One of the most common wage-and-hour mistakes employers make is misclassifying employees as exempt when they should really be nonexempt. Many business owners assume that if they pay someone a salary, that automatically makes them exempt from overtime. Unfortunately, that is not how the law works. Under the Fair Labor Standards Act (FLSA), paying a salary is only one part of the test — and it does not replace the legal requirement to evaluate job duties.
Another big mistake is relying too heavily on job titles. Calling someone a “manager,” “administrator,” or “supervisor” does not make them exempt. The Department of Labor looks at what the employee actually does day-to-day — their primary duties, level of authority, and responsibility — not what the position is called. This is where many employers get tripped up, especially in smaller businesses where employees wear multiple hats.
Employers also sometimes assume that exempt status is something they can choose based on what fits their budget or what seems “fair.” But exempt vs. nonexempt classification is not a preference — it is a legal determination based on the FLSA rules. If the job duties do not meet an exemption test, the employee must be treated as nonexempt, even if the employer would rather pay a salary.
The good news is that these issues are very preventable. A quick review of job duties, pay structure, and actual day-to-day responsibilities can help employers avoid costly overtime claims and Department of Labor problems later. And if you’re ever unsure, don’t guess — call us. The team at People First is always happy to help, and we’re just a phone call away.
