Some retail employers assume—incorrectly—that adding the word “manager” to their job descriptions and paying them a salary means they are exempt from federal and state overtime rules and regulations. More likely, the boss misclassifies employees as managers and assistant managers intentionally to avoid paying overtime and benefits. It’s not uncommon for managers to work 15-20 hours over the 40-hour week. For instance, In the America Pawn Shop overtime lawsuit, a manager claims he typically works 60-hour weeks.
Assistant Manager Misclassification
Particularly challenging is determining whether an assistant store manager is exempt from overtime. Obviously a cashier is eligible and generally a district manager is not, but assistant managers are in that gray area, where there are some managerial duties but they seldom in charge. They typically perform nonexempt and exempt tasks, but the key factor is whether their primary duty is performing managerial functions. They may be involved with overseeing employee tasks but spend more time assisting customers, stocking shelves, cleaning the aisles – all of which are nonexempt duties.
In another recent case filed against a retailer, Kohl's Department Stores is facing a federal lawsuit for not paying assistant managers overtime. Stacy Collins, a former employee classified as exempt from overtime, claims that her work mainly included "unloading freight, stocking shelves, filling on-line orders, ensuring that the merchandise was arranged according to company standards, counting inventory, and organizing the store," according to the lawsuit.
In order to avoid employment complaints, retail employers must review the type of work that managers and assistant store managers are performing to determine whether they qualify for the exemption. The America Pawn Shop manager states in his lawsuit most of his time is spent stocking shelves and filling in for other employees.
According to the Department of Labor, store managers and assistant managers can be exempt when:
• They are compensated on a salary basis of over $455 per week (i.e., the "salary threshold").
• Their primary duty is the management of the enterprise.
• They customarily and regularly direct the work of two or more other full-time employees or their equivalent, e.g., four part-time employees.
• They have the authority to hire or fire other employees, or their suggestions and recommendations on HR decisions are given particular weight.
The Cost of Misclassification
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The number of cases brought in federal courts under the Fair Labor Standards Act from 2010 through 2017 rose by nearly 38 percent — more than 10 times the rate of federal civil cases overall and retailers have been the most frequent targets. Most of those lawsuits, such as Cash America Pawn alleging misclassification of employees as managers exempt from overtime, have been class or collective actions.