On May 24, 2010 the Honorable Frederick J. Martone of the District of Arizona conditionally certified a class of approximately 4,600 current and form Store Managers at AutoZone automotive parts stores across the country (except for California). See Taylor v. Autozone, Inc. et al., 2011 U.S. Dist. LEXIS 55590 (D.Az May 24, 2011). The lawsuit alleges that Autozone improperly treats its Store Managers as exempt from the overtime law and pays them a salary that does not properly compensate them with overtime pay. In reaching this conclusion, the Taylor Court held that the company’s common classification of all store managers as exempt “supports the conclusion that all class members are similarly situated. Taylor, 2011 U.S. Dist. LEXIS 55590 at *7. The workers argue that rather than performing typical managerial tasks (such as hiring, firing and scheduling), they spend the majority of their time performing more basic duties that are usually performed by hourly employees who are entitled to overtime such as, inter alia, stocking merchandise , creating plan-o-grams, helping customers with sales and operating the cash register.

The complaints made by the workers in Taylor are common throughout the retail and banking industry, especially in recent years where many employers have cut back on the amount of overtime its hourly workers are allowed to put in. As a result, salaried Assistant Store Managers and Store Managers have been required to “pick up the slack” and put in long hours performing duties that are usually reserved for hourly employees and not get paid for this time because they are “managers.” This is especially true for Assistant Store Managers or Assistant Branch Managers which are often paid a salary simply to do the same tasks as hourly without any of the authority or responsibility that is supposed to come with the “manager” title.

Judge Munley of the Middle District of Pennsylvania recently denied a Defendant’s motion summary judgment in a case where a Store Manager alleged violations under the Fair Labor Standards Act (FLSA).  In Pierce v. Dolgencorp, Inc., 2011 U.S. Dist. LEXIS 10624 (M.D. Pa. Feb. 3, 2011), a former Dollar General Store Manager alleged that she was misclassified as an exempt employee and therefore wrongfully denied overtime compensation.  Judge Munley noted, after viewing the evidence in the light most favorable to Plaintiff, that Ms. Pierce worked 50 to 60 hours per week, interviewed and hired 14 employees, trained employees, disciplined employees, and scheduled employees’ hours.  Indeed, during a deposition Plaintiff had testified that she was the leader of her store.   

Nonetheless, questions of fact remained as to three factors determinative under federal law as to whether  Plaintiff was properly classified as exempt in her position as a Store Manager:  1) the amount of time spent on managerial duties; 2) relative importance of managerial and non-managerial duties; and 3) relative salaries paid to employee as compared to non-exempt employee.  Judge Munley noted that despite Plaintiff’s job title as a Store Manager, Plaintiff testified that she spent 50% of her time performing manual labor.  Also, on “truck days” – which occurred two times a week, Plaintiff would spend 75% of her day unloading and inventorying.  Regarding the second factor in dispute, Judge Munley noted that because the store refused to grant Plaintiff more hours to give to other non-exempt employees to perform manual labor, and instead made Plaintiff perform such work instead as a Store Manager, a reasonable juror could conclude that Defendant most valued Plaintiff’s manual labor.  Accordingly, as the facts of this case demonstrate, it is a very fact-intensive, as well as legal, analysis as to whether an employee with the title of Store Manager is properly classified as exempt from the overtime laws by his or her employer.

The Boss has found so many ways to violate federal and state overtime law that it’s not really possible to say which violation is most pervasive.  In this edition of The Wage and Overtime Quarterly, however, we explore a violation that certainly ranks near the top of the list of overtime rip-offs: Misclassifying salaried employees as “executives” who are exempt from overtime coverage.

This is an important topic for all you Trial Lawyers, advocates, and Winebrake Law Firm clients who receive this newsletter.  Government investigators cannot possibly clean up America’s wasteland of wage and overtime violations.  So it is up to Trial Lawyers and Workers to recognize workplace abuses and refer the abuses to lawyers who are dedicated to wage and overtime litigation.  History has proven that lawsuits are the most effective way to vindicate the rights of American workers.

