One of the most concerning trends in employment law today is employee misclassification. Stringent labor protections put in place by the government, the increased use of of independent contractors and explosion in the gig economy means that the burden is on employers not only to classify employees correctly, but also to treat them strictly within the boundaries of the law under that classification.

Failing to pay overtime under federal law can lead to not only having to pay the employee what is owed, but double damages for up to three years, plus attorney fees. Even more, in Michigan, the Attorney General’s has announced as special Payroll Fraud Enforcement Unit to investigate wage theft and misclassification of workers. Which means that the misclassification of employees could be found criminal.

Here is what you need to know about classifying your employees correctly and employment practices that follow.

Salary vs. Hourly

Many employers assume that by putting employees on a salary and marking them as exempt, the employee is not entitled to be paid overtime. But to do so, the employer needs to go through several specific steps to ensure the employee actually meets the legal definition of what can be exempt. And that takes much more than just paying them a salary.

To be exempt, an employee must actually meet the duties and salary tests set out by federal law. The most notable of these exempt duty categories include those employees who meet the professional,...

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