Misclassified Workers

The Fair Labor Standards Act (FLSA) is a broad and far-reaching law that requires a minimum wage and premium overtime pay for the vast majority of workers in the United States. However, the statute does come with a number of notable exceptions for salaried workers in bona fide executive, administrative or professional positions. The vast amount of interpretive guidance and case law defining the scope of these exceptions has not stopped employers from stretching it to and beyond the limit, especially to avoid paying time-and-one-half for overtime. It has become commonplace for employers to classify their workers as “administrative” and then force or allow them to work long hours with no overtime compensation. However, just because an employee is paid on a salaried basis and is told they are exempt from overtime does not mean she or he is in fact exempt from overtime. Misclassification is commonplace. Our New York wage and hour attorneys at Joseph and Kirschenbaum LLP have uncovered countless cases of employee misclassification—and recovered tens of millions of dollars for workers in unpaid overtime and penalties.

In order to be exempt from the FLSA overtime and minimum wage requirements, a position must meet two criteria. First, the worker must receive a minimum guaranteed salary of at least $455 per week. In contrast, hourly workers by definition are not guaranteed $455 per week.

For instance, if you are an hourly worker and are out part of a week, or quit your job in the middle of the pay-cycle, you won’t necessarily make $455 that week. Therefore, virtually all hourly workers, no matter how senior or professional, must be paid time-and-one-half for hours worked over 40 per week. Thus only salaried workers can possibly be exempt from overtime, but the tests for determining whether the overtime premium must be paid to salaried workers are difficult for employers to meet. Most salaried workers must receive time-and-one-half for hours over 40 and are not exempt.

Generally, for an employer not to pay overtime, the employer must prove that the employee's actual duties (title being irrelevant), fall into one of the following categories, in addition to a few other less common categories:

• Executive – To win on the executive exemption, the employer must prove that the employee is a manager who customarily directs the work of at least two full time employees and has authority to hire and fire or to substantially affect job status through his or her suggestions.

• Professional – The employee engages in primarily intellectual work that requires substantial knowledge and training and the application of independent professional judgment. This exemption can also apply to creative professionals like artists and performers, but usually requires a sustained course of formal training in the field. For instance, doctors and registered nurses (as opposed to licensed practical nurses and certified practical nurses) accountants (but not bookkeepers), lawyers (but not paralegals) are deemed exempt from overtime as long as they are not paid hourly and are actually practicing medicine, nursing accounting or law.

• Administrative – The employee engages in non-manual, e.g., office, work necessary for the operation of the employer's business that requires the application of independent judgment regarding matters of significance. This is even narrower and harder for the employer to meet here in New York, where the United States Court of Appeals for the Second Circuit has ruled that the administrative exception can only apply to employees in general business operations and not those actually engaged in creating, providing or marketing the employer's product or service.

• Computer – The employee is a computer systems analyst, programmer, software engineer or other similar worker engaged in the creation, modification or application of a program or system. Many IT workers are wrongfully classified in this category and are wrongfully not paid time-and-one-half for hours over forty.

There are other FLSA exemptions as well, such as for outside, e.g., travelling, sales people and long haul truckers. However, the above exemptions—especially the administrative exemption—are the most frequently abused. Commonly, employers inappropriately label their workers as administrative personnel by using such titles as “account representative” or “assistant manager” and then fail to pay time-and-one-half for work more than 40 hours per week. Even if you are compensated on a salary basis, you are still entitled to overtime unless your job duties actually satisfy these strict criteria. The employer is legally obligated to keep track of the time of all non-exempt workers. Therefore, if your employer did not track the hours because of misclassification, you may still recover based on your best reasonable estimate of the overtime you worked.

Misclassified workers are often forced or allowed to work long hours for no additional compensation and can potentially miss out on tens of thousands of dollars each year in wrongfully withheld wages. Employers who abuse FLSA exemptions will usually continue to do so unless action is taken against them. If you have complained about a lack of overtime pay only to be told that you are FLSA-exempt, you do not have to take your employer's word for it. Our knowledgeable New York wage and hour attorneys at Joseph & Kirschenbaum LLP can analyze your job duties, determine if you are—or, in a previous job within the last few years, were—correctly classified and help you take appropriate legal action. Contact us today to schedule a free initial intake call. We are available by phone at 212-688-5640 or online. Se habla espanol.