When Assistant Managers and Shift Supervisors Are Owed Overtime

Manager in Name Only: When Assistant Managers and Shift Supervisors Are Owed Overtime

Retail chains, fast food franchises, convenience stores, restaurants, and call centers routinely give workers a management title, put them on a salary, and stop paying overtime. Assistant manager, shift supervisor, key holder, team lead, and store manager in training are among the most common. Many of these workers spend the great majority of their time doing exactly what the hourly employees around them do: running a register, stocking shelves, cooking, cleaning, unloading trucks, and taking customer calls. Under the Fair Labor Standards Act, a title and a salary do not make an employee exempt from overtime. The exemption depends on what the job actually involves.

The executive exemption, which is the one most often claimed for these positions, requires the employer to prove four things. The employee must be paid on a salary basis at not less than the threshold amount set by the Department of Labor's regulations. The employee's primary duty must be management of the enterprise or of a customarily recognized department or subdivision. The employee must customarily and regularly direct the work of two or more other full-time employees or their equivalent. And the employee must have authority to hire or fire other employees, or the employee's recommendations on hiring, firing, advancement, and promotion must be given particular weight. All four requirements must be met. Failing any one of them means the exemption does not apply and overtime is owed for every hour over 40.

Primary duty is where most of these cases turn. Primary duty means the principal, main, major, or most important duty the employee performs. Courts look at the relative importance of management duties compared to other duties, how much time is spent on exempt work, how free the employee is from direct supervision, and how the employee's salary compares to the wages of the hourly workers doing the same non-exempt tasks. Performing management tasks and hourly tasks at the same time does not automatically defeat the exemption, but a supervisor who spends most of a shift on the line, on the floor, or on the register, and who has little authority to depart from company procedures, has a strong argument that management is not the primary duty.

The two-employee requirement is often overlooked and is frequently the cleanest way to defeat a claimed exemption. The employee must customarily and regularly direct the work of at least two full-time employees or the equivalent, measured in employee-hours rather than headcount. In a small store, on an overnight shift, or during slow hours, an assistant manager may be supervising one person or working alone. If that is the ordinary situation rather than an occasional one, the exemption is not available no matter how the job is described.

The pattern that produces these claims is easy to recognize. A worker is promoted from an hourly position to a salaried assistant manager role, receives a modest raise, and starts working 55 to 70 hours a week. Corporate sets the schedules, the prices, the promotions, the ordering, and the labor budget. Hiring decisions run through a district manager. The new manager's actual added responsibility is opening, closing, holding the keys, and covering shifts that corporate labor targets will not fund. When the raise is divided across the real hours, the promotion often produces a lower effective hourly rate than the job the worker left.

Employers that treat these positions as exempt usually keep no record of the hours worked, which makes the unpaid overtime harder to see but no less owed. When an employer fails to keep accurate time records, workers may prove their hours through reasonable estimates supported by whatever evidence exists. Schedules, opening and closing reports, security system arm and disarm logs, point-of-sale timestamps, delivery receipts, and text messages with district managers all help establish the real hours.

Workers in similar situations may have legal rights under the FLSA. Unpaid overtime and minimum wage claims are generally subject to a two-year statute of limitations, and three years if the employer's conduct was willful. Time limits apply.