If you misclassify your employees, not only will you owe back wages, you will also have to pay back taxes and penalties on each quarter the employee was misclassified. You could owe even more if it was proven that you intentionally misclassified the employee.
Not sure what the difference is between exempt and non-exempt? Check out this video: Exempt vs. Non-Exempt
How big of a problem are employee misclassifications in the dental community?
Let’s take a look at a recent situation with one of our clients.
I sat down in front of the entire office. There were about nine employees in total and there was one thing that was obvious before the meeting started. They were mad. Really mad.
“I haven’t punched a clock in 20 years.” she told me.
Another employee just flat out told me I was wrong and that her husband told her they classify as exempt. She was very upset.
We reviewed the classifications of the staff and determined that none of them were properly classified. The front desk, the assistants, hygienists, all improperly classified. They were all classified as exempt and making a salary, and they should have been non-exempt.
When we helped the dentist explain this, they were not happy. Fast forward three months and they were all very happy. Why? Because if they put in some extra hours, they made some more money. They were salaried at the assumption of 32 hours a week before and would now stay and work for 35 to 40 hours a week to get a few extra bucks, not including potential for overtime.
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Misclassifying an employee as exempt
Employers often think that if you pay someone a salary, or they have a certain title, they qualify as exempt from overtime and minimum wage. This is not true. Exemptions are determined by both the duties of the job and the salary test.
Dental practices seem to really struggle with this. Sometimes practices will try to lump everyone into the “administrative” exemption because they think they perform duties that are of great significance to the business.
The tricky part here is determining if that employee exercises discretion and judgement to matters of significance. Do they have decision making authority, or do they do the job as you tell them to do it?
Are dental hygienists exempt?
Many employers try to claim that hygienists are exempt under the “professional” exemption. While this is true in some cases, this is not always the case. Under federal regulations, only hygienists who have completed four academic years of study in an accredited school approved by the American Dental Association potentially qualify for the exemption.
The hygienist would also have to be paid on a salary basis and receive at least $455 per week to meet the salary test portion of the white collar exemptions.
The question “are dental hygienists exempt?” is not always a simple black and white answer.
Why is this such a common mistake?
It’s easier to pay them a salary
If you want to pay a salary, you can. You can pay your people as salaried, non-exempt. This means that as long as they don’t make below minimum wage for their hours, and they agree to the rate, you can pay them the salary, You still have to track their hours, though. You can use our online timekeeping system if you need help.
My employees like it better
The reality is that while you might get audited and get “popped” for having employees misclassified, it is entirely more likely that one of your employees will turn you in when they realize they are not properly classified.
“But, Matt, my employees love me!”
Until they don’t.
There have been a number of headlines lately about the DOL Wage and Hour Division (WHD) hiring auditors in droves to enforce the Fair Labor Standards Act (FLSA) exempt status classification, but the reality is that people get turned in every day by their employees for improper classifications.
Improperly classifying employees leaves you exposed to issues that you just don’t have the time or resources to worry about. Take the time to determine the proper classification for your employees and pay them accordingly. You can download a free FLSA Classification Checklist from our website through this link.