by Susan E. Prince, J.D., BLR Legal Editor
Under federal overtime laws and regulations, employers must pay overtime to employees who work in excess of 40 hours per week. However, the law exempts certain kinds of jobs from overtime requirements if they meet specific criteria under the overtime laws. The problem arises when employers mistakenly misclassify their employees - for a variety of reasons. Below are 3 common mistakes.

Mistake #1: Classifying non exempt workers as exempt

Exempt white-collar employees must perform certain types of work, and they must generally be paid on a salary basis and receive a minimum salary. To be exempt, employees must generally be paid a predetermined amount each pay period. The amount paid may not be reduced because of a variation in the quality or quantity of the work performed.

With limited exceptions, the employee must receive his or her full salary for any week in which he or she performs any work, without regard to the number of days or hours worked. However, the employee need not be paid for any workweek in which he or she performs no work. These rules are even more complicated to apply during emergencies, snowstorms, when employees are out sick or taking personal time.

Mistake #2: Exempt employees working multiple jobs

Exempt salaried employees often want to work additional hours for their employer doing nonexempt work (such as data entry) to augment their salary. If this work is paid on an hourly basis, the employee may no longer be exempt and overtime will be owed including overtime for hours over 40 per week that the employee works in his or her formerly exempt job.

This problem can be avoided by paying the employee a fixed salary for the second job that does not vary from week to week based on the number of hours worked. In addition, the hours worked in the second job must not be so large that the employee's “primary duty” is no longer work that qualified for the professional, administrative, or executive exemptions.

Mistake #3: Emails sent after work hours

Employers may have to pay for the time, even overtime, taken by nonexempt employees to read and send e-mails after work hours. Employers may disregard insubstantial or insignificant periods of time beyond the scheduled working hours, if, as a practical administrative matter, the time cannot be precisely recorded. If employees are checking e-mails for 2 or 3 minutes, employers will likely not have to pay for this time. But if employees are spending 10 to 15 minutes after work hours, employers will have to pay employees for this work time.

Many employers provide PDAs only to exempt employees and limit after-hours e-mail checking to exempt employees. If a business needs to provide nonexempt employees with PDAs, have a company policy prohibiting after-hours use, monitor employee use of the PDAs, and discipline employees for violating the policy. Remember that even if employees violate a company policy by reading and writing e-mails after work hours, you may discipline the employees, but you still have to pay them for this time.

Overtime laws are complicated. Employers must follow rules, apply tests, conduct analyses, and audit their employees to make sure they are properly classified. But in the end, the time spent correctly classifying employees is well worth the money.

Susan E. Prince, J.D., is a Legal Editor for BLR’s human resources and employment law publications. Ms. Prince has over 10 years of experience as an attorney and writer in the field of human resources and has published numerous articles on a variety of human resources and employment topics, including compensation, benefits, workers’ compensation, discrimination, work/life issues, termination, and military leave. Ms. Prince also served as an expert on several audio conferences discussing the 2004 changes to the federal regulations under the Fair Labor Standards Act. Before starting her career in publishing, Ms. Prince practiced law for several years in the insurance industry and served as president of a retail sales business. Ms. Prince received her law degree from Vermont Law School.