Dive Brief:
- A former Paycor employee alleged in a July 19 lawsuit that the HR software company misclassified more than 100 employees as exempt from federal minimum wage and overtime requirements (Terry v. PayCor Inc., No. 1:22-cv-00419 (S.D. Ohio, July 19, 2022).
- The lawsuit sought collective action status and claimed workers in a group of roles — “implementation consultant” and similar positions — were improperly paid as a result of the alleged misclassification. The employees reportedly helped onboard clients, set up their software and provided training on the applications, among other things. This work frequently required more than 40 hours in a workweek, the complaint said.
- While the suit did not offer an exact number of potential plaintiffs, it estimated that more than 100 consultants could be eligible for inclusion in the class, if the suit is certified as such. The complaint requested back pay, interest and damages. Paycor did not respond to a request for comment.
Dive Insight:
The Fair Labor Standards Act requires that employees be paid at least minimum wage for all hours worked — and time-and-one-half for hours worked beyond 40 in a workweek — unless they meet the criteria for an exemption.
The law offers several exemptions, including a professional exemption, an administrative exemption and an executive exemption. A U.S. Department of Labor fact sheet said that to meet the administrative exemption, for example:
- The employee must be paid at least $684 per week, on a salary or fee basis.
- The employee’s primary duty must be the performance of office or nonmanual work directly related to the management or general business operations of the employer or the employer’s customers; and
- The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
Management-side attorneys generally recommend that HR pros ensure workers are properly classified, both as employees or independent contractors, and as exempt or nonexempt; a comprehensive wage and hour self-audit is a great way to do so, one lawyer wrote in an op-ed for HR Dive.
Wage and hour liability can be substantial given that such claims often lend themselves to class status; the FLSA also sometimes allows for double or triple damages. And while some suits come from private plaintiffs like the Paycor litigation, the federal government also actively enforces the law’s provisions. A court earlier this year entered a $7.2 million judgment against an employer in a suit brought by DOL; the agency called the news an “unequivocal” warning about misclassification.
