Is an Assistant Manager Exempt or Nonexempt?

Assistant managers can be exempt or nonexempt from overtime pay, depending on how they’re paid and what kinds of duties their jobs entail.

What does it mean to be overtime exempt?

Being overtime exempt has various meanings, but the most significant difference between exempt and nonexempt employees is that exempt workers aren’t entitled to receive overtime pay. Under federal law, nonexempt employees are entitled to overtime pay at 1.5 times their regular rate for all hours worked over 40 hours in a work week.

Regulations for overtime exemption are determined by the U.S. Department of Labor (DOL) under the Fair Labor Standards Act (FLSA). Similar to the way that all states must comply with federal minimum wage but may require a higher rate, some states have even stricter overtime regulations. This means that some workers may be classified as overtime exempt under FLSA, but are classified as nonexempt under state laws. Generally, employees are classified according to regulations that would provide them with the most benefits.

Due to the fact that managers and supervisors are supposed to be given different benefits, such as a higher salary, exempt employees are not protected under federal minimum wage requirements and overtime pay rates.

However, regardless of employment classification, companies must provide a safe work environment and provide equal employment opportunities.

Who is overtime exempt?

The difference between an exempt and nonexempt position is not always clear. Under the federal Fair Labor Standards Act, exempt employees generally include those who are paid a salary rather than an hourly rate, earn at least $455 a week, and work a job that fits into one of several categories. These categories are:

• Executive: This category includes employees who have a primary duty of managing a business or a department. These employees must oversee two or more employees and must have the authority to hire or fire or to provide suggestions or recommendations to these decisions.
• Administrative: This category includes employees who primarily perform office or non-manual work related to management or business operations. Jobs in this category include the exercise of discretion and independent judgement when making significant decisions.
• Professional: This category includes employees whose job required knowledge of an advanced field, usually requiring prolonged, specialized academic study. This includes highly specialized jobs such as teaching, computer science, and engineering.
• Farm Workers, Seasonal Workers, and Contract Workers: Basically any employee who is hired on a short term basis to help fill the gap during a busy time for the company or work period. These situations vary between workers and companies, but these workers are generally exempt from overtime and other minimum wage protections.
• Tipped Employees: These workers must earn regular tips, with the FLSA stating they must earn at least $30 a month, they may be considered for a special tipped minimum wage rate. However, if the tips earned during a typical work hour do not add up to the federal minimum wage rate, companies may be in violation of labor laws.

When in doubt, employees can find out if they are exempt or nonexempt by speaking to their human resources department or an employment law professional.

What does it mean to be overtime nonexempt?

Nonexempt employees are typical hourly waged employees that work on site and have their schedules at the complete mercy of their managers or some other higher position. In contrast to exempt employees, nonexempt employees do not have authoritative power over one another and are paid at a lower rate than higher, or exempt, employees.

Nonexempt employees are covered under minimum wage protections provided by the Fair Labor Standards Act (FLSA), which state that employees must be paid one and a half times their hourly rate after working over 40 hours in one week or eight hours in a single workday.

Are managers exempt or nonexempt?

Some managers are exempt from overtime based on their salary and job duties. However, assistant managers at fast food restaurants, retail stores, or grocery stores may not be classified as overtime exempt depending on their duties. If a manager is expected to spend a significant portion of their time performing duties expected of a nonexempt employee, they may be eligible for overtime.

Other situations may make a manager nonexempt, including working in a tip-based environment such as a restaurant. A recent rule change proposed by the Department of Labor would also allow salaried restaurant employees, including managers, to receive overtime pay if they make less than $35,000 every year.

Often, the exact exceptions are determined by state law. For example, managers in California are exempt only if they spend over 50 percent of their time on the following work duties:

• Regularly direct the work of two or more employees;
• Regularly exercise discretionary power;
• Have the authority to hire and fire employees;
• Have the ability to make comments/suggestions about personal matters which are given weight by the employer.

Additionally, a manager in California must earn a monthly wage that is at least two times the equivalent of full time minimum wage.

What if my employer wrongfully classified me as exempt?

Companies have been allegedly misclassifying managers as exempt employees, which means they are not entitled to the same benefits and protections provided by minimum wage including overtime benefits.

Businesses can be found in violation of federal labor laws if they misclassify supervisors or managers as exempt employees, like in the case of Petco managers, so it is important for them to have a strong understanding of the differences between exempt and nonexempt employees.

