Misclassification of employees as exempt from overtime is among the most costly wage errors, because it is systematic — one wrong classification is every person in the role, across the limitation period.
Three requirements for the common white-collar exemptions: payment on a salary basis, a salary at or above the applicable threshold, and duties that satisfy the relevant test. All three must hold.
Salary basis means a predetermined amount not subject to reduction for variations in quality or quantity of work. Deductions for partial-day absences, or docking for performance, undermine it.
Duties tests turn on primary duty. Executive requires management of a recognised unit, direction of at least two full-time equivalents, and authority over hiring or firing decisions. Administrative requires office work directly related to management or general business operations, with the exercise of discretion and independent judgment on matters of significance. Professional requires advanced knowledge in a field of science or learning.
The audit. Pull the job description, then interview incumbents about how time is actually spent, then compare. Where they diverge, the practice controls.
Fixing a misclassification requires care: reclassifying prospectively without addressing the past leaves an obvious claim, and the announcement itself can prompt one. Do it under privilege, with a plan for both directions.