Dive Brief:
- NaviHealth has agreed to pay $4.69 million to resolve claims that it misclassified "care management employees" as exempt from the overtime requirements of both the Fair Labor Standards Act (FLSA) and Pennsylvania state law (Barbee v. NaviHealth, No. 3:19-cv-00119 (M.D. Tenn. May 8, 2020)).
- The plaintiffs alleged they were willfully and incorrectly paid a flat salary, regardless of their hours worked. They said they didn’t qualify for any of the laws’ exemptions because their primary duties included data entry and scheduling, among other tasks.
- The defendants, however, argued that the class members were not misclassified and that its decisions were made in good faith, according to the settlement documents.
Dive Insight:
The FLSA generally requires that an employee be paid minimum wage and time-and-one-half for hours worked beyond 40 in a workweek — unless he or she both meets a salary threshold and a duties test. The federal laws’ duties tests include those for executive, administrative, professional, computer and outside sales employees.
When employees are misclassified, the back pay and damages can be substantial; when that misclassification is deemed willful, employers can be subject to additional damages and an extended statute of limitations. Last year, for example, Steak 'n Shake paid out more than $7.7 million after a judge awarded $3 million in liquidated damages to misclassified managers, concluding that the failure was "not a good faith mistake."
Employment law attorneys suggested that employers use recent updates to the law’s minimum salary threshold for exemption as an opportunity to review classifications. But if an employer hasn’t yet done so, it’s still a worthwhile undertaking, experts say; annual raises or pay equity audits can provide a convenient time to review classification and fix any issues. The time and expense associated with such reviews is insignificant compared to the costs of a lawsuit, even if an employer successfully defends any such claims, David Miller, attorney at Bryant Miller Olive, previously told HR Dive.