If managers have been classified as exempt but believe that they are eligible for overtime pay, they may want to speak to a qualified employment law attorney. These legal professionals can help evaluate individual situations and determine if employees can seek unpaid overtime wages from their employers.

How can I collect unpaid wages for overtime exempt misclassification?

If workers file a lawsuit against their employer, they may be able to collect unpaid wages as a result. These wages can be collected in damages which are awarded in a trial verdict or they can be collected as part of a settlement.

Settlements differ from trial verdicts because they do not make any legal judgement or assign wrongdoing to the defendants. These deals are often viewed favorably because they allow both parties to resolve claims without the risks and costs of continuing litigation. However, settlements often require claimants to give up their right to sue about the same issue in the future – and some individuals may decide that a settlement payment is not worth it.

One such settlement was recently proposed with Petco Animals Supplies Inc. to settle class action lawsuit claims regarding labor law violations. The company agreed to an $8 million preliminary overtime class action settlement which will resolve allegations that the company had failed to properly compensate their assistant store managers overtime.

Petco Classification Lawsuit

California federal Judge M. James Lorenz is overseeing the continuing Petco litigation, which may be resolved by a proposed settlement of $7.995 million. This potential overtime class action settlement will give approximately 900 proposed Class Members nearly $9,000 each.

The plaintiff told Law360 that the proposed overtime class action settlement as “a fair, reasonable and adequate result that was the product of arms-length negotiation.”

“Having vigorously litigated for four years, from motions to dismiss to conditional certification and well into second stage discovery, the parties were in a strong position to evaluate their respective positions and resolve the case … [C]ounsel for both sides were able to draw on their experience and their detailed knowledge of this case when they advised their clients about settlement,” the motion for preliminary approval said.

The overtime class action settlement motion is also seeking certification of a settlement Class, which includes individuals who worked as Petco assistant managers between 2010 and 2016 in the following states: Colorado, Illinois, Massachusetts, New Jersey, New York, Oregon and Pennsylvania.

The proposed class action wage and hour lawsuit is being led by lead plaintiff Erik K., who worked as a Petco assistant store manager in Illinois from 2007 to October 2010. Erik filed legal action in March 2013, alleging the animal supplies company had violated federal labor laws by failing to pay overtime to employees.

Petco had initially tried to dismiss the motion in 2014, arguing that Erik’s claim was barred because it was filed past the Fair Labor Standards Act (FLSA) two-year statute of limitations.

A San Diego Petco location had also tried to have the claims dismissed previously, arguing that Erik’s allegations were “entirely conclusory and devoid of facts.” The judge had granted partial dismissal but allowed Erik to amend the proposed class action wage and hour suit to include allegations of willful violations of the FLSA.

The amended claim alleged Petco had underfunded its labor budget and failed to acknowledge the effect that underfunding would have on the jobs of Erik and other class members. Erik alleged that due to the company’s business practices, he and other Class Members were unable to record all hours worked and post adequate notices for overtime wages.

Judge Lorenz ruled that Erik had provided sufficient evidence indicating Petco either knew or should have known that they were violating federal labor laws, and that the assistant store managers were not exempt from overtime benefits.

Erik stated the proposed overtime class action settlement figure will account for 93% of the proposed Class’s liquidated damages. The plaintiffs legal counsel stated they were “very pleased to reach this settlement on behalf of our hard-working clients.”

Although the Petco overtime settlement would provide a favorable resolution to the wage and hour claims, the deal will not move forward unless it is approved by the court. Once the court grants preliminary approval of the settlement, the settlement process will move forward, and claims will likely start to be accepted.

At the final approval hearing, the court will review any objections and exclusions filed with the settlement administrator and will make a final determination on the fairness of the settlement. If given final approval, the settlement will move to the payment stage where checks will be sent to individuals who filed a valid claim.

Settlements like this are being reached regularly across the country. Top Class Actions readers can always stay up to date on these deals and the claims processes by checking back for new developments on this and similar issues.

The Petco Wage and Hour Class Action Lawsuit is Case No. 3:13-cv-00644, in the U.S. District Court for the Southern District of California.

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If you work or worked as an assistant manager at a fast-food restaurant, retail store or supermarket and you perform the same duties as the hourly employees, you may have been misclassified as exempt and are owed unpaid overtime pay.

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This article is not legal advice. It is presented
for informational purposes only.

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