The misclassification of workers has always been a problem. The Labor Department is working with some states to make sure that all workers are classified correctly. Whether you are exempt or non-exempt plays an important role in how you are paid. If a worker is misclassified, that could lead to problems down the road for employers.

The Labor Department is working in conjunction with the Internal Revenue Service and will share information with them and nine states to crack down on these mistakes. The tax losses can be extraordinary if workers are misclassified, so the crackdown may correct the issues and clear up any discrepancies that may exist. The nine states cooperating in this action are Maryland, Connecticut, Missouri, Minnesota, Montana, Utah, Hawaii and Washington. New York has made plans to cooperate in the very near future.

Here are some tips to make sure you are in compliance as a business owner:

1. Conduct an Internal Audit

Audit your company to see who may be misclassified. If you beat the Labor Department to the punch, you may be able to correct any issues before they come in and take a look. The Labor Department classifies employees by the job description, so don’t assume anything. And make sure you’re hiring the right people for the right jobs in the first place.

2. Cut Overtime

Let non-exempt employees know they may not work overtime. Pay them for any overtime they have performed, but take action if they continue to do so after being told not to. Communication is important, so talk to them and make your requests clear so that no misunderstandings happen in the future.

3. Start a Complaint Investigation

Promptly investigate any complaints that come across your desk while contacting a lawyer on the matter. Taking care of the problem swiftly can help the situation immensely. Look at job descriptions and review the Labor Department guidelines thoroughly. Notify your employees of the final results to help them understand their status as well.

Do you have any horror (or hero) stories to share? Let us know in the comments!