which managers are exempt from overtime pay?

Most managers don’t get paid overtime.  But as one company recently learned the hard way, the key word is “most.” More than 1,400 store managers recently sued Family Dollar Stores, Inc., to recover back pay for lost OT wages.   The employees regularly worked 60-70 hours a week, but, like most employees classified as managers, they were considered exempt.

Store managers were the highest ranking employees in their respective locations. They were “in charge” of all the employees in their store, so the company argued they qualified for the executive exemption. But that wasn’t enough for the court – it’s the actual duties of a position that matter for the exemption, not title or position in a hierarchy. And in this case:

  • Store managers were closely supervised by district managers
  • They spent about 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.

The court ruled in favor of the employees. Family Dollar was forced to give the managers a total of $35 million for unpaid OT.

So which managers need 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. Source: BusinessBrief.com

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About Arthur De Gennaro

My friends call me Art. Welcome to my blog. In this space you’ll find information and comments on the ophthalmology world, the optical industry, the hearing industry and medical practice management. My intent is to provide information you can use to improve your business and your own performance. Please visit often and feel free to join the discussions by leaving comments.

You can learn more about me and my consulting company, Arthur De Gennaro & Associates, LLC by visiting my web site www.adegennaro.com

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November 2009

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