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Biggest Employee Classification Mistake Small Businesses Make

Name: Biggest Employee Classification Mistake Small Businesses Make
Uploaded: 2024-06-10T16:21:39+00:00
Duration: 1 min
Channel: Matt Vaadi
Description: In this concise advisory video, Matt Vaadi warns small‑business owners that the most common employee‑classification error involves the administrative…

10 Jun 2024 · 1 min

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In this concise advisory video, Matt Vaadi warns small‑business owners that the most common employee‑classification error involves the administrative exemption. He explains that many employers mistakenly apply the exemption to non‑managerial staff who perform routine administrative tasks. Vaadi outlines the two‑part duties test for the exemption: (1) the work must be truly administrative and involve supervisory duties, and (2) the employee must have independent decision‑making authority over matters of significance. Since most administrative personnel lack the latter, the exemption is intended for managers, not typical admin staff. He urges employers to correctly classify workers to avoid overtime violations and other legal risks.

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Are your employees properly classified? Probably the biggest misclassification I see is the administrative exemption. This is an abused exemption. People think it applies exactly as it says. You can exempt administrative employees from overtime and make them salaried. Well, in reality, this exemption is typically more applied to manager— management and leadership level employees because of one key thing. There are two parts of the duties test. It's, hey, your work must be administrative and supervising must be supervisory in nature. But the second piece of the duties test is that you must have independent decision-making authority on matters of significance. Most administrative personnel do not. This was meant for managers, not your admin staff. So make sure that you're not trying to apply the administrative exemption to somebody who only does administrative work and doesn't have any independent decision-making authority. Are your employees properly classified?