HR Hotline: What happens when an employee is mistakenly classified as exempt? |

Q: I employ a longtime executive assistant who is mad at me because I recently changed her pay status from salaried to hourly.

I did this because a review of our personnel practices revealed that several of our employees, including this one, were incorrectly classified as exempt.

She is now insisting that I put her back to work because she prefers the reliable pay, she thinks the status change was a punishment and she says she will waive her right to overtime.

Is it ok if I agree with this? She threatens to file a lawsuit with the state labor department if I don’t agree.

A: No. Neither an employee nor an employer can choose exemption designations, even if both agree.

Whether an employee is exempt is strictly a legal decision that involves no choice on the part of the parties involved.

An exempt employee is identified as such because their job duties and salary level make them exempt from state and federal requirements regarding minimum wage, overtime, and record keeping.

A legally non-exempt employee cannot simply agree to be exempted and cannot waive their right to overtime pay.

Who is exempt?

Connecticut law recognizes three main categories of exempt employees: (1) executives; (2) administrative; and (3) professional.

State law also recognizes several other specific exempt positionssuch as television news writers, certain types of salespersons and taxi drivers, for example.

It is important to remember, however, that job titles alone will not determine an employee’s exempt status.

Job titles alone will not determine an employee’s exempt status.

To be legally exempt, the employee’s duties and salary level must both meet specific requirements.

The Department of Labor summarized the requirements for executive, administrative and professional employees.

It looks like you made the right decision in reclassifying your executive assistant.

Generally speaking, if she does not manage a department, supervise others, make hiring and firing recommendations, use her own discretion and judgment, or perform a work requiring advanced knowledge and education, she may not be exempt.

Can I continue to pay her salary while correctly classifying her as not exempt?

Yes, but that wouldn’t make much sense.

If you pay a regular salary to a non-exempt employee, this means that the employee is entitled to both (1) a regular weekly salary, even when she works less than her usual hours, and (2) remuneration for overtime when she works more than her usual hours.

And you still need to comply with the record-keeping requirements that track their specific working hours.

What about the threat to file a complaint?

You will be at much greater risk of wage and hour liability if you continue to improperly maintain its exempt status.

The longer you pay them wages with no overtime and no overtime records kept, the longer you expose your company to liability for overtime violations.

The state Department of Labor presumes the accuracy of an employee’s overtime claims, when an employer cannot provide reliable evidence to the contrary.

The longer you pay his wages without overtime and without keeping time records, the more liability you expose your business to.

And, while it is a violation to falsely classify an employee as exempt, the reverse is not true: An employer will not violate federal or state law by classifying an exempt employee as non-exempt.

Thus, if you wish, you can pay a managerial, administrative or professional employee by the hour.

Thus, the Department of Labor will dismiss a complaint alleging your “refusal to pay on a salary basis” or an “erroneous designation of nonexempt status.”

Explain to your assistant that the change in hourly status is not a punishment, but a protection – a protection imposed by law.

HR problems or issues? Email or call CBIA’s Diane Mokriski at the HR Helpline (860.244.1900) | @HRHotline. The HR Helpline is a free service for CBIA member companies.

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