To avoid paying overtime and keeping track of every minute employees spend on the job, many employers reflexively classify employees as exempt rather than hourly employees. But many employers get it wrong—and that can be costly.
Not only is it your job to make sure the classification is correct, but also courts are required to narrowly construe the classification rules in favor of making employees hourly and, therefore, eligible for overtime.
That’s why it’s critical for whoever is responsible for classifying employees to be absolutely familiar with the exemptions and how they apply to your specific jobs.
One of the biggest mistakes is to lump anyone who makes any daily decisions into the administrative exemption, a classification designed for employees whose primary duties “relate to of general business operations and include the exercise of discretion and independent judgment with respect to matter of significance.”
In one recent case, a court said the employer got it wrong because the employees’ daily duties may have involved discretion, but the decisions they made were hardly of major significance.
Recent case: Robert Iaria and several others were dispatchers for Metro Fuel Oil. The company classified the dispatchers as exempt administrative employees because, according to the company, they used significant judgment about how deliveries were scheduled throughout the day. The company also claimed they monitored drivers and took customer complaints.
The men sued, alleging they were really hourly employees.
The court agreed after taking a close look at their actual day-to-day duties. They were closely supervised and had very little discretion in how they set up deliveries, resolved problems or monitored drivers. (Iaria, et al., v. Metro Fuel Oil, No 07-CV-4853, ED NY, 2009)
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