Classifying workers correctly ensures they receive fair pay.
Understanding the rules about who qualifies as exempt or non-exempt under the Fair Labor Standards Act (FLSA) protects employees’ rights to overtime pay.
What is the difference between exempt and non-exempt?
Exempt workers do not qualify for overtime pay. These positions are typically salaried and involve managerial or professional roles that meet specific requirements, including earning a minimum salary.
Non-exempt workers are generally paid an hourly rate and may have variable hours. They qualify for overtime pay when they work more than 40 hours in a week. They earn 1.5 times their hourly rate for extra hours worked.
How does misclassification happen?
Employers sometimes misclassify workers due to misunderstanding FLSA rules or cutting labor costs. For example, labeling an employee as “salaried” does not automatically make them exempt. Their job duties and salary must meet the exemption criteria. Misclassification often occurs when a worker’s responsibilities include a mix of exempt and non-exempt tasks, leading to unpaid overtime for hours worked.
What are the consequences of missed overtime?
Misclassified workers lose the overtime pay they should receive, which can lead to significant financial losses, especially in industries with long hours. In Indiana, employees who believe they have been misclassified can file complaints with the Indiana Department of Labor to recover unpaid wages.
Why accurate classification is essential
Employers must follow FLSA standards to classify workers correctly. Accurate classification ensures employees are paid fairly and treated equitably. Correcting errors promptly also promotes a fair and transparent work environment, protecting workers from unfair pay practices.