In a BLR webinar titled "Exempt or Nonexempt? How To Avoid the Misclassification Mistakes You Simply Can't Afford To Make," attorneys with Vedder Price PC explained the importance of properly classifying employees for purposes of the Fair Labor Standards Act (FLSA) and offered several suggestions to help organizations protect themselves from overtime lawsuits.

Rising Number of Class Actions

Federal wage and hour class actions now annually outnumber race and sex discrimination class actions, which historically were the most prevalent employment class actions.

• Federal wage and hour class actions increased from 6,120 in 2009 to 6,761 in 2010.
• Many of these collective actions allege the misclassification of groups of employees.

Under federal law, employers must pay employees the minimum wage for all hours worked and overtime for all hours worked in excess of 40 hours in a workweek. However, employers need not worry about these requirements if an employee is exempt.

Audit Your Classifications

Wage and hour lawsuits can be expensive, and the damages can compound quickly. To help employers avoid such litigation, Vedder Price PC recommends being proactive and auditing your exempt and nonexempt employee classifications:

• Work with outside counsel to determine whether employees are misclassified. Although this approach generally will give you the protection of attorney/client privilege, be aware that internal audits may be discoverable in litigation.
• Determine whether your organization has any significant liability stemming from any misclassifications.

The webinar speakers were Aaron R. Gelb, Esq., a shareholder at Vedder Price PC and a member of the firm's Labor and Employment Practice Area; Joseph K. Mulherin, Esq., a senior associate in the Labor and Employment Practice Area at the firm; and Roy P. Salins, Esq., a senior associate in the Labor and Employment Practice Area of the firm. They can be contacted at agelb@vedderprice.com, jmulherin@vedderprice.com, and rsalins@vedderprice.com, respectively.