Misclassified Managers Owed Overtime

New York, NYTammy G., like thousands of managers throughout the US, has been misclassified and therefore not paid overtime —a violation of the Fair Labor Standards Act (FLSA)."As a field and staffing manager I performed the same job as my staffing team, but was not paid hourly wages," says Tammy. "I worked a minimum of 50 hours a week, I was on call from 5pm until 9am the following day (and only paid $25 for this service) and most of my meal periods were missed, because the job required me to work through lunch."

Employers should realize by now that they cannot misclassify employees as exempt in an attempt to avoid overtime compensation. Several stock and security workers filed a lawsuit against the retailer Scoop NY, claiming they were promoted to manager positions but the content of their work did not change significantly with these promotions. In fact the only difference was that as managers and assistant managers, they were given a salary instead of the hourly wages they had initially been paid. And they were putting in a lot of unpaid overtime. "They used me," said a former employee. "That was just a name, to say I was a manager." As well, they were seldom given breaks during frequent 12-hour days.

And in January, 2009, Khan aka Dominic Kudo a general manager at one of 1,200 Panda Express restaurants filed a class action lawsuit on behalf of all managers nationwide to recover unpaid overtime. Khan alleges Panda Express deliberately schemed to misclassify its workers as "exempt" employees, so as to avoid paying overtime for the long hours of non-managerial, non-exempt tasks that it required its general managers to work.

Then there's Starbucks—again in hot water. In April of 2009, a Florida Starbucks manager claimed that the company didn't pay overtime in violation of federal law. He filed a lawsuit seeking overtime compensation to store managers dating back to January 15, 2006. A similar lawsuit against the company was settled last year for an undisclosed amount for 900 plaintiffs. A year previously in Houston, Starbucks paid 350 assistant managers after it was alleged that they were forced to work off the clock.

When will employers learn they can't get away with misclassifying their employees to cut costs? Perhaps the 250 new field investigators added to the Department of Labor's (DOL) Wage and Hour Division will help. According to the DOL, wage-and-hour labor litigation continues to increase exponentially. Federal class actions brought under the FLSA outnumbered all other types of private class actions in employment-related cases, to the tune of $252.7 million paid out in settlements in 2008.

It might be a good time for employers to review their overtime pay policy and double-check the FLSA exempt employees' status.