Under the Fair Labor Standards Act, exemptions are determined based on elements that go beyond salary versus hourly pay, and employers need to pay special attention to both state and federal laws.
Not understanding the differences in each of these job labels could result in consequences years later as employees and independent contractors alike can take advantage of a two or three-year statute of limitations (depending upon the violation) when bringing their claims to court. While certain classifications may seem enticing, employers need to take proper measures now to prevent or rectify any incorrect misclassifications and be wary that, if issues go uncorrected, consequences may ensue and headlines regarding the raising of minimum wages will not be the only thing we read.
Suffice it to say, the proactive employer should objectively conduct a labor audit to determine whether every worker is properly classified as exempt or non-exempt, and as employee or independent contractor. A penny of preventive measure might save a pound down the road.
Phil Mortensen is a Labor and Employment attorney at Barton LLP. He has represented both private and public sector employers in such matters for over thirty years and his experience extends from drafting employee handbooks to working closely with managers and training supervisors to ensure compliance with all applicable state and federal employment laws. For more information, see www.bartonesq.com.