Misclassification of Employees: Exempt Vs. Non-Exempt
Employers can save significant money by incorrectly classifying employees as “exempt” and not having to pay them overtime. Unfortunately, many employers misclassify employees for that reason — taking advantage of their team’s hard work without paying overtime wages. Our employment law attorneys can determine your classification based on your job activities and duties, not your job title.
Employees wrongly classified as exempt are often paid a salary, day rate, or piece rate. Common examples of exempt positions include managers, professionals, and administrators who manage others’ work, interpret company policy, or supervise other employees’ work.
Companies often classify employees as exempt by giving them titles like assistant manager, manager, lead, crew chief, field supervisor, foreman, or supervisor. If the employee has no or limited managerial responsibilities, it may be a case of misclassification, and that employee may be owed unpaid overtime wages.
Do you think your employer is exploiting you through employee misclassification? The misclassification lawyers at Bohrer Brady can help you determine your rights and options.
Commonly Misclassified Positions
Employers misclassify several positions as exempt or independent contractors to avoid paying overtime or other benefits. Here are some examples:
- IT Professionals: Employers often mistakenly classify Information Technology professionals as exempt from overtime pay. This misclassification arises from the specialized nature of their work, which involves the Computer exemption. However, this exemption may not apply to all IT professionals.
- Inside Sales Representatives: Sales representatives may also be misclassified as exempt, particularly those who earn a commission.
- Medical Personnel: Nurses, home health aides, and other healthcare workers are often misclassified.
- Customer Service Representatives: Customer service representatives, particularly those in call centers, are commonly misclassified as exempt. It may stem from the assumption that because their work is office-based, they are exempt. In reality, without discretionary power or managerial control, they should receive overtime pay.
- Construction Workers: Some employers label construction workers as independent contractors to avoid legal and financial obligations. They attempt to avoid providing health insurance, paying overtime, and contributing to worker’s compensation and unemployment insurance. By doing so, they effectively shift the tax payment burden onto the workers.
- Gig Economy Workers: The rise of the gig economy has led to rideshare drivers or freelancers being classified as independent contractors. The misclassification often comes from a lack of clear legal guidelines for gig workers. As a result, they miss the benefits and security accompanying employee status.
If you fall under one of these categories, contact a Bohrer Brady employee misclassification attorney.
Independent Contractor Misclassification: Employee vs. Not an Employee
The Fair Labor Standards Act (FLSA) entitles workers misclassified as independent contractors to overtime pay. The question is whether you are truly “independent” or an employee of the company. Employees have the right to overtime, while “independent contractors” do not.
An “independent contractor” is a person engaged in their own business. An employee is one who “follows the usual path of an employee” and is dependent on the business they serve. There is no simple answer to whether a person is an employee or an independent contractor. Each contractor misclassification situation requires a factual analysis.
The Economic Reality Test gives some guidance on whether a person is an employee or an independent contractor:
