It could save a big chunk of money in the event of a wage and hour lawsuit.

In one recent case, a group of employees were classified as exempt. They were then given new job titles and switched to nonexempt status.

The problem: Their positions changed names, but their duties stayed the same. So the employees sued, claiming they were owed overtime for the period before the change.

After failing to have the case thrown out, the company offered to settle. It estimated how many hours of overtime the employees had worked and came up with an appropriate dollar amount.

But a court rejected the settlement offer. The reason: Without a record of the hours the employees actually worked, there was no way for the company to prove it was offering the correct amount. In the court’s view, that meant the employees could potentially be owed a lot more than that.

Now the case will move forward, and the employees will be able to ask a jury for an award based on their estimate of the hours they worked.

Cite: Davis v. Abercrombie & Fitch Co.

Misapplying the exemptions can cost companies a lot of money.

TAC Worldwide, a Massachusetts-based staffing firm, has just agreed to pay $1.8 million in back wages to 973 employees who sued for being mistakenly classified as exempt from OT.

Most of the affected employees held IT-related positions. Job titles of those who sued include: network engineer, help desk representative, technical writer, software tester and network administrator.

A common classification mistake is focusing on title rather than actual job duties. Employees may have titles that sound exempt — but employers still need to look at what those employees do on a daily basis and make sure the duties match up with at least one of the Fair Labor Standards Act’s OT exemptions.

For more information on the exemptions, click here.

Cite: Chao v. 888 Consulting Group, Inc.

The computer professional exemption.

It’s a common misconception that all jobs involving computers are exempt. But in fact, the FLSA’s computer employee exemption is very narrow, covering only employees who earn more than $27.63 per hour or $455 per week and:

• apply “systems analysis techniques and procedures,” such as consulting with users to determine hardware or software needs
• design, develop, create, test or modify computer programs based on user design specifications
• design, develop, create, test or modify programs related to operating systems, or
• perform a combination of those duties that requires the same level of skill.

Some examples of employees who don’t qualify for the exemption: employees who repair hardware and help desk professionals whose only job is to fix users’ problems.

Note: IT employees who don’t meet the requirements for the computer professional exemption may still be exempt, based on the FLSA’s administrative, executive or professional exemptions.

Whichever way companies choose to track employees’ time, a recent case makes one thing clear: They must keep accurate records — or take a big hit in court.

A woman sued her employer, claiming she worked overtime that was never paid.

Could she prove this? Well, she didn’t have any proof she ever worked more than 40 hours a week, and she couldn’t even name specific times when she allegedly worked overtime.

Her case was thrown out, right? Wrong.

Turns out, the employee did have evidence that the company didn’t keep accurate records of the hours employees worked. The woman managed a store and had the only set of keys — therefore she had to be there to open and close the store.

But on some days, company records showed her coming in after the store was open and leaving before it closed. She claimed she was there but that her boss submitted inaccurate attendance information.

Normally, it’s up to an employee to prove he or she worked overtime and didn’t get paid. But in this case, the court ruled, doubt was cast on the accuracy of the company’s own records.

Therefore, the company had the burden to prove no overtime was worked — which it couldn’t do. The woman’s complaint will now lead to a costly jury trial or an expensive settlement.

Time must be accurate, however it’s tracked

Employers have a lot of options when it comes to tracking the hours employees work.

Whatever the method used, managers must be trained on the importance of accurate tracking and documentation.

Failing to keep solid records violates the Fair Labor Standards Act — and leaves the company helpless if an employee makes a claim about unpaid time.

Cite: Brown v. Family Dollar Stores of Indiana, LP

In the latest dispute, former Apple employee David Walsh is suing the company for unpaid overtime. He claims Apple misclassified him as exempt and failed to pay him for compensable on-call time.

According to Walsh, the company inflated job titles to make them sound exempt. For example, he says some workers were known as “Senior Network Engineers” — even though they did the same work as regular Network Engineers.

He’s currently seeking class action status to let other employees join the suit.

Who’s exempt from OT?

Whether IT employees are exempt depends on a lot of factors. Many likely fall under the administrative exemption, which requires that employees exercise “discretion and independent judgment” in their work.

There’s also the “computer employee” exemption, which covers mostly programmers and software developers (read more from the Department of Labor here).

Companies across the country are looking for ways to help workers cope with rising gas costs. But many might be offering flexible arrangements too quickly without considering the legal consequences.

One way more and more employers are trying to lower costs and raise flexibility is letting some employees telecommute at least one day a week. That can be a big boost to recruitment, retention and employee satisfaction, but it also comes with a fair share of legal challenges.

Here some things to keep in mind if your company’s thinking about allowing any telecommuting:

Security — In some cases, employers can be held liable when personal information about employees or customers is stolen. Since employees working from home are more prone to security problems than others, special care is needed when telecommuters work with sensitive information. Managers need to work closely with IT to make sure employees have a secure set-up before they do any work from home.

Also, clear ground rules need to be established, such as:

• no working on public wireless networks
• family members or other people shouldn’t use the company’s equipment, and
• any data in physical form (CDs, paper documents, etc.) must be kept in a secure place.

Safety — The Occupational Safety and Health Administration (OSHA) has made it clear it won’t inspect home offices — or require employers to inspect them. Nonetheless, employers should be ready to handle claims of injuries from people working at home, since they might be entitled to worker’s comp.

Guidelines and rulings are unclear about when telecommuters get comp — it depends on the state and the specific situation surrounding the injury. It’s something employers with work-from-home programs must be ready for, since teleworkers are often eligible.

Time-tracking – As telecommuting gains popularity, it’s not just exempt employees who get the benefit. Nonexempt employees are taking advantage, too, which creates some new legal issues.

For example, keeping track of the time a nonexempt employee works can be tough without a clock to punch as soon as someone walks in the door.

What’s a good solution? Some companies install timeclock software that lets telecommuters clock in over the phone or by logging in to their computers.

Overtime — Also, it’s sometimes hard enough to keep nonexempt employees from working unauthorized overtime hours — and the problem multiplies with people away from the workplace.

To limit problems, companies need a clear policy regarding when and how much employees are allowed to work. Or, managers can consider only letting exempt employees telecommute.

Discrimination — As with any benefit, if it’s given to some employees and not others, there’s always a chance someone might claim discrimination. Before rolling out a telecommuting program, employers should have rules on who’s eligible based on objective criteria — for example, position type, department, seniority, performance, attendance records, etc.

Technology’s made it easier for employees to work anytime, anywhere. And it may also make companies more likely to get sued for FLSA violations.

With exempt employees, catching up on work on a home computer or responding to e-mails with a BlackBerry is no big deal.

But as connectivity increases, nonexempts are more and more likely to do the same. And experts say that’ll result in a lot of lawsuits for unpaid overtime.

Most at risk are companies that give PDAs, phones and other devices to nonexempt employees, since that basically encourages them to work extra hours. But as more people buy those devices on their own and use them for work, that puts all employers at risk if the time isn’t being tracked.

Even if it’s prohibited

It’s dangerous territory, since employees don’t always tell their supervisors they’re working at home. But that doesn’t mean companies can’t be held liable. Take this example:

An administrative assistant often takes time at night to read and respond to her e-mail. She never records the time and has never told her boss that she does it.

But he regularly gets e-mails from her that are time-stamped during non-work hours. That might be enough to put the supervisor on notice that she’s doing extra work and is owed overtime.

‘De minimis’ work?

One possible defense for employers is the FLSA’s “de minimis” exception. The law says employees don’t need to be paid when they do work for “a few seconds or minutes” at a time.

In other words, if a nonexempt employee takes a couple minutes to check e-mail over the weekend, that time doesn’t need to be counted toward overtime pay. But there’s no set rule saying what’s de minimis and what isn’t, and courts have found that blocks of work as short as ten minutes have to be paid.

What to do

So far, the issue hasn’t been tested in court, but law experts warn it’s only a matter of time.

In addition to making sure any and all time worked is properly recorded, here’s how companies can avoid getting hit with those claims:

• Update policies – You have to pay overtime even if you have a policy against working extra hours. But giving people rules about when they shouldn’t work is the best way to avoid those sticky situations.
• Educate managers - If supervisors don’t understand the overtime regs, they may expect and encourage nonexempt employees to check e-mail and do other work at home.
• Limit communication – If managers call or e-mail employees after hours, they may feel encouraged to work overtime. That communication should be limited to critical situations.
• Withhold devices - If your company issues BlackBerries, laptops and other devices to employees, it might be a good idea to only give them to exempt workers.