Do Not Judge Employees by Their Titles: Make Sure Employees Actually Are Managers Before Paying Them Like Managers
Most employers know that executives do not get overtime. Some people are unaware, however, that it takes more than a title to make a manager. AT&T and its subsidiaries are in the process of finding that out the hard way, as they confront a $1 billion lawsuit brought by “managers” who were not paid overtime. The suit is being brought by seven named plaintiffs, and also seeks class-action status to bring in another 5,000 employees.
The affected employees are called “first level managers” or “level one managers.” According to the lawsuit, first level managers perform primarily clerical duties, such as relaying information between “real” managers and field technicians, and do not have sufficient discretion to be deemed managers. The suit alleges that they are misclassified as exempt employees and given managerial titles specifically to avoid overtime.
According to the Fair Labor Standards Act, the management or executive exemption to the overtime pay requirements includes four criteria, all of which must be met:
• The employee is paid on a salary basis, at least $455 per week (or $23,660/year)
• The employee’s primary duty must be management – that is, the employee either manages the company as a whole or a recognized department or subdivision
• As part of managing, the employee regularly directs the work of at least two full-time employees or their equivalent (for instance, four half-time employees would equal two full-time employees); and
• As part of managing other employees, the claimed manager has either actual hiring and firing authority, or at least substantial input into hiring, firing, retention, and promotion decisions
The Labor Department puts out a very helpful factsheet on the subject. For most purposes, common sense will suffice – a manager must actually manage.
In other words, under the FLSA it is the substance of a job, not the nomenclature, that controls.
