Misclassifying Employees As "Managers": The Wrong Way To Save A Dollar
Dollar General, like other discount retailers operating in multiple states, operates on thin margins. While saving a buck is vital for Dollar, misclassifying employees as exempt managerial staff when they have little say in the management of the business and perform mostly manual labor, in order to avoid paying them overtime wages, is the wrong way to do it.
Five former “managers” of Dollar filed suit against the chain, claiming that their duties were anything but managerial—and that they should have been paid overtime wages. The five had originally sought to bring a class action suit in 2008, but the class action claims were dismissed. These five employees are now proceeding with their individual claims.
Dollar is no stranger to overtime lawsuits. A year earlier, 10 similar lawsuits were initiated in Alabama and transferred to West Virginia. Those were just the tip of the iceberg. Hundreds of cases against the store have been brought in multiple states.
In all cases, the employees claim that Dollar misclassified non-managerial employees as exempt managers in order to avoid paying overtime. The employees say that they worked 60-90 hours per week and one employee claimed that, if she was a manager, she should have had some say in how things were done, but that, instead, she was performing manual labor and not managerial tasks.
Under the Fair Labor Standards Act, employees can be exempt from the overtime pay requirement under the “Executive exemption” if the employee’s primary duty is managing the business. While there’s no hard-and-fast rule for exactly how much time must be spent managing—it’s safe to say that it needs to be more than the 5-10 hours per week, as claimed by the Dollar employees in one of the Dollar cases.
It’s understandably tempting to misclassify staff as exempt employees when, like Dollar, a chain operates thousands of stores, each with multiple employees. That’s an enormous payroll, even without overtime wages. One plaintiff’s attorney estimated the chain has saved $80 million by not paying overtime. However, like Dollar, doing so could be the fodder for multiple misclassification lawsuits. The take-away? Don’t call employees “managers” and classify them as “exempt” from overtime when their duties and responsibilities do not support the classification. It’s what they do on the job, not what they are called, that determines how they need to be paid.
Your wrap up it well with your sentence, "It’s what they do on the job, not what they are called, that determines how they need to be paid." Good job!
I work for an employer in a retail store. This is a private non chain retail business. We have had two store policy changes in the last two years governing various things employees must and must not do. I work as a sales clerk. One sales clerk is the vice president of the company, another is the president and general manager, we have one administrative secretary and I and another guy are general sales clerks. We are asked to sign this new policy statement of recent.
I noticed that the policy statement only refers to 'hourly' employees. Me and the other guy receive a 'salary' each week as evidenced by the lack of hours documented on our pay checks and the term 'salary' that appears by our compensation amount. It is the same amount every week. We are required to work a routine that amounts to 44 hours one week and 51 hours the next with the cycle repeating twice per month. We are not compensated the 30 hours each month we work over 160 hours or 4x40hrs.
Have we been misclassified as salaried employees exempt of overtime pay? I don't see how we meet the definitions of administrative, executive or professional as I read it. We are blue collar. We perform a lot of manual labor ie., shipping and receiving, stocking inventory, filling paint orders. All of our activities are tightly controlled by our general manager on a daily basis. He makes all the final decisions.
How does the statute of limitations work? I only suspected I was not actually a salaried type employee recently, even though I have been there 3+ years, based on the bizarre policy statements we have been asked to sign.
Am I missing the point?
I can see why you would have concerns, however there may be state or local laws that apply to your situation in addition to federal standards that may apply to your industry. It is best to consult an attorney familiar with those laws who can provide you with appropriate guidance.
I work for a landscape company in savannah, ga. My nominal title is 'Director of Operations'. I am considered overtime exempt. I do direct more than 2 people in the field and do a good bit of office work (proposals and correspondence). However, I work side by side in the field with my workers. I perform well over 20 percent manual labor. I am often asked to work on my day off to lay sod, spread pinestraw, plant plants and install drainage pipe.
advise?
thanks,
Tom
Tom:
You’ve raised an interesting question. Your scenario demonstrates why employers need to take care when classifying managers. These issues are always very fact specific. If you have concerns, you should speak with an attorney familiar with the law of your jurisdiction who can spend time with you to review all the facts.