In a BLR webinar titled "Exempt or Nonexempt? How To Avoid the Misclassification Mistakes You Simply Can't Afford To Make," Joseph K. Mulherin, Esq., offered advice to help employers avoid misclassification mistakes, and he illustrated how quickly damages for such mistakes can compound.
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He recommended that employers watch out for "managers" and "assistant managers" in name only:
- They have no real authority to hire, fire, discipline, etc.
- In reality, they are "production" employees who "supervise" on the side (e.g., call center managers, team leaders, foremen, etc.).
- Some "working" supervisors may be exempt, but the more time they spend on production tasks, the less likely it is they are exempt. For example, in the fast-food industry, you would want to consider how much time assistant managers spend making hamburgers compared to advising employees, doing payroll, and disciplining, etc.
- Retailers and chain restaurants have been fighting these cases for years.
Damages Example
Assume that five supervisors, each earning $40,000 and working 2,250 hours per year, successfully sue for overtime for the past three years. The company would owe them each $13,335 ($6,667.50 for overtime plus liquidated damages in the same amount). So, for a class of five supervisors, the damages would be $66,675.00. For a class of 20, the damages would be $266,700 ($13,335 per employee x 20 employees).
Note: Those figures do not include attorneys' fees, which an employer typically must pay for the class if the employer loses a case, nor do the figures include the employer's attorney fees.
Joseph K. Mulherin, Esq., is a senior associate in the Labor and Employment Practice Area at Vedder Price PC. Based out of the firm's Chicago office, he counsels and represents public- and private-sector employers nationwide in a variety of traditional labor and employment law matters. Mulherin has significant experience with wage and hour matters, having counseled clients on a multitude of issues and successfully litigated numerous single-plaintiff cases and large class actions. He can be contacted at jmulherin@vedderprice.com.