their facts and help determine if they present a viable wage and hour violation.