Despite the very clear regulations specifying what employees should be exempt or nonexempt for wages, misclassification is still one of the most common mistakes employers make.

But it seems both the employee and employer often have a role in this issue. In addition to the employer trying to avoid paying overtime, employees often want to be classified as exempt.

In my interviews with employees across a variety of clients being investigated or audited, many of them feel like they should be exempt and want to be exempt because it seems to imply their position is at a higher level. Yet, wanting to be exempt is not on the official list of exemptions from the government. How do you handle it?

It's not you…

First, it is critical to understand that regardless of how much an employee may want to be exempt, might be happy about getting to be exempt, and may have plenty of written documentation requesting to be exempt, it is not up to the employee to make that call.

Unfortunately, many employers believe that a loyal, happy employee will never sue them. And while that may be true, classification audits can come from a variety of places. A terminated employee may bring a claim that has to be investigated; a current employee who is not as happy or loyal may complain; or a spouse who hates that their significant other is working so many long hours without extra pay could be the inspiration for a claim.

No matter how big or small, no employer is exempt from these issues. They can happen quickly, they are expensive and they are time consuming to address. In this case, spending a little time on prevention is worth it.

Making the case

But how do you keep your employee happy when they are begging to be exempt and feel as if they deserve to be?

Explaining the situation associated with misclassification may work but most employees do not care, especially if they have been classified as exempt before. The most successful argument I have seen work when you are truly trying to help your employee feel appreciated is to explain to them that first, it is not up to you.

Second, explain to them that it is really important to you that they get paid for all the work that they do. Many employers "gross up" or "true up" the nonexempt salary so that the annual rate without overtime is the same as that with overtime. But that only rectifies the situation for the current period.

Explain to the employee that you appreciate them and want them to be paid for every minute they work and by grossing up they would be losing out on money they are rightfully owed. Third, talk to them about their career aspirations. If a position that is exempt is important to them, figure out what it would take to get them to that level and show them the path for achieving it.

Ounce of prevention

While it is best to avoid misclassification in the first place, you may find you have already done it and want to rectify the situation.

I am not an attorney but I can safely say the best thing to do in such a case is to contact an attorney who specializes in employment law in your state. States are different so it is best to get a local expert.

Do this before you take any action. The attorney will be able to help you craft a plan to address any misclassifications while minimizing the associated risk. Google is not a sufficient substitute, and the money you spend on an attorney up front will truly help you in the long run.