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Exempt Or Non-exempt? Failing To Classify Workers Correctly May Violate The FLSA

Determining whether a worker is exempt v. non-exempt is one of the more crucial decisions employers can make. If a worker is categorized as “non-exempt” the Fair Labor Standards Act (FLSA) provides that that employee must be paid overtime for all hours workers in excess of 40 hours in any workweek. Overtime pay is typically calculated at one and one-half times a worker’s standard rate of pay. On the other hand, if you are considered to be an “exempt” employee, then you will not be entitled to overtime pay regardless of the number of hours you work. Generally, employees are considered exempt if they perform certain types of “white collar” work and make more than a certain amount of money each week.

Misclassifying workers as “exempt v. non-exempt” is a fairly common – and potentially costly – error employers make. Labeling a worker as exempt may deny a worker a substantial amount of take home pay in the form of overtime compensation. If you believe that your employer may have misclassified you it’s a good idea to consult with an experienced Atlanta overtime pay attorney right away.

Recently, an overtime pay case highlighted the confusion that can occur in determining whether an employee should be paid overtime.

The controversy began in 2006 when mortgage brokers were considered “exempt” employees and the FLSA did not require employers to give them overtime pay. However, in 2010 the Department of Labor determined that this analysis was wrong and that loan officers should not be considered exempt. Instead, their classification should be changed to “non-exempt” and the workers would be entitled to overtime pay.

Based on this ruling the Mortgage Bankers Association filed a lawsuit, MBA v. Harris, claiming that the Department of Labor failed to follow the proper procedure for changing such a major rule. Recently, the U.S. Court of Appeals for the District of Columbia agreed and vacated the DOL’s interpretation (i.e. said that it no longer applies.)

However, this leaves an industry questioning what to do. Even though the employers may think that it’s okay to classify mortgage brokers as “exempt” and not pay them overtime, the reasoning behind the Department of Labor’s initial interpretation from 2010 still remains. That interpretation found that the mortgage brokers did not fall within any of the exemptions because the primary activities they were involved in – selling financial products – did not meet the criteria for an exemption.

Here the interpretation was vacated for procedural errors, and not based on the DOL’s reasoning. As a result, it’s not clear how courts will interpret mortgage broker’s classification in the future.

This case shows some of the challenges employers and employees face in trying to figure out the FLSA. If you have questions or believe that you may not have been paid all the overtime compensation you may be entitled to, please contact the top Georgia wage and hour attorneys The Buckley Law Firm, LLC for an immediate consultation.

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