$35M question: Which managers are exempt from overtime pay?

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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.

What managers are exempt?

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.

0 thoughts on “$35M question: Which managers are exempt from overtime pay?”

  1. My husband works for a city as an engineer he is paid as an exempt employee, although he is required to submit a time card and is “docked” time if he goes to a Dr. appointment at the end of the day. He does not make management decisions, he does not direct the work of anyone, and he does not have the authority to hire, fire anyone. He does make more than 455 per week. Is he considered exempt?

  2. Sonia
    He may fall under the Professional employee exemption or a partial exemption it is hard to say with out knowing what kind of work he does. regarding the docked time: their may be an issue there. from what i have read you can only dock time if the company has set up an aloted an amount of paid time off and the EE has used this time up.

  3. I have professional level technicians that I pay on a salary. They make decisions about when to perform their duties which may be after “regular” hours or on weekends, depending on the clients needs. They do fill out a timecard but are never docked for going to the doctor. It is used to track PTO and to keep an eye on how much time they may be working “over”. They are paid over $455 per week, have no one working directly under them. Are they considered exemp?

  4. Sonia-Keith was right in suggesting that your husband is likely classified exempt under the Professional classification. However, the minute the company (city) docks him for going to the doctors at the end of the day they lose the right to classify him as exempt. The FLSA is very clear on this. You may want to take a look at it and then discuss it with a lobor attorney.

  5. I am considered a manager and director of Information Technology in which I regularly perform non-managerial duties while physically at work to compensate for my department as well professional level technical duties during off hours and have been doing so for several years. I get paid a salary and get “no pay” on days which I do not “punch” into the building. I am working at all times (pretty much on call with worldwide IT systems; I am in charge of multi-worldwide network data centers and networks with employees over 250) and work every weekend including 2 to 3 hours per week night. I find it hard to believe my company has a Salary 40hr work week but also a time punch system and can dock me for not “punching” a minimum of 40hrs into a physical building. I spend at least 16hrs on the weekend working at home and 2 to 3 hrs per night during the off-peak hours for this wonderful job. If I am supposed to spend at least 40hrs during the week in a building to get paid for 40hrs why would I not be eligible for OT in which I spend my own time? I was told I cannot be paid for time I did not spend in the building or overtime since I am salary. I only have 1 employee and my boss has nothing to do with the direction and/or decision making of my department. I work for a medium sized company and have been doing so for several years. Some managers do get overtime and unfortunately my hourly employee with his overtime makes more than me and I am the manager/director of the department.

  6. In a home health setting where staff nurses are paid a dollar amount per visit and an hourly rate for meetings, how would the overtime calculation work?

  7. Sonia, I think the difference in this is going to be because he works for a “public employer” as opposed to a “private employer”. The public employer (i.e., government) can do things a little differently. You might check DOL website on public employer rules and classifications.

  8. Joe W:
    There is a difference between being salaried and being exempt. You can be salaried and still be entitled to overtime. If you are classified as exempt, you are exempt from being paid overtime, and you may NOT be docked for hours not worked except for whole day absences for personal reasons. You need to find out if you are classified as a salaried or exempt employee. Being exempt requires that you be paid a set salary regardless of the amount of hours you work. You need to talk to your HR mgr. I doubt he/she knows what’s going on. If that doesn’t work, there’s always the DOL.

  9. Sonia said her husband works for a City. This is important, as the Fair Labor Standards Act treats public sector employees a little differently. There is a provision for public sector entities that have a timekeeping system, and a leave system in place which allows the entity to have the employee use their leave for doctor’s appointments and so forth, for times that are less than a full day.

    Years back, public sector employers could not “dock” an exempt employee for a partial day absence, but even that ruling has been recently reversed in the Courts.

  10. We are a non-profit organization. Does supervision of volunteers qualify a person as an exempt employee, or do the workers also need to be employees? The employee meets the other criteria for exempt status, salary, responsibility, supervision, etc.

  11. I had an employee who was head of his department as maintenance supervisor. He started with our company by working in the field installing sprinkler systems. As we grew I gave him the opportunity to work in the office to start the new department of maintenance and tenant work for sprinkler systems. He said he would like to give it a try. I explained that he would not be making overtime but that I would pay him for each hour he worked and gaurenteed he would never get less than 30 hours a week. His lowest pay here during the 3 1/2 years he worked in this position was $25.00 an hour. In other words he would never make less than $750.00 a week. But if he worked 52 hours in a week @ $25.00 an hour he made $1,300.00 for the week. He had 3 men that he would schedule for work. He also had the ability to hire and fire. He would estimate, purchase and schedule work within his department. A few times when he had scheduled a maintenance test and we had no one available do to contract schedules he would preform these inspections. This did not happen very often. Maybe 1 day out of the month. Did I pay him wrong? Do I owe him the half time?

  12. @Chris I am afraid you need to put this EE on a salary. I went back to my reference books just to make sure but I am afraid that every thing I read stated that to be exempt the EE must be paid on a salary bases. You will need to talk to a employment lawyer to see if you need to pay the back pay but for now I would at least make the change over to salary. Good luck.

  13. Curious – The rules really are the same, but an Assistant Manager for one company may meet the criteria to be classified as Exempt whereas an Assistant Manager with another company may not. It depends on the responsibilities for the Assistant Manager’s job function. It’s not about the job title. The determination is based on the job function or responsibilities the person actually performs. The position would have to meet the criteria of one of the exemptions available to be “exempted” from the overtime rules. DOL will most likely tell you that every position is non exempt. IF a particular job function meets one of the exemption classifications (i.e., Executive, Professional, Administrative, etc.), then that function or job can be classified as exempt and would therefore be “exempted” from the overtime rules. But again, the job function must meet all of the criteria to be exempted. I would check with my Labor attorney or DOL on how to classify the Assistant Manager.

  14. If you are a manager with two or more employee’s working for you is it law that you be paid as an exempt employee or can you remain hourly?

  15. Ok question here: my husband is the supervisor maintenance for a student apartment complex. He works at least 3-4 hours extra every day, HARD labor in the heat of Texas (air conditioners, painting, manifolds, make readies, cleans and repairs swimming pool). Anyways, he only has ONE assistant and right now they got him 3 seasonal part timer assistants for their busy summer turn for 6 weeks only. He is paid salary only-nothing extra for him being on call on the weekends, he hasn’t gotten a bonus, nor heard word of a bonus. They pay him salary on the 1st and the 15th only (which makes it even harder because it feels like more time in between pay periods. What to do?? I always thought that he should be given a good bonus which should compensate for all the extra hours and time. Also, we don’t live in property do there is no compensation for housing just in case anyone was wondering. Thank you!! And any advice would be great

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