A disturbing trend in unethical and illegal employer behaviors continues to center on misclassifying workers as “exempt” from the overtime laws in order to underpay them. The behavior has brought about local and statewide enforcement against employers engaging in this unlawful action. The Lore Law Firm offers services to those workers in situations where their employers participate in these kinds of egregious acts of wage theft and abuse. Understanding the outcomes of recent cases shows how misclassification issues are trending among employers, and the tools that workers have available to fight back within the legal system.

How Employers Use Misclassification to Underpay Employees

When employers misclassify workers, they can sometimes get out of paying them the wages they are owed where overtime work is concerned. Employers get away with this by classifying employees as “exempt,” which means they are exempt from the overtime pay laws. According to the Fair Labor Standards Act, employers are required to pay non-exempt employees time-and-a-half their regular rate of pay for all hours worked over 40 in one workweek. Exempt employees are not required to be paid this overtime premium, but they must qualify under one or more predetermined categories, including executives, computer workers, administrative professionals, outside salespeople and learned/creative professionals. If an employee does not meet both the salary and job duties required for exemption, then the overtime laws do apply and they are entitled to overtime pay.

To classify an employee as exempt, they must be paid a gross minimum weekly salary of at least $684 per week ($35,568 per year). They must also have job duties and responsibilities that meet the exemption tests—such as managing, supervising 2 or more employees, hiring, firing, making important business decisions, etc. However, some companies take advantage of workers who may not know employment laws and classifications, putting them in the exempt category when they should be non-exempt or classifying them as independent contractors when they should be an employee. The company then gets out of paying overtime as a result. This is where working with a qualified overtime pay lawyer can help you to know what your rights are regarding employee classifications and how to address the situation with your employer.

Recently Settled Cases Illustrate Widespread Misclassification Violations

One of the most high-profile examples of misclassification used to avoid paying employees overtime was the case of Scott et al. v. Chipotle Mexican Grill. Chipotle was accused of misclassifying management trainees as exempt from incurring overtime. The company settled for $8 million after those employees posited the company did not meet the Fair Labor Standards Act duties test to qualify for overtime exemption. They noted that not only did they not have a consistent schedule or advance notice of work hours, but also those management trainees spent much of their time fulfilling orders and preparing ingredients instead of engaging in administrative management duties. More than 500 workers shared in the compensation from this settlement.

Another common form of misclassification involves company employees operating as independent contractors. Hager v. Omnicare, Inc. was settled for $11.9 million in favor of delivery drivers claiming Omnicare Inc. had improperly classified them as independent contractors to avoid paying overtime. The drivers noted that they had almost no independence and were largely controlled in how they did their job – delivering to Omnicare customers using routes and schedules mandated by the company and delivering products to healthcare facilities adhering to Omnicare standards and policies. While Omnicare paid a hefty sum in the settlement, the case did not reclassify the drivers as employees. This underscores the fact that there is still a long way to go to level the playing field for workers.

Learn Your Options by Consulting with a Trustworthy Overtime Pay Lawyer

The moment you suspect that your employer may be engaging in unethical and illegal activity to avoid paying you correctly, it’s best to seek legal guidance to handle the situation. When employers engage in behavior to misclassify and underpay workers, this is an indicator that they may be acting unethically and unlawfully in more ways than one. Review your specific situation with a team member from the Lore Law Firm. We have a comprehensive background in overtime laws in every state and can provide you with important information about your rights and how to handle the situation to position yourself for the best possible outcome.

Reach out today for a free and confidential review by calling (713) 782-5291 or to learn more.