In a BLR webinar titled "Exempt or Nonexempt? How To Avoid the Misclassification Mistakes You Simply Can't Afford To Make," Roy P. Salins, Esq., discussed some key points to keep in mind if you determine that employees should be reclassified and you decide to voluntarily pay back overtime:

• In the absence of actual time records, the law permits an employee to offer his or her own evidence--either oral or written--that meets his or her burden of proving he or she worked overtime.
• In practice, this means that an employee can estimate through oral testimony how often he or she worked overtime and how many overtime hours he or she worked and, unless the employer has specific evidence to the contrary, the employee's testimony controls.
• If the objective in paying back overtime is to compensate for hours worked that were not properly paid, that objective is not attained unless the employer is confident that it is neither under- nor over-paying.
• A voluntary payment does not relieve the employer of all liability. Under the law, an employee cannot waive overtime claims unless the waiver is supervised and approved by a court or the U.S. Department of Labor. For example, assume the employer determines that an employee is owed $30,000 in overtime over the past three years and pays it voluntarily. The employee could still file a lawsuit claiming that he or she was owed $35,000, recover the additional $5,000, and obtain $35,000 in liquidated damages on the entire amount. The employee also would be able to recover attorneys' fees, which can, in many instances, exceed the amount of the original claim.
• In addition, the employer's unilateral payment of back overtime likely would be viewed as an admission that employees were underpaid in the past and may cause some employees to consult the Department of Labor. It may even prompt certain employees to seek out legal counsel who undoubtedly would be tempted to bring a claim for additional back pay and liquidated damages. In the past, employers could approach the DOL and seek its guidance on remedying a misclassification issue. However, the DOL will no longer do this.

Roy P. Salins, Esq., is a senior associate Labor and Employment Practice Area of Vedder Price PC. Based out of the firm's New York office, Salins's practice includes all aspects of litigation in federal and state courts, administrative agencies, and in arbitrations before FINRA and the AAA. Salins also devotes a large part of his practice to counseling clients in all areas of labor and employment law, compliance with federal and state nondiscrimination and wage statutes, and issues relating to reduction in force, employee compensation, benefits, staffing, hiring, discipline and discharge. He can be contacted at rsalins@vedderprice.com.