DOL Targets Employer Misclassification of Non-Exempt Employees

By Anthony M. Hohn

Recently the Department of Labor (DOL) Wage and Hour Division (WHD) announced that it is considering implementing a new rule that would revise recordkeeping requirements relating to classifying workers as exempt from the overtime requirements of the Fair Labor Standards Act (FLSA). If implemented, the rule would result in more stringent disclosure and recordkeeping requirements for covered employers which exclude workers from the FLSA’s minimum wage and overtime requirements. If approved and implemented, the new rule will result in significant changes for employers.

Under the rule, employers would be required to notify workers of their rights under the FLSA and to provide information relating to hours worked and calculation of wages. Employers seeking to exclude a worker from coverage by the FLSA will be required to perform a “classification analysis” and to disclose that analysis to the worker. This analysis would also be subject to review by WHD enforcement personnel. Finally, the new rule would address burdens of proof which will apply when an employer fails to comply with these requirements.

According to the DOL, the new rule is expected “to promote transparency and encourage greater levels of compliance by employers.” The DOL intends to release the proposed rule in August 2010.