Monday, March 7, 2011

Store Manager Is FLSA Exempt, Says Employer. Not So Fast, Says Court.

In Pierce v. Dolgencorp, Inc., the U.S. District Court for the Middle District of Pennsylvania held that a Store Manager's claim that she was owed unpaid overtime wages under the Fair Labor Standards Act (FLSA) could be sent to a jury for determination. In so doing, the Court rejected the employer's arguments that the Store Manager had to be classified as an "executive employee" as a matter of law.

Cindy Pierce was originally hired by Dollar General as a cashier in 1998. In 2001, she was promoted to Store Manager, and continued to work in that capacity until June or July of 2003. As a Store Manager, Pierce was the only salaried employee and the only employee who was classified as "FLSA exempt" by Dollar General.

As a Store Manager, Pierce had at least one Assistant Store Manager (ASM) and one clerk, and managed a store budget of over 200 hours per week. When she was first hired as Store Manager, Pierce earned $355.77 per week. By April, 2002, she was earning $423.08 a week, and understood that her salary was meant to compensate her for however many hours she worked. Pierce's ASM was paid $6.20 per hour. Pierce testified that she usually worked 50 to 60 hours a week, and sometimes as much as 65 hours a week. As Store Manager, Pierce interviewed and hired employees without approval from her District Manager, trained employees, disseminated and enforced corporate policies, evaluated employee performance, disciplined employees, fired and promoted employees, ensured store security and safety, monitored sales, damages, employees and hours, directed employees' work assignments and scheduled employees' hours. Pierce 30%-50% of her time performing paperwork, and it took her 5-6 hours just to complete the employees' work schedules. Pierce was unquestionably the store's leader.

On the other hand, Pierce testified that she spent 4 - 6 hours everyday stocking shelves and on "truck days," (which occurred about twice a week) Pierce and her ASM spent 75% of her time unloading and inventorying the delivery to the store. It would normally take two days to have delivery items unloaded and stocked on store shelves. She also ran the store registers when needed. Pierce had to request permission to take days off from her District Manager, and the store layout was dictated by a "planogram," that was created and disseminated by the District Manager. Pierce testified that she did not have discretion to set up the store as she would have liked. Pierce also spent 5 - 6 hours a week sweeping the floors and doing other non-managerial work. Pierce received excellent reviews in the area of "payroll control," which she attributed to her personally working more hours and not hiring extra employees.

In June of 2003, Pierce resigned from Dollar General because of stress associated with her job. In March of 2004, she made claims against Dollar General for unpaid overtime wages.

Dollar General (a.k.a. Dolgencorp, Inc.), argued that Pierce was not entitled to overtime pay for the period in which she served as Store Manager because she was properly classified as an "executive" employee, which is exempt from the overtime requirements of the FLSA. Dollar General argued that as Store Manager, Pierce's primary duty was management, and that she spent most of her time engaged in management work. Dollar General filed a Motion for Summary Judgment on this point, seeking dismissal of Pierce's claims.

The District Court disagreed, and held that Pierce had presented enough evidence to allow a jury to determine whether she spent most of her time performing managerial or non-managerial work. Specifically, the Court found that: (1) based on her testimony, a jury could determine that Pierce spent 25% - 30% of her time doing paperwork, and the remainder of her time performing manual labor; (2) a jury could conclude that Pierce's non-managerial work, such as unloading trucks, stocking shelves and running the registers, was more valuable to Dollar General than her managerial duties, because it saved Dollar General the expense of having to hire additional employees to perform the same work, evidenced by the fact that Dollar General refused to grant her more employees for her budget; and (3) when the respective hourly rate of pay of Pierce and her ASM is compared, a jury could find that Pierce was actually paid comparatively less than her ASM for an equivalent amount of hours (approximately 96% of her ASM's salary). Therefore, the District Court denied Dollar General's Motion and held that Pierce's claims must be determined by a jury.

The lesson to be learned from this case is clear: job titles are not everything. Just because someone holds a "manager" position does not mean that that individual is automatically exempt from the overtime pay requirements of the FLSA. Indeed, as this case shows, even performing some managerial tasks and duties in the course of employment does not entitle an employer to rely upon an "executive" exemption in every instance. As the District Court noted, the focus in these types of cases will be on the employee's "actual day-to-day activities, as opposed to generic job descriptions or performance evaluations." Things are not always as they seem at first glance.