Exempt vs. Nonexempt: How to Find and Fix Misclassification Mistakes

In 2015, the Department of Labor (DOL) found that roughly 75% of employers were misclassifying workers. Employers that pay workers as 1099 contractors, without fully qualifying the classification, cost the federal government nearly 3 billion dollars annually. Why? These errors cause certain employment taxes to go unpaid. Workers who are misclassified also lose out on the guarantee of minimum wage and overtime. Adding to the concerns is the fact that most businesses pay at least some of their workers on a salary basis. This normally means the worker receives the same amount of money every week, with no consideration of overtime. The Department of Labor has issued an update to the regulations governing overtime exemptions which is expected to make more workers eligible for overtime under federal law. This means many who are not receiving overtime pay today will find themselves eligible on or before December 1, 2016. In addition, 40% of currently “overtime-exempt” classified workers will be receiving pay increases to salaries that meet at least $913.00 per week. Will your business be ready for the changes?

The misclassification of employees has been a hot topic with the IRS and the Department of Labor for years. Efforts to identify and audit employers who classify workers as exempt from minimum wage and overtime payments have been ramped up. The Questionable Employment Tax Practices Initiative (QETP) was created to bridge the gap between federal and state agencies that identify these errors. The IRS and the Department of Labor have also added more than 100 new investigators over the last two years. Both agencies have made their positions very clear that employers who fail to pay employees all of the wages due to them risk steep penalties. If your business received a visit from one of these agencies tomorrow would your employee classifications pass the tests? Do you know which tests to administer? If you determine an employee has been misclassified, what will you do? This webinar will help you answer these questions and many others with confidence.

• Update on the DOL’s revised regulations regarding the white collar overtime exemptions
• The standard tests for each exempt category and when you must classify an employee as non-exempt
• The importance of a solid job description defining possible non-exempt duties an exempt worker may perform
• How to administer the ABC Test for independent contractors along-side the June 2015 classification clarification guidance
• The reality of simultaneous audits and investigations under the QETP
• Real case law examples of major organizations that paid out millions of dollars for misclassification errors involving assistant managers
• How to know when you may or may not deduct an exempt worker’s pay
• Solid reasons to begin tracking your exempt employee’s work time
• How to protect your business from lawsuits resulting from misclassification errors
• And much more!

You must proceed carefully when reviewing classifications to avoid costly mistakes and lawsuits. Knowing how to classify employees is crucial to the well-being of your employees and your business. With the release of the updated white collar overtime exemption rules, there has never been a better time to become well-versed on classification rules.

Employers, HR managers, Chief Financial Officers, Payroll and accounting managers, Payroll processing professionals