|Becker College |
|FLSA |
|Class V, Essay |

|Jennifer Macduff |
|12/15/2015 |

The employee working at the upscale coffee shop was promoted from Barista to Manager. The manager was reclassified as exempt and will not be receiving overtime pay. The Manager, in addition to being responsible for managing and making sure the store runs smoothly, performed non-management type work; waiting on customers, checking supplies and cleaning bathrooms. The manager feels that although they are involved in interviewing that ultimately the District Manager makes the decision. The manager is thinking that they should be considered non-exempt and be paid for overtime work.

Would this company be able to document that the store managers are exempt from the FLSA (not to mention similar state laws)?

If the employer has not adequately maintained records the court could accept the Managers claim and give the employer the burden of disproving the allegations. Under FLSA the employer automatically bears that burden. The company should be able to document that the Manager’s primary duty is managing the store, that they direct the work of two or more employees and has the authority or input into hiring, firing and advancement of employees.

The rule of thumb is that the exempt employee devotes substantial time to supervision. That includes training workers, setting and adjusting pay rates and hours, handling complaints, disciplining employees, directing work and determining what materials, supplies, machinery or tools to buy, sell or stock. And, that doesn’t mean that exempt employees are excluded from performing tasks such as stocking shelves or serving food. If they are responsible for the success or failure of the store, while they perform nonexempt work, they can still be considered exempt

But, the more time that the manager spends doing the work of the store as opposed to managing the work may mean that they are exempt in name only and eligible for overtime pay.
What would it cost to reclassify your store managers as non-exempt?

The cost to reclassify an employee can be huge especially now that the federal government and many states are cracking down on misclassification. If found liable, the company could be responsible for back wages, taxes, penalties, interest and attorney’s fees.

If managers feel overworked and underpaid, what do you project that they will do when the economy picks back up? Is that a concern for the company?

This is definitely a concern for the company; there are costs associated with recruiting, impact to the store performance, impact on morale, training costs and customer dissatisfaction.

Is the company in compliance with the FLSA? What would it cost to have a lawsuit filed against the company? Have other companies in your industry had any FLSA issues. What can you learn from their experiences” Would you advise meeting with the corporate counsel? What facts and observations would you recommend be presented at such a meeting?

On average, employers pay up to $4.5 million dollars to settle wage and hour cases. An attorney recently told Bloomberg Businessweek: "I can hit a company with a hundred sexual harassment lawsuits, and it will not inflict anywhere near the damage that a single wage-and-hour suit will.” There are many well-known FLSA cases that have taken place within the same industry, Starbucks being one of the most popular. The employer in this case may be at risk if they cannot prove that the manager’s duties extend beyond what the non-exempt employees are handling.

The employer should meet with their corporate counsel to ensure that they are in compliance with FLSA. Most importantly, the company needs to be transparent when dealing with counsel to ensure that counsel has all the detail they need. The company needs to ensure that they:

➢ Classify employees correctly. ➢ Incorporate FLSA-relevant policies into the training procedures. ➢ Perform a comprehensive wage-and-hour audit. ➢ Understand wage and hour obligations, review with human resources personnel their current wage and hour commitments and obligations. ➢ Review the company’s written policies and look for disparities between company policy and practice and the provisions of the FLSA. ➢ Maintain timecards and other records ➢ Training managers. ➢ Titles are not everything and they must remember that they don’t determine whether an employee is exempt from the provisions of the FLSA (i.e., putting “Manager” in a job title does not automatically qualify an employee for an exemption). ➢ Do not assume and make assumptions when dealing with wage and hour issues!

References

10 Costly FLSA Mistakes: Why Companies Are Losing in Court. (n.d.). Retrieved December 16, 2015, from http://www.replicon.com/10-costly-flsa-mistakes-why-companies-are-losing-in-court

Starbucks Hit With Another FLSA Overtime Suit - Law360. (n.d.). Retrieved December 16, 2015, from http://www.law360.com/articles/83571/starbucks-hit-with-another-flsa-overtime-suit

Using The Fair Labor Standards Act For Nickel And Dimed Employees. (n.d.). Retrieved December 16, 2015, from http://www.litigationandtrial.com/2013/01/articles/attorney/civil-rights-1/flsa-settlements-nickel-and-dimed/