Misclassifying employees is one of the most common — and costly — mistakes a business can make. Whether you’re a small business owner or an HR professional managing a growing team, understanding the legal distinction between exempt and nonexempt employees is critical to avoiding lawsuits, penalties, and backpay claims.
At Koegle Law Group, we’ve seen firsthand how easily these missteps happen — and how devastating the consequences can be. In this article, we break down what you need to know and do to protect your business.
What Is Employee Misclassification?
Under both federal and California law, employees are presumed to be nonexempt — meaning they are entitled to:
- Overtime pay
- Meal and rest breaks
- Accurate timekeeping
- Other wage and hour protections
To classify someone as exempt, the burden is on the employer to prove that the employee fits squarely into a specific exemption category. Simply giving an employee a salary or calling them a “manager” is not enough.
Why Misclassification Is a Problem
Misclassified employees can file complaints or lawsuits — often as a group — claiming:
- Unpaid overtime
- Missed breaks
- Improper compensation
A recent case handled by Koegle Law Group involved a group of project managers who were misclassified as exempt. The potential liability exceeded $1 million. Fortunately, the issue was caught early and resolved through mediation, but it’s a powerful reminder that even well-meaning businesses can get it wrong.
The Role of Job Descriptions
A clean, accurate job description is one of your best defenses.
A legally compliant job description should:
- Clearly outline duties, responsibilities, and required skills
- Distinguish between levels of employees (e.g., line-level vs. management)
- Include physical requirements (e.g., lifting, standing, visual acuity)
- Be regularly reviewed and updated
These descriptions don’t just help with classification — they’re crucial for handling workers’ compensation, performance evaluations, and ADA accommodations.
Common Pitfalls to Avoid
✅ Assuming all salaried employees are exempt
✅ Using vague or outdated job descriptions
✅ Failing to track time for employees who should be nonexempt
✅ Not reassessing roles as job duties evolve
One particularly tricky role? Project Managers. Unless they manage at least two or more employees and meet the executive exemption criteria, they often should be classified as nonexempt.
How To Protect Your Business
If you’re unsure about your classifications or haven’t reviewed your job descriptions in a while, now is the time to act. Here’s where to start:
- Audit Your Employee Classifications
- Review who is salaried vs. hourly
- Match roles against legal exemption tests
- Update Your Job Descriptions
- Be specific and use legally relevant language
- Include physical and supervisory requirements
- Consult with Employment Law Experts
- Avoid DIY mistakes — get your policies reviewed by a legal professional who understands California and federal law.
Let Koegle Law Group Help
At Koegle Law Group, we specialize in helping employers navigate business challenges. We’ll review your classifications, strengthen your job descriptions, and give you peace of mind — before a problem arises.
👉 Schedule a consultation today
📍 https://koeglelaw.com
📞 (661) 362-081
