As all HR pros know, most managers don’t get paid overtime. But, as one company recently learned the hard way, not everyone with the title of “manager” is exempt.
More than 1,400 store managers recently sued Family Dollar Stores, Inc., claiming they weren’t payed OT they were owed.
The employees regularly worked 60-70 hours a week, but, like most employees classified as managers, they were considered exempt.
The managers were the highest-level employees in their respective stores. Therefore, the company argued, it was clear that they should qualify for the exemption.
But that wasn’t enough for the court, which ruled that the actual duties of the jobs made them nonexempt positions. For example:
- The store managers were closely supervised by district managers
- Store managers spent roughly 80% of their time on manual tasks like running registers, stocking shelves, cleaning the store and unloading trucks, and
- Virtually all managerial decisions, such as scheduling shifts, setting store hours, and hiring and firing employees, were made by district managers — store managers simply carried out those decisions.
Family Dollar was forced to give the managers a total of $35 million for unpaid OT.
What managers are exempt?
Given the confusion over who’s really exempt, how can HR figure out who needs to be paid OT?
The court cited the FLSA’s criteria for the executive exemption. To be exempt, managers must:
- be paid a salary of at least $455 per week
- have management as a “primary duty”
- direct the work of at least two full-time employees, or an equivalent number of part-timers, and
- have the authority to hire, fire and promote — or at least have significant influence on those decisions.
Cite: Morgan v. Family Dollar Stores, Inc.