Are You Owed Overtime Backpay? How to Know if Your Employer has Misclassified You As ‘Exempt’

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Minnesota Employment Law Attorneys

Thousands of workers across the US are being underpaid in the guise of holding respected positions. And you may be one of them.

Employment law is a complicated set of rules that were written to ensure that US employees are treated fairly by their employers. But with all our regulations and rules, some employer still find a way to take advantage of their workforce. One of the most common ways to do this is pay manipulation. Lowballing job candidates or hiring freezes that force the current workforce to function short-handed. Docking pay for trivial infractions. And shift manipulation to minimize the overtime they have to pay. But the worst pay manipulation outside of overt fraud or embezzlement is a misclassification. Also known as the exempt-overtime scam.

Before we get started, let’s just say this: If you have been misclassified as exempt and denied overtime, there’s a chance your employer owes you months or even years of backpay at time and a half. And that’s what we’re here to discover today.

The Classic Exempt-Overtime Scam

Employment law comes in two halves: non-exempt and exempt. Officially, this is supposed to separate the staff by income and responsibility.  The vast majority of employment laws were written to protect ‘wage slaves’ who are at the beck and call of their employers. Retail associates, paper-pushers, clerks and admins. Anyone who is paid hourly and/or does not have much control over their daily tasks. Non-exempt employees must e paid overtime.

Exempt employees are supposed to a “cut above the rest” in both their pay and responsibilities. Exempt employees should be making a higher and very stable salary with the ability to choose and structure their own work tasks. They are “exempt” from overtime requirements because it’s assumed that exempt roles ‘get the job done’ on a salary, no matter how much time this takes.

Now where’s the scam, you ask? All an employer has to do to avoid paying -anything at all- for overtime is to classify a worker as exempt. So employers who think they’re clever give wage-slave (little to no autonomy) roles salaries and call them ‘exempt’. Then crank up the workload to juice the staff without overtime. Some even re-classify employees after hiring to avoid paying them the overtime they work.

If you suspect that you or someone you know has been misclassified in order to deny overtime, not only do you have options. You also have the potential to properly re-classify yourself and earn your overtime as backpay for all those hours they were failing to pay you.

Are You Currently Classified as Exempt by Your Employer?

The first step is to confirm that you are actually classified as exempt right now. It might surprise you, but most employers don’t actually tell someone whether or not they are taking an exempt role. In companies where exemption is done right, it’s often obvious which roles are or are not exempt. In companies that do it wrong, you never know how they write their rules to play the scam. Fortunately, there are only two factors you need to 99% confirm how your employer has you classified.

— You are paid a salary

To be considered exempt, you must be paid a salary. Now, not all employers know that there’s an exemption minimum to that salary. They often simply give the same low wage in salary-form and think that is enough. Then file you as ‘exempt’.

— You are not paid overtime

You may only discover you’ve been classified as ‘exempt’ when your overtime is denied for the first time. But if — at any point — you are told that you don’t qualify for overtime: you are being -treated- as if you are exempt. Whether that is a valid classification has yet to be seen.

Signs You are Properly Classified

To know if you’re being misclassified, it helps to weed out everyone who has actually been classified correctly. Exempt employees are supposed to be in a position of prestige and power, with the greater responsibility that comes with that power. A project manager might be an exempt employee who is responsible for pulling a project together even if it takes a few late nights in the last month.

That is why exempt employees don’t earn overtime, but the return is supposed to be a combination of wage stability and personal freedom in the job to get those tasks done on time (or not). In fact, exempt employees should also be free to finish their work early.

Here’s how you define a truly exempt position and how you should be treated if exempt:

  • Your salary is equal to more than double minimum wage
  • You are in a white-collar job (or are a traveling salesperson)
  • You have a great deal of control over your daily tasks
  • You are responsible for finishing your work on time, no matter how many hours that takes
  • Your pay is never docked, and you are paid for any whole week in which you work one day.

Signs You Are Misclassified (and Owed Overtime Backpay)

Now let’s talk misclassification. If the previous job description did not sound like your role, then there is a very high chance that you are being exempt-scammed as we speak. But you don’t have to take it lying down. If even one of the following points is true about your job, then you are not legally exempt. Not only that, but your employer has broken the law and can be forced to re-classify you and pay you back for all the overtime you worked while they were effectively ‘pretending’ you were in an exempt role.

  • Your salary is less than double minimum wage
  • You don’t have a ‘white collar’ office job
  • You have to wear a uniform
  • Your boss sets your schedule
  • Your boss controls all or most of your daily tasks
  • Your pay is ever docked for anything, or you are not paid in full for partial weeks

An Attorney Can Force Your Employer to Make it Right

Most employee misclassifications are a purposeful attempt to cut corners and prevent their staff from claiming the overtime that they are given no choice but to work. But you don’t have to take this kind of treatment lying down, for yourself or your colleagues who have no doubt been similarly mistreated. An experienced employment lawyer can help to both hold your employer accountable for their choice to misclassify employees and to win you the overtime backpay you deserve. For more employment law insights or a consultation on your unique workplace situation, contact us today. Our legal team is ready to help in any way we can.