Found misclassification problem? Fix it fast

Avoid costly litigation by reviewing how you classify your em­­ployees as exempt or nonexempt. If you discover you have made a mistake, fix it right away. You’ll cut your misclassification liability.

Recent case: Greg had the fancy title of field service engineer with a company that manufactures and distributes three-dimensional printers that make everything from toys to submarine parts. He was classified as exempt under the Fair Labor Standards Act (FLSA).

The only problem was that the job wasn’t exactly an engineering position. Greg and 16 other employees essentially were customer service technicians, traveling to customers’ sites, installing new machines and maintaining existing machinery.

Greg sued, alleging he should have been classified as nonexempt.

Then his peers signed on, and a judge combined the two cases into one.

Eventually, two more individuals sued, and the judge agreed to add those plaintiffs to the class-action lawsuit.

They all claimed they should have been hourly employees. They all put in more than 40 hours per week, and argued that meant they were entitled to overtime pay.

While the case was pending, the company reclassified all its field service engineers to hourly employees and changed the way it tracked and paid the “field service engineers.”

The court then decided to decertify the class, determining that each case should be handled individually, with each set of plaintiffs having to show what hours they really worked. Going forward, there will be three separate lawsuits, each arguing for back pay. (Holaway v. Stratasys, No. 12-998, DC MN, 2013)

Final note: Although the court didn’t specifically say so, it may have been influenced by the fact that the employer went ahead and changed the classification going forward.