Can I be personally liable for misclassification? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Can I be personally liable for misclassification?

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in Compensation and Benefits,Human Resources

Q. Let’s say I do the payroll for a company and know that we are misclassifying employees (exempt vs. nonexempt; independent contractors vs. employees). And let’s say I advised the owner, but he chose to leave it as is. Could I be held liable as the payroll administrator? — Anonymous

A. Under the Fair Labor Standards Act (FLSA) and certain state laws, individuals involved in making classification decisions can be personally liable for misclassifications. The FLSA defines “employer” broadly to include “any person acting directly or indirectly in the interest of an employer in relation to an employee.” (29 U.S.C. §203(d))

Whether you could be held liable likely depends on your role in determining the classification and your role within the company.

For a checklist to help you make the decision of exempt or nonexempt, go to

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