If you find yourself reclassifying your employees as non-exempt (from previously being exempt), then you could end up in deep legal doo-doo like the Michigan Bell Telephone Company.

Reason? It doesn’t take employees long to figure out that, if they’re doing the same jobs as exempt as when they were non-exempt, then they were probably cheated out of overtime prior to the reclassification.

Voila–Wlotkowski et al. v. Michigan Bell Telephone Company, filed in the Eastern District of Michigan.

Now, Michigan Bell probably did the right thing in realizing the class-action-lawsuit workers were non-exempt, but when it did so, it should also have dealt with the back-overtime-pay issue. Since the company decided to brush that under the rug, it ended up being sued.

There are a couple of lessons here. One is that it’s important to do workforce classification audits, especially with the Department of Labor breathing down employers’ throats to classify (and pay) properly. The other is that, when you do reclassify employees as non-exempt, you must right away square the back-pay issue with them.

Classifying workers is often difficult, but Personnel Concepts offers an FLSA Overtime Rules Compliance Kit, which will explain the criteria for exempt and non-exempt classifications and even provide handy checklist forms.