It’s important to periodically review the classification of jobs in your company to ensure they comply with federal law. Roles in businesses sometimes change and failure to correctly classify a position can be an expensive error.
The U.S. Department of Labor investigated two companies, for example, and found violations that resulted in hefty damages in 2021. The companies are:
- Holland Services, with oil and energy services operations in Washington, Pennsylvania, which misclassified 700 employees from 2012 to 2019 and failed to pay overtime. The company owed $43,276,638 for back wages and damages.
- Servant’s Quest, a home health care business providing services in Tennessee, which misclassified 50 workers as independent contractors and was ordered to pay $358,675 in back wages for overtime violations.
In 2019, 10 truck drivers who haul cargo at ports in Los Angeles and Long Beach, California, were awarded nearly $1.3 million for lost wages by the California Labor commissioner because they were misclassified as independent contractors.
The misclassification of employees as independent contractors causes a loss of wages and benefits those workers are entitled to under the law.
Misclassification of jobs can affect your company by resulting in lawsuits and having a financial effect through fines, the loss of the business, and employees who don’t want to work there, thus damaging the company’s reputation in the industry by no longer being the employer of choice.
Independent contractors vs. employees
Independent contractors have control over their work and are responsible for paying self-employment and income taxes. Employees have the right to minimum wage and other protections under the law. Employers withhold taxes from their pay. Employers must comply with state laws and the Federal Fair Labor Standards Act (FLSA).
Jobs can be misclassified not only as independent contractors instead of employees, but also as exempt instead of nonexempt.
Exempt employees usually work in professional, administrative or executive roles and are paid a salary. They are not entitled to overtime pay. Nonexempt employees may be paid hourly and are entitled to overtime pay.
I recommend doing a review of your organization’s jobs every couple of years, depending on the size of your company.
In one company in which I worked, there was a corporate review of administrative assistants, which led to a review of all administrative positions. Some of the roles were changed from exempt to nonexempt, which meant those employees were then entitled to overtime pay.
You must be sure job descriptions include:
- The correct classification.
- Compensation as required by some states.
- Day-to-day tasks and responsibilities.
- The skill level needed to do the job.
- The education level, college degree or certification required.
- The years of experience or hands-on expertise required.
- Any physical requirements needed to do the job.
You’ll want to make job postings available to the public through such employment websites as Indeed or your company website.
The nonexempt classification can include overtime pay for working more than eight hours a day or 40 hours a week, holiday pay for working holidays and additional pay for working Sundays.
If overtime work is required to finish the workweek, your employee should seek approval in advance. In one of my corporate Human Resource positions, an employee was regularly working overtime without asking for permission. We had to have a conversation with her because we didn’t want to pay overtime for administrative roles.
As always, communication with your employees is imperative. It’s a good idea to instruct new employees how to fill out a time card during orientation.
If you’re creating a new position or changing an existing job, Human Resource professionals have access to resources that can help ascertain whether the job should be exempt or nonexempt. Be sure to also check the U.S. Department of Labor website. You want to be sure you pay your employees correctly. If you need help with the exemption test, contact me at email@example.com. Employment lawyers also are a good source of information about job classification.
50+ Job Seekers workshops
The 50+ Job Seekers Networking Group’s workshops are free and virtual on Zoom, with some held in person.
Workshops on Zoom for the next few weeks are:
- Thursday, Aug. 10, 10 to 11 a.m.: “Volunteerism as a Pathway to Employment,” Savvy Seeker Series with David Guydan.
Combining purposeful volunteering as part of a job search can increase the chances of landing a paid position. Explore with David Guydan the possibilities in this one-hour virtual seminar, grounded in research on the benefits of volunteerism. Learn about the “new retirement” and an expanded set of options available today for encore careers, whether paid or unpaid. Seminar attendees will leave with new information on how volunteering leads to paid jobs and a roadmap of how to use meaningful volunteer activities as a pathway to employment.
David is director of Discovery Centers for Civic Employment, which supports volunteerism through Councils on Aging throughout the Commonwealth of Massachusetts.
- Tuesday, Aug. 15, 10 to 11:30 a.m.: “Critical Thinking” with Ed Lawrence.
Critical thinking in the workplace means sorting among useful and arbitrary details to come up with a big-picture perspective that leads to an impactful decision or solution to a problem. Businesses are impressed by critical thinkers who can help them solve their problems. If you find yourself stuck in your job search or career path, many times it’s due to a lack of critical thinking.
Join Ed Lawrence in this interactive workshop to learn critical thinking concepts, traits of critical thinkers, and why critical thinking is important. He will help you develop those skills by presenting fun problems for you to solve.
- Monday, Aug. 21, 10 to 11:30 a.m.: Interview Practice with Ed Lawrence.
For good or bad, first impressions matter. When interviewing you need to put your best foot forward, and that takes practice.
- Do you have an interview coming up?
- Do you know how to respond to behavioral questions?
- Do you need suggestions on how to address gaps in employment?
Join us for answers to your questions and learn how to respond to a variety of questions that may be presented to you during an interview.
- Tuesday, Aug. 29, 10 to 11 a.m.: “Navigating the Unexpected: Improv for Job Seekers,” Savvy Seeker Series with Dr. Miriam Rosalyn Diamond.
Join Dr. Miriam Rosalyn Diamond to participate in easy exercises that can support your job hunt. These noncompetitive games are designed to help you hone skills in presenting and marketing yourself, maintaining a positive attitude, and thinking on your feet while expanding your flexibility and creativity. Everyone is welcome. No special experience, abilities or talent are needed – just a willingness to jump in, support others and have a good time.
Dr. Diamond leads improvisational programs for social, cultural, educational and professional groups across North America.
- Tuesday, Sept. 5, 10 to 11:30 a.m.: G2G (Give to Get) with Ed Lawrence.
G2G is an open forum for Q&A, breakouts to discuss your job search questions, and plenty of time to network and connect with fellow 50+ job seekers. Every attendee’s name will be placed on the Wheel of Names. You could win a free coaching session.
- Thursday, Sept. 7, 10 to 11:30 a.m.: “Overcoming Barriers to Employment,” with Human Resources expert Cheryl Gelzer Alexis.
A job campaign is hard enough on its own, but it’s even harder when you face discrimination, encounter implicit bias, lack common credentials or face other barriers to employment.
- Are you a mature job seeker?
- Do you have gaps in your resume or long-term employment?
- Have you experienced bias based on gender or race?
If so, join us to hear Cheryl Gelzer Alexis offer ideas on how to respond to barriers and answer your questions.
Cheryl manages Learning & Developmental Initiatives for MassHire South Shore Career Center. She has more than 25 years of experience working in Human Resources for Harvard University and several Fortune 500 companies.
I’d love to hear from you!
Contact me by downloading my digital business card by texting HRPRO to 21000 or emailing me at firstname.lastname@example.org.