Keith Markel, Alana Mildner Smolow and Kayla West Share Tips for Luxury Brand Retailers to Avoid Misclassification Lawsuits in The Global Legal Post

Partner Keith Markel, co-chair of Morrison Cohen’s Labor & Employment Practice and Luxury Brands Group, along with Counsel Alana Mildner Smolow and Associate Kayla West, both members of the Luxury Brands Group, co-authored an article in The Global Legal Post entitled “Wage and Hour Cases Are Always in Fashion.” With the prevalence of misclassification lawsuits against luxury brands, which are often brought as class or collective actions with substantial amounts at stake for employers, the authors discuss ways for retail employers to ensure compliance with ever-changing U.S. overtime laws. The article includes the following tips for employers:

Given the law’s fluctuations for minimum salary thresholds across various U.S. jurisdictions, stay apprised of applicable federal, state and local wage and hour laws.

Be mindful of minimum salary thresholds under federal law for the EAP exemption ($684 per week, or $35,568 annualized). Several states, such as New York and California, maintain their own minimum salary thresholds that far exceed $684 per week. In both states, minimum salary thresholds for executive and administrative overtime exemptions are set to increase on January 1, 2025.

Paying the minimum salary for exemption status alone does not insulate the employer from liability.  

Individuals who are exempt from overtime pay – typically employees in executive, administrative and professional roles under the “EAP exemption” – must generally 1) be paid at or above the minimum salary threshold and 2) perform certain job duties associated with the exemption.

Even if an employee is paid on a salary basis at or above the minimum salary threshold, a court or the federal or state Department of Labor (DOL) could find that the employee has been misclassified as exempt because the employee does not perform the requisite job duties for an exemption.

Consider increasing an exempt employee’s salary beyond the minimum salary threshold to help ensure that the employee will not go from exempt to nonexempt overnight based on annual or other increases to minimum salary thresholds, and to avoid the appearance of merely “checking boxes” for overtime exemption compliance.

Maintain up-to-date documentation that accurately reflects the employee’s role and job responsibilities. Periodically review and audit exempt employees’ roles to confirm that the job description reflects their job duties and is consistent with the exemption requirements under applicable law.

Fashion industry retailers: consider keeping separate job descriptions for different stores to the extent employees have more responsibility in certain locations.

When in doubt, consult with employment counsel in making classification decisions to avoid potential wage and hour liability.

Read the full article here.