Lesson of IBM overtime suit: Clarify exemption status — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Lesson of IBM overtime suit: Clarify exemption status

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IBM faces the possibility of multimillion-dollar legal damages if a court grants class-action status to a pending Fair Labor Standards Act (FLSA) lawsuit.

The suit, filed last month in San Francisco by three ex-IBM employees, claims the company failed to pay overtime to qualified workers. Those employees are seeking class certification for the company's computer installers and maintenance workers. If successful, IBM would be liable for overtime pay to tens of thousands of its employees. The suit alleges violations of both federal and state laws.

Advice: Plaintiffs' attorneys see easy money in overtime lawsuits. Confusion over the new FLSA regulations means that many employers (some estimates run as high as 40 percent) unknowingly violate the law. Technology companies, in particular, are being targeted.

That's why you should monitor employees' hours carefully to make sure all who are entitled to overtime receive their fair allotment. Also, periodically review each position to make sure it still meets the exempt or nonexempt classifications originally established. Some of the largest overtime cases deal with misclassification.

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