New exemption definitions aren’t retroactive — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

New exemption definitions aren’t retroactive

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Q. If, according to the revised Labor Department regulations, we've been improperly classifying certain employees, would we need to go back and reimburse them? At that time, we thought they were properly classified. —Becky, Texas

A. The new regulations take effect Aug. 23, 2004. If you have properly classified employees under the old regulations, there isn't a problem. The regulations aren't retroactive. But if you find today that you've been misclassifying someone in the past, you really need to make the correction now. You don't want to allow a misclassification to go forward.

Many businesses are looking at the regulations as an opportunity to conduct a self-audit and make sure they've got all their ducks in a row, even if they didn't in the past. And they can hold this out to their employees to show that they're complying with new regulations.

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