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Mar 18, 2016

Employers liable for double damages for exempt status misclassification

Wage and Hour 

A call center employer in Idaho has been ordered to pay misclassified employees not only for their actual unpaid overtime, but also an equal amount as liquidated damages, doubling the company’s liability. The employer had classified its “trainers” as exempt from overtime pay based on the supervisory and management tasks that they thought the employees would be performing. However, as it turned out, the actual job was different and the trainers never actually performed any supervisory tasks. Once employees complained and the potential misclassification was realized, the employer took months to actually begin paying the employees properly. The court noted that liquidated damages under the Fair Labor Standards Act (FLSA) are meant to compensate employees for a delay in receiving their proper wages and that these damages should be paid unless the employer acted in good faith. Ultimately, taking two months to reach the “fairly obvious conclusion” that the employees were misclassified, and then taking almost two additional months to begin paying the employees properly, was not ruled to have been in good faith and the employer was ordered to compensate the employees for both their overtime pay and an equal amount as liquidated damages (Norton v. Maximus, Inc., D Idaho, Nov. 2015).

Tips: Misclassification of employees as exempt from overtime is an area that the Department of Labor (DOL) has been focusing on and mistakes can be costly. For assistance with exempt status, see Vigilant’s Legal Guides, “When is an Employee Exempt Under Federal Law ?” and “Salary Basis Test for Overtime Exemptions” or speak with your Vigilant employment attorney.

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