ATLANTA, GA (October 29, 2013) – As employers continue to grapple with the surge in wage and hour related lawsuits, exempt misclassification claims are a key concern according to a national survey conducted by Littler Mendelson, P.C. (Littler), the world’s largest employment and labor law firm representing management. The survey, completed by 325 human resources professionals, C-suite executives and in-house counsel, measured how employers are being impacted by litigation and Department of Labor (DOL) audits focused on the classification of employees as exempt from overtime pay and certain wage and hour laws.
Concern with Exemption Challenges Drives Employers to Take Action
Roughly half of respondents (49 percent) are concerned about the threat of misclassification litigation or a DOL audit in the near future. In reflecting on their biggest concerns in this area of employment law, respondents emphasized the potential financial impact associated with these types of claims, as well as the business disruption.
In response to these concerns, many of the responding organizations have either conducted their own audits to assess exempt classifications (54 percent) or intend to do so in the next year (14 percent). In addition, the majority of respondents are monitoring trends in exempt misclassification litigation to some degree, with 43 percent monitoring these trends closely.
“The best defense to exemption litigation is advance preparation,” said Lee Schreter, co-chair of Littler’s Wage and Hour Practice. “Employers can plan ahead for this type of litigation and build the necessary evidence today to defend against these claims in the future.”
Employees Misrepresenting Exempt Job Duties Highlights Need for Strong Evidentiary Records
Among the respondents who have recently been involved in misclassification litigation or a DOL audit, 57 percent have encountered employees who misrepresented exempt job duties. Mid-level management was the position most frequently cited as driving the dispute in 43 percent of cases.
“Employers often lose or settle exemption cases not because the position was misclassified, but because the employer cannot marshal sufficient evidence to counter the plaintiff’s self-serving efforts to down play decision-making responsibilities,” said Schreter. “Employers can effectively counter ‘job deflation’ by creating contemporaneous business records of exempt duties as those tasks are performed rather than attempting to reconstruct those activities after a lawsuit is filed.”
When asked about whether their organizations were creating these type of records, 33 percent indicated having employee self-assessments on record. One of the more effective means for tracking exempt duties can be performance evaluations that ask employees to describe and assess their own performance. This type of evidence provides a written affirmation of job responsibilities in the employee’s own words and can be used to impeach any contradictory testimony. In addition, the majority of respondents indicated having up-to-date job descriptions (82 percent) and employee performance reviews (73 percent). However, the ability of their job descriptions to support exempt classifications was commonly cited as one of their biggest concerns in this area in verbatim feedback from respondents.
View complete Xmpt Survey Report.
About Littler Mendelson
Littler Mendelson is the world’s largest labor and employment law firm exclusively devoted to representing management. With more than 1,000 attorneys and 57 offices throughout the U.S. and globally, Littler has extensive resources to address the needs of U.S.-based and multinational clients, from navigating domestic and international employment laws and labor relations issues to applying corporate policies worldwide. Established in 1942, the firm has litigated, mediated and negotiated some of the most influential employment law cases and labor contracts on record.