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Misclassification can result in double penalty

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in Employment Law,Human Resources

Employers that erroneously classify an hourly employee as exempt can expect their mistake to be a costly one. Not only will they have to pay two years’ worth of back overtime, but they’ll probably have to pay double that amount as a penalty for not getting the classification right.

That’s because the Fair Labor Standards Act requires a double payment unless the employer can show it was an innocent mistake made in good faith.

How do you prove you exercised good faith in your classification process? By showing that you thoroughly investigated what the FLSA requires for each exemption claimed.

In this case, the employer relied on existing job descriptions for each position, without regard for how the actual job was performed. That wasn’t good enough.

Recent case: Jose and several other lieutenants in the Travis County Sheriff’s Office sued their employer, alleging unpaid overtime. They had been classified as exempt employees and thus not entitled to overtime.

In court, they showed that their actual jobs didn’t fit an FLSA exemption. The court then concluded that each lieutenant was owed overtime pay. The sheriff’s office then tried to argue that it should not face the double-pay penalty because it had acted in good faith.

The court rejected the good faith defense.

It pointed out that the sheriff’s department handbook required employees to be classified as exempt based on their job descriptions.

Because what the employee actually does on a day-to-day basis determines an FLSA exempt or nonexempt classification, the court concluded the handbook was evidence of a lack of good faith. It awarded double pay to the lieutenants. (Escribano, et al. v. Travis County, WD TX, 2017)

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