A recent $20.9 million settlement between Rite Aid and 9,400 of its managers gives store managers and assistant managers reason to consider whether their employers are complying with the overtime pay provisions of the Fair Labor Standards Act.
The Fair Labor Standards Act requires that employers pay overtime at a rate of time-and-a-half to non-exempt employees who work more than forty hours a week. Companies often assume that giving an employee the title of “Manager” means the employee is “exempt” and therefore not entitled to overtime pay. That assumption is not necessarily true.
Determining whether a manager is exempt under the FLSA typically depends on applicability of the FLSA’s “executive” or “administrative” exemptions. At the outset, for either to apply, the employee must be paid the equivalent of $455 per week. The executive exemption then focuses largely on whether the employee’s primary duties involve management of the business, and whether the employee has disciplinary authority. The administrative exemption is essentially concerned with the employee’s ability to exercise discretion with respect to matters of significance to the business. In either case, it is critical to look beyond job titles and consider the employee’s actual job duties. When employers fail to do that, they can pay a hefty price.
Rite Aid got sued for not paying its managers overtime in accordance with the FLSA. But Rite Aid is far from alone. In the past several years many other nationwide companies-including CVS, Bath & Body Works, Radio Shack, and just recently, Five Guys Burgers and Fries-have been sued by groups of their respective employees under the FLSA. Brought on behalf of large groups of “managers,” these lawsuits are known as “collective actions,” and can involve hundreds, or even thousands, of employees. Each employee may be entitled to their overtime pay, statutory damages, and attorneys’ fees. As a result, multi-million dollar settlements and judgments like in the Rite Aid case are not uncommon.
Store managers, assistant managers, and other lower-level managers whose job duties involve mostly manual tasks and little or no discretion, may well be entitled to overtime pay. These employees should consider whether their employers are complying with the FLSA.
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