Under federal law, certain employers are required to pay non-exempt workers time-and-a-half for any hours worked in excess of 40 per workweek. However, some companies have, either intentionally or in error, misclassified employees, resulting in employees not receiving overtime pay to which they may be entitled.
A lawsuit involving Chipotle, a popular American franchise chain specializing in tacos and other Mexican cuisine, is a case-in-point.
The restaurant was alleged to have misclassified certain employees as “exempt” in order to avoid paying time-and-a-half as required under federal law, specifically the Fair Labor Standards Act (FLSA). After a four-year-long battle, Chipotle recently agreed to a settlement to pay $15 million in damages to roughly 5,000 workers involved.
Unfortunately, these circumstances happen all too often. Employers in all types of industries classify employees as “exempt” either based on a misunderstanding of the law or, sometimes, in order to avoid paying overtime.
But simply classifying employees as exempt doesn’t actually make them exempt. Certain factors determine an employee’s classification. Salary amounts, job knowledge, duties, skill and responsibilities – all of these and more play a part in determining whether an employee should be exempt or non-exempt. Indeed, a common misperception by employers is that merely paying an employee on salary is sufficient for the employee to be deemed “exempt” from overtime pay. However, while paying salary is one of the requirements for exempt status, the employee may still not be exempt if the job duties do not meet the criteria set forth in the FLSA.
It’s important to note that employment law is complex; and federal wage and hour laws are particularly complex and technical. In many cases, employees who have been incorrectly categorized as exempt have been able to receive back pay during the period of misclassification, along with liquidated (or double) damages, attorney’s fees and costs .
Those who have questions or concerns about appropriate classification of employees are encouraged to contact an employment law attorney. An attorney who knows the law can offer advice as it pertains to individual circumstances.