Few HR mistakes can blow up faster than the simple misclassification of a nonexempt employee. A single Fair Labor Standards Act classification error—paying a flat salary to someone who should be receiving hourly wages (plus overtime)—can easily become an attorney’s meal ticket, as well as an employer’s ticket to the poorhouse.
Attorneys in such cases typically try to take a case involving just one employee and turn it into a collective action. They’ll ask a judge to have the employer identify all other similarly situated employees, all of whom will receive notice of the lawsuit. If they join the suit, that magnifies the possible unpaid overtime and wages, plus penalties and attorneys’ fees.
Advice: Prevent this costly calamity by regularly reviewing your positions to make sure you have properly classified everyone. Do so every time you update a job description to reflect any new responsibilities.
Recent case: Laurence Ritzer and Lou Tesoro worked as technical support staffers at a bank, helping employees nationwide with computer problems. They were classified as exempt and ineligible for overtime.
They sued on behalf of all similarly situated employees, claiming they should have been paid hourly. The bank opposed certifying such a class.
The court ruled for Ritzer and Tesoro, noting that the tech support employees throughout the company had job descriptions that were virtually identical. Therefore, the court said all the technical support staff that held similar jobs to Ritzer and Tesoro should have the option to join their wage-and-overtime suit. They will now all get letters inviting them to sign up. (Ritzer v. UBS, No. 2:08-CV-1235, DC NJ, 2008)
Final note: Overtime litigation is incredibly hot—and attorneys are finding novel ways to raise the stakes.