Posted on 05-Nov-07 by The Timekeeper

This issue comes up periodically, and is a reminder of why it’s so important to make sure you’ve classified your employees correctly — that is, according to what they do, not by what their job title is. A classic example (and one which has bitten more than one company in the butt) is the “assistant store manager.”

Just because you give somebody a title with the word “manager” in it, this doesn’t automatically make that person exempt from overtime. Way too many businesses make that mistake, and way too many of them end up having to pay tons of money in back pay and penalties.

Folks, the criteria is based on what the person does, not what you call them. You could call an employee the “Executive Director of Food Products Cooked in Hot Oil” but if what he’s doing is making french fries, you still gotta pay him overtime when he works over 40 hours a week.

“Promoting” somebody to “assistant manager” but not changing their actual duties all that much — so they still spend most of their time doing the same things they did when they were just Joe Fry Cook — and thinking this is a cool way of getting a ton of unpaid overtime out of them is a great way to find yourself in the DOL’s cross-hairs. There are very real, and very stringent, requirements a job must meet before it can be classified as exempt.

Of course, it’s not just fast-food restaurants at risk. Retail organizations of all types have run into troubles — and not just the “mom and pops” either. As reported by CNNMoney.com, office products giant Staples announced on Friday Nov. 2 it has agreed to pay $38 million to settle a class action lawsuit alleging misclassification of 1,700 current and former assistant store managers.

According to the suit, which was originally reported by Staples in 2003, the assistant managers were allegedly wrongly classified as exempt from overtime pay, when their actual job duties didn’t support such a classification. Staples admits no wrongdoing in settling the suit (of course — I mean, let’s face it: when was the last time you heard any company announce, “We’re settling because we’re guilty as sin and our lawyers tell us we’re going to lose big if we let this go to trial?” Duh). The settlement is still subject to court approval.

Now, not that the average small business is going to have to cough up $38 million because of a couple of misclassified assistant store managers. But this is one of those times when an hour or two consulting with a qualified professional to ensure all your jobs are appropriately classified could definitely wind up saving you a lot of money and headaches on down the line.

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