Overtime Classification Mistakes Can Cost Employers

Misclassifying employees as exempt from overtime is one of the most common and costly mistakes employers make. As wage and hour enforcement continues to increase, New Jersey businesses should take time to review employee classifications and overtime practices to ensure they comply with both state and federal law.

A common misconception is that paying an employee a salary automatically makes them exempt from overtime. In reality, an employee must meet specific salary and job duties requirements to qualify for an exemption. Job titles alone do not determine exempt status. An employee's actual day-to-day responsibilities are what matter most.

Incorrectly classifying an employee as exempt can expose employers to significant liability, including:

• Back payment of unpaid overtime wages
• Liquidated damages and civil penalties
• Interest and attorney's fees
• Potential audits and enforcement actions by the New Jersey Department of Labor or the U.S. Department of Labor

Moving companies should pay particular attention when classifying office staff, dispatchers, operations managers, warehouse supervisors, sales personnel, and other salaried employees. A management title does not automatically exempt an employee from overtime requirements if their primary duties do not meet the legal tests.

Best Practices for Employers

To reduce the risk of costly wage and hour claims, employers should:

• Review all exempt employee classifications annually.
• Verify that employees meet both the salary and duties tests.
• Maintain accurate time records for all non-exempt employees.
• Consult with legal counsel or an HR professional before changing classifications or compensation practices.

Taking the time to review employee classifications now can help prevent expensive wage claims and ensure your company remains compliant with New Jersey and federal overtime laws.

For more information: The New Jersey Department of Labor provides guidance on overtime requirements, employee exemptions, and wage and hour laws at https://www.nj.gov/labor/wageandhour/