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4th Circuit Affirms That Store Manager That Spends Majority Of Time On Non-Managerial Tasks Is Nonetheless Exempt Under The FLSA

Published by on April 19, 2011

The U.S. Court of Appeals for the Fourth Circuit recently affirmed a summary judgment in favor of Family Dollar Stores, Inc., holding that Family Dollar did not violate the Fair Labor Standards Act (“FLSA”) for failing to pay overtime to current and former managers that were classified as executive exempt employees.  More after the break. […]

The U.S. Court of Appeals for the Fourth Circuit recently affirmed a summary judgment in favor of Family Dollar Stores, Inc., holding that Family Dollar did not violate the Fair Labor Standards Act (“FLSA”) for failing to pay overtime to current and former managers that were classified as executive exempt employees.  More after the break.

The lead plaintiff was a former store manager for Family Dollar, a national chain of over 6,800 stores in 44 states.  Plaintiff, like all other store managers, was classified by Family Dollar as an executive exempt from FLSA overtime pay requirements.  Plaintiff worked 50-65 hours per week and was paid a fixed salary plus a bonus which was directly related to the profitability of the store.  Each store manager supervised at least one hourly assistant store manager and multiple hourly clerks.  Plaintiff was permitted to set her own hours and was authorized to make decisions affecting the profitability of the store, subject to company policy.  Plaintiff’s duties included training, supervising, disciplining, scheduling and evaluating employees, and overseeing the store’s operations, including ordering inventory, customer relations, cash handling and budgeting.  Plaintiff was supervised by a district manager who visited the store once every two or three weeks.  The district manager followed plaintiff’s personnel recommendations 95% of the time.  Plaintiff claimed that she spent 99% of her work time performing non-executive tasks, such as stocking shelves, running cash registers, and cleaning.  Plaintiff explained that her job required that she “multi-task,” such that while she performed non-managerial task, she was also functioning as a manager.  Plaintiff argued that she was misclassified as exempt because she spent the vast majority of her time on non-executive tasks and therefore should be paid on an hourly basis and awarded unpaid overtime.  At summary judgment, the district court concluded that plaintiff was properly classified as an exempt employee and granted Family Dollar’s motion for summary judgment.  

The Fourth Circuit affirmed, holding that even though plaintiff was required to perform the nonexempt tasks needed for the successful operation of the store, she remained the highest level employee at the store and her income depended on the success of her performance and the profits at the store.  The Fourth Circuit noted that FLSA recognizes the nature of retail business and exempts retail executives from the requirement that the majority of their hours be spent on executive functions.  The Court held that although plaintiff claims that non-managerial task occupied most of her time, she was also concurrently managing the store and the person responsible for running the store.  Additionally, plaintiff was relatively free from supervision and there was typically no one else at the site to direct the store’s operations.  Because plaintiff’s claim was properly dismissed, the district court did not err in declining to permit plaintiff to pursue her claim on behalf of other similarly situated employees.             

For a copy of the full opinion of the Fourth Circuit, click here.

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