The many twists and turns of FLSA overtime law

‘Managers’ weren’t exempt employees – and employer now owes $36M in FLSA overtime case

When it comes to exempt v. non-exempt classification, the title of “manager” doesn’t much matter. That’s what Family Dollar Stores found out when a federal court upheld a $36 million judgment against it for failing to pay overtime to 1,424 workers.

These were store managers whom the company considered exempt from FLSA overtime requirements. But the court said they weren’t exempt employees. For one thing, they spent only about 10% of their time on managerial tasks. Otherwise they were stocking shelves, mopping floors or running the register.

For another, they had little managerial latitude – a company manual prescribed each of their duties in fine detail. Instead of looking at job titles, FLSA overtime law weighs whether people spend at least half their time on managerial functions, how independent of supervision they are, and how much they earn.

Cite: Morgan v. Family Dollar Stores, No. 07-12398, 11th Cir., 12/22/08.

COMPANY OWES $1.6M FOR FLSA OVERTIME VIOLATIONS

A Temple, TX-based wholesale food distributor will pay $1.6 million in back overtime to 570 employees it misclassified as exempt employees, DOL said. The employees, retail-merchandising specialists, were wrongly classified as outside sales reps, exempt from FLSA overtime rules. DOL noted that to be classified as sales reps, employees must either be making sales or obtaining contracts for services their employer will provide.

Cite: DOL v. McLane Co. Issue 6.16 3-24-2008

EMPLOYER IGNORED EXEMPT EMPLOYEE ISSUE

A California flood control district hired a consultant to study whether a dam tender was an exempt employee, then did nothing about the study’s recommendations. As a result, a judge refused to throw out the employee’s claim that the employer willfully violated the FLSA overtime law by failing to pay him overtime. The consultant study recommended the employer evaluate the dam-tender position for exempt status and overtime liability, which it did not do. The judge said this showed the employer was well aware it had a potential problem, yet ignored it.

Cite: Watson v. Yolo County Flood Control & Water Conservation District. Issue 6.11 12-31-07

Employer’s own memos undermined FLSA overtime case
If you classify an employee as an exempt employee under FLSA law, you’d better treat him as exempt – or he may lose that status.

An on-site maintenance supervisor at an apartment complex received lots of written instructions from his employer about on-call time, lunch time, punching in and other activities a court said was inconsistent with salaried employees.

One memo stated that emergency calls would be paid from the time of call – and all travel and call time had to be recorded.

Given such procedures, said a judge, the employee was a non-exempt, salaried worker.

Cite: Estanislau v. Manchester Developers.

Exempt vs. Non Exempt: How do you classify?

Here’s a case where an employer confused the name of a job with its duties – not a good idea when it comes to meeting FLSA overtime law.

A telecommunications firm figured the job titles “Tenant License Administrator,” “Regional Administrator” and “Project Coordinator” sounded important enough to be exempt from overtime. That was a bad decision.

A DOL investigation revealed these and 25 other positions had all been misclassified as exempt employees. The employer paid nearly $290,000 in back wages to 167 employees.

This case is a reminder to perform an internal FLSA self-audit before the government does.

Cite: DOL v. American Tower Corp.

Employer misclassified 28 jobs

Conducting self-audits may help you spot misclassified jobs before a wage-and-hour inspector does.

A telecommunications firm misclassified 28 positions as exempt from FLSA overtime regulations.

DOL investigators found numerous overtime violations. The employer cooperated with the investigation: It agreed to pay 167 employees $290,000 in back wages and perform a self audit to ensure all jobs were properly classified.

Cite: DOL v. American Tower Corp

Overtime-eligible workers are on the rise

Now that the new FLSA overtime law is in effect, doomsday pundits who predicted hundreds of thousands would lose overtime benefits ought to have their tails planted firmly between their legs.

Nearly half of employers (48%) say more employees are now eligible for overtime, while 49% report little or no change, according to a survey conducted by the HR Policy Association.

“Our members are baffled by those who claim millions of workers will be denied overtime because of the change in the rules,” said HR Policy Association President Jeffrey McGuiness.

Source: HR Policy Association.

Little supervision duties equals no exempt employee status

A manager whose primary duty isn’t to supervise cannot be considered exempt for overtime purposes.

A Tennessee convenience store chain was reminded of this when DOL hit it up for $720,000 in back wages and damages for 110 assistant managers.

Cite: DOL v. Pilot Corp.