Overtime for Managers Lawsuit Ends in Plaintiff Victory

A class action lawsuit against the Steak ‘N Shake restaurant chain over a failure to pay overtime for managers has ended in a $4.6 million verdict for the plaintiffs, plus legal fees and court costs. The award comes on the heels of a $3 million court victory for its restaurant managers who claimed they had been shorted on overtime pay.

Chain Accused of Misclassifying Employees

According to a report in Restaurant Business, Steak ‘N Shake reportedly misclassified managers, in violation of the Fair Labor Standards Act (FLSA), and required them to work up to 70 hours a week doing tasks unrelated to their management duties. A major reason for this was understaffing. Currently, the Steak ‘N Shake chain faces major financial problems, having lost $10.7 million in 2018 and another $19 million during the first quarter of 2019, Business Insider reports.

The parent company, Biglari Holdings, has temporarily closed some 60 of its company-owned stores and has been taking other cost-cutting measures in the face of declining revenues – including the elimination of cherries on their milkshakes.

Legal Problems in the Past, More to Come

Steak ‘N Shake is facing another overtime for managers class action lawsuit filed by 1,300 current and former management employees. The 85-year-old restaurant chain appears to have a track record when it comes to misclassifying employees and failing to pay overtime when required by federal regulations. In 2011, a similar lawsuit was filed by servers and other employees who claimed that management had improperly adjusted weekly tips in order to “shave” hours spent on the clock.

The current class action was filed in St. Louis nearly five years ago, with allegations brought by two managers.

FLSA Violations Bring Heavy Penalties

Under the FSLA, employers who fail to pay overtime as required by law can be liable for twice the amount of actual damages, unless they can prove that they acted in “good faith” and had “reasonable grounds” for not doing so (in other words, if it was an “honest mistake”). Defendant Steak ‘N Shake claimed that it had “reasonably” relied on the managers’ own written certifications that their daily tasks “