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Justify exempt status to avoid class actions

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in Management Training

It takes just one or two disgruntled employees to start a Fair Labor Standards Act (FLSA) class-action overtime lawsuit.

Be prepared to fight such lawsuits early and vigorously. Otherwise, a court could decide to expand the lawsuit from one or two workers to many more. That can turn a small-time case into one that could cost you millions.

Your best bet: Classify employees correctly in the first place. Be ready to show the court exactly how you did it. Your documentation should include current job descriptions, a review by each employee attesting to the job description’s accuracy and a brief explanation of why the position qualifies as exempt.

Recent case: Betty Black worked as a paralegal for a large law firm and was classified as exempt. Therefore, she didn’t receive overtime pay for working more than 40 hours per week—something she claimed to do regularly.

She sued on behalf of herself and all other similarly situated paralegals across the firm’s many divisions.

The court first looked at Black’s self-described job duties: speaking with clients, preparing documents and organizing files. She didn’t supervise anyone, made no management decisions, and her job required no special training or certification. The court said her job probably wasn’t exempt.

It then looked at other paralegals with the firm and discovered many who did the same sort of work and who were also classified as exempt. It ordered the firm to turn over addresses so Black’s lawyers could invite them to join a class-action lawsuit. (Black v. SettlePou, No. 3:10-CV-1418, ND TX, 2011)

Bottom line: You must get classifications right. Consult an expert if necessary. An attorney can help you craft jobs carefully so exempt employees truly meet the legal requirements.

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