The Audit’s Done, and We Need to Reclassify – Now What?

Let’s assume you’ve done an internal audit, or one required by the Department of Labor, and found – as so many companies do – that certain titles/positions require reclassification from exempt to non-exempt under the Fair Labor Standards Act and state law.  What are the next steps?

The task of making reclassification a reality requires consideration of many factors.  For example, will the company pay backpay for some or all of the period during which employees were misclassified?  If so, will current and former employees be paid, or just current employees?  How far back should the company go in calculating backpay?  How many hours – in the likely absence of time records – should the company pay for?  How is the amount of backpay calculated?

Apart from the issue of repayment, companies also need to think about obtaining acknowledgements from employees to limit liability, “messaging” the reclassification to employees, setting new pay rates, and training supervisors to monitor and, if necessary, prevent off the clock work by those who are now non-exempt.

During our presentation at the 19th Annual Akerman Labor & Employment Law Seminar, we will discuss how to handle soup-to-nuts reclassification in a practical way, including best practices for limiting legal claims resulting from the reclassification.  We hope you will join us on April 4th!