MENUMENU
  • FREE RESOURCES
  • PREMIUM CONTENT
        • SEE MORE
          PREMIUM RESOURCES
  • HR DEEP DIVES
        • Coronavirus (COVID-19) Resources for HR Professionals
          Employment Law
          Labor Law Posting Requirements: Everything You Need to Know
          Recruiting
          businesswoman selecting future employees on digital interfaces
          Recruiting Resources for HR & Hiring Managers
          Performance Management
          vector image of young female making star rating
          Performance Review Resources
          Employment Law
          Understanding Equal Employment Opportunity and the EEOC
          Recruiting
          Onboarding Resources for HR & Hiring Managers
  • CORONAVIRUS & HR

  • LOGIN
  • SIGN UP FREE

HR Morning

MENUMENU
  • FREE RESOURCES
  • PREMIUM CONTENT
        • SEE MORE
          PREMIUM RESOURCES
  • HR DEEP DIVES
        • Coronavirus (COVID-19) Resources for HR Professionals
          Employment Law
          Labor Law Posting Requirements: Everything You Need to Know
          Recruiting
          businesswoman selecting future employees on digital interfaces
          Recruiting Resources for HR & Hiring Managers
          Performance Management
          vector image of young female making star rating
          Performance Review Resources
          Employment Law
          Understanding Equal Employment Opportunity and the EEOC
          Recruiting
          Onboarding Resources for HR & Hiring Managers
  • CORONAVIRUS & HR
  • Employment Law
  • Benefits
  • Recruiting
  • Talent Management
  • Performance Management
  • HR Technology
  • More
    • Leadership & Strategy
    • Compensation
    • Staff Administration
    • Policy & Procedures
    • Wellness
    • Staff Departure
    • Employee Services
    • Work Location
    • HR Career & Self-Care
    • Health Care
    • Retirement Plans

Not sure about who’s exempt? You'd better be

Tim Gould
by Tim Gould
July 23, 2010
2 minute read
  • SHARE ON

policy-folder
Companies that try to avoid paying overtime to eligible employees are skating on thin ice. Not only are judges cracking down on schemes designed to pare OT costs, but Congress is poised to pass new legislation to raise the penalties for misclassifying workers. 
Here’s a look at the latest incidence of a company getting nailed for improper OT payment.
A worker in a Texas aviation facility signed a unique contract for providing his services as an aircraft painter. The going rate for the position was around $18 per hour, but he agreed to work for $5.50 an hour — plus another $12.50 per hour that the company called a “per diem.”
The per diem was capped at 40 hours a workweek. The company agreed to pay the man $20 per hour for time worked in excess of 40 hours per week.
Eventually, the man sued, claiming he was cheated out of overtime pay. The company countered that he was only entitled to one-and-a-half times his hourly rate — $5.50 — which would come out to $8.25. And he was getting $20.
The court wasn’t buying it. The man’s OT rate should have been based on the total of  the hourly rate and the per diem rate — $18. That would bring the OT rate to $27 – the rate he’d have been getting if he was classified as a non-exempt employee.
Case closed. The court made it clear how it felt about the payment arrangement in its written ruling. When the company claimed the per diem setup wasn’t a ploy to avoid paying (the employee) overtime, the judge had a curt reply: “We disagree.”
For a look at the ruling, go here.
What’s on the horizon
The issue of employee classifications isn’t going to get any simpler — and overtime won’t be the only area that can get companies in trouble.
In 2014, the healthcare reform laws will call for stiff penalties on companies with 50 or more full-time employees if just one of those full-timers receives government-subsidized medical coverage.
Key fact: In this instance, the government considers an employee full-time if he or she works 30 or more hours per week.
Last spring, Congress introduced the Employee Misclassification Prevention Act, which would add new penalties for misclassifying workers as well as require employers to provide workers with written instructions on how to dispute their classification by filing a claim with the Department of Labor.
Another proposal, the Taxpayer Responsibility, Accountability and Consistency Act, would toughen penalties for employers who misclassify workers as independent contractors.
Will any of this legislation see the light of day? Tough to say. But given the new enforcement efforts by the feds in recent months, it’s pretty clear that the question of classifying employees will remain a hot spot for employers for the foreseeable future.

Get the latest from HRMorning in your inbox PLUS immediately access 10 FREE HR guides.

I WANT MY FREE GUIDES

Keep Up To Date with the Latest HR News

With HRMorning arriving in your inbox, you will never miss critical stories on labor laws, benefits, retention and onboarding strategies.

Sign up for a free HRMorning membership and get our newsletter!
  • This field is for validation purposes and should be left unchanged.
HR Morning Logo
  • Facebook
  • Twitter
  • Linked In
  • ABOUT HRMORNING
  • ADVERTISE WITH US
  • WRITE FOR US
  • CONTACT
  • Employment Law
  • Benefits
  • Recruiting
  • Talent Management
  • HR Technology
  • Performance Management
  • Leadership & Strategy
  • Compensation & Payroll
  • Policy & Culture
  • Staff Administration
  • Wellness & Safety
  • Staff Departure
  • Employee Services
  • Work Location
  • HR Career & Self-Care

HRMorning, part of the SuccessFuel Network, provides the latest HR and employment law news for HR professionals in the trenches of small-to-medium-sized businesses. Rather than simply regurgitating the day’s headlines, HRMorning delivers actionable insights, helping HR execs understand what HR trends mean to their business.

Privacy Policy Terms of Service
Copyright © 2021 SuccessFuel

WELCOME BACK!

Enter your username and password below to log in

Forget Your Username or Password?

Reset Password

Lost your password? Please enter your username or email address. You will receive a link to create a new password via email.

Log In

During your free trial, you can cancel at any time with a single click on your “Account” page.  It’s that easy.

Why do we need your credit card for a free trial?

We ask for your credit card to allow your subscription to continue should you decide to keep your membership beyond the free trial period.  This prevents any interruption of content access.

Your card will not be charged at any point during your 21 day free trial
and you may cancel at any time during your free trial.

preloader