The “Executive” Employee Exemption from Overtime Coverage   

The Fair Labor Standards Act (“FLSA”) and state laws such as the Pennsylvania Minimum Wage Act (“PMWA”) generally require that employees receive overtime pay equaling one-and-one-half-times their regular rate of pay for hours worked over 40 during the workweek.  Under these laws, however, “executive” employees are exempt from receiving overtime pay.

The Executive Exemption makes good sense.  After all, real company “executives” are not the types of employees who need the protections of the FLSA’s overtime provision.  That is because real executives have the clout and bargaining power to fend for themselves in negotiating with The Boss for fair pay.

Unfortunately, as discussed below, many companies use the Executive Exemption to deny overtime pay to mid-level and low-level employees who lawmakers never intended to exempt from overtime pay protections.  Year after year, these abuses of the Executive Exemption illegally deprive working American families of millions of dollars in hard-earned wages.

Corporate America’s Abuse of the Executive Exemption

The Executive Exemption is a bonanza for American business.  And far too many companies abuse the exemption to force supposedly exempt “Managers,” “Assistant Managers,” “Department Managers,” “Office Managers,” and “Team Leaders” (the list of exaggerated job titles is endless) to work absurdly long hours performing routine tasks for free.  For sure, there is nothing “executive” about the day-to-day work performed by many of these employees.  Working the cash register, completing routine paperwork, stocking the shelves, unloading delivery trucks, taking inventory, cleaning the work area, and performing manual labor are not the types of job duties that are supposed to fall within the Executive Exemption to overtime coverage.

Abuse of the Executive Exemption is devastating to America’s working families. I am very sorry to report that The Winebrake Law Firm represents many supposedly exempt “executives” who  routinely work 60, 70, and even 80 hours per week.  Some of these individuals barely make minimum wage when their weekly salaries are divided by their hours worked.  Their classification as exempt from the overtime laws is disgraceful.

Recognizing Abuses of the Executive Exemption

The Executive Exemption rip-off thrives when employees do not understand their rights.  Too many employees believe they are “exempt” from overtime coverage just because they are “salaried.”  This belief is simply wrong.  Under the law, a salaried employee qualifies as an exempt “executive” only if the employee’s real-life job duties entail work of a truly executive nature.

Most overtime misclassification lawsuits turn on whether the employee’s real-life job duties actually entail executive work.  Importantly, in determining whether the Executive Exemption applies, the employee’s job title is not particularly relevant.  The federal regulations specifically state that “[a] job title alone is insufficient to establish the exempt status of an employee.”  29 C.F.R. § 541.2.  Thus, it does not matter whether the supposedly exempt employee has the term “Manager” in his or her job title.

To qualify for the Executive Exemption, all of the following requirements must be satisfied:

•           The employee must receive a guaranteed weekly salary of at least $455 per week;

•           The company generally may not make deductions from the fixed weekly salary;

•           The employee’s primary duty must be managing the business operation or a recognized department or subdivision of the business operation;

•           The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and

•           The employee must have the authority to hire and fire other employees, or, at least, his/her recommendations as to hiring and firing must be given particular weight.

Moreover, under Pennsylvania law, any employee classified under the Executive Exemption must spend at least 60% (and, sometimes, 80%) of his/her time performing the types of tasks listed above.

Application of the above requirements requires a careful analysis of the employee’s actual job experience and a detailed review of federal/state regulations and court decisions.  If you have any reason to suspect that you, a co-worker, or a client might have been improperly denied overtime under the Executive Exemption, you should call a law firm that concentrates in wage and overtime law (e.g. The Winebrake Law Firm!!!) for a detailed evaluation.

Examples of Salaried Employees who are Commonly Misclassified as Exempt from Overtime Coverage

Here are some examples of salaried employees who commonly are misclassified as exempt from overtime coverage under the Executive Exemption and other “white collar” exemptions:

•           Managers and Assistant Managers of small retail stores such as “dollar stores,” “convenience stores,” and retail shops within shopping malls;

•           Managers of departments within larger retail establishments such as department stores, “big box” stores, supermarkets, and drug stores;

•           Newspaper sales managers;

•           Bookkeepers or Accountants without CPAs;

•           Social Workers and Case Managers working for social service agencies;

•           Licensed Practical Nurses (LPNs), Medical Assistants, and similar line-level health care employees;

•           Computer technicians and computer support staff (including help desk staff) who do not regularly write code;

•           Warehouse managers and supervisors;

•           Work crew captains or foremen;

•           Mortgage loan officers;

•           Home health aids or visiting nurses employed in Pennsylvania;

•           Call center sales representatives; and

•           Trainees for exempt positions.

 “Only YOU Can Prevent Overtime Abuse”

Smokey the Bear used to appear on TV to tell us: “Only You Can Prevent Forest Fires.”  Well, the same can be said of overtime abuse.  Too many Trial Lawyers, advocates, and workers believe that the overtime laws are too complicated for them to understand, so they leave it to The Boss to interpret the law.

But The Boss is under pressure to feed the bottom line, so his interpretation of the overtime law might not be too worker-friendly.  If you believe the overtime rights of you or your client are being violated, give us a call.  Stop guessing at your overtime rights.

In a recent decision from the Middle District of Pennsylvania, Plaunt v. Dolgencorp, Inc., 2010 U.S. Dist. LEXIS 132135 (M.D. Pa. Dec. 14, 2010), Judge James A. Munley held that a store manager’s cause of action seeking overtime-pay under the Fair Labor Standards Act, (FLSA), 29 U.S.C. § 213(a)(1), could proceed past the summary judgment stage. In that case, the plaintiff was a former Store Manager for Dollar General. While employed as a Store Manager, the plaintiff was never paid any overtime for hours worked over forty within a workweek; instead, she was paid on a salaried basis. Defendant argued that Plaintiff was not entitled to overtime because, according to Defendant, her primary duty was management. Plaintiff in turn argued that although her job title was “Store Manager,” a review of her daily job duties demonstrated that she in actuality spent a large portion of her day performing non-managerial functions.
After a thorough review of the applicable federal caselaw and regulations, Judge Munley held that a jury could decide that plaintiff’s primary duty while employed as a store manager was not management. The District Court focused on five factors which steered its analysis: 1) the amount of time plaintiff spent on managerial duties; 2) the relative importance of the plaintiff’s managerial and non-managerial duties; 3) the frequency with which the plaintiff exercised discretion; 4) the degree to which the plaintiff was supervised; and 5) the relative salaries paid to the employee as compared to a non-exempt employee who performs the same non-managerial tasks. Within this analysis, Judge Munley found that a jury could find that the plaintiff “could not alter store hours or change the store’s layout,” “could not set pay rates, but only recommend advancements,” “could not hire or fire employees, but only make recommendations,” and that she was “required to operate within the payroll budget.” Id. at *36.
In sum, this decision indicates that one must look beyond an employee’s job title in determining whether an employee was wrongfully denied overtime compensation under federal law. As the Supreme Court of Massachusetts observed in Goodrow v. Lane Bryant, Inc., 432 Mass. 165, 296 (Mass. 2000): “A manager in name does not a manager make.”

I just read an especially thoughtful opinion by Judge Catherine D. Perry of the United States District Court for the Eastern District of Missouri in an FLSA misclassification lawsuit entitled Kanatzer v. Dolgencorp, Inc., 2010 U.S. Dist. LEXIS 67798 (E.D. Missouri July 8, 2010). The decision is important in two respects. First, the Court finds disputed facts concerning the issue of whether plaintiff, a Dollar General Store Manager was properly classified as an FLSA-exempt “executive.” Applying the four factors described in 29 C.F.R. 541.700(a), the Court emphasized the common-sense notion that the amount of time a supposed “executive” spends performing non-exempt duties such as working the cash register, assisting customers, and performing other “hourly” tasks really DOES matter under the misclassification analysis. Second, the Court rejected Dollar General’s argument that, in calculating damages, plaintiffs’ economic expert was required to utilize the fluctuating workweek method (“FWM”) of overtime compensation. Here, the Court emphasized that the FWM cannot be applied retroactively since, among other reasons, the method requires that the employee actually received overtime pay. This opinion will provide guidance to retail employees seeking to vindicate their overtime rights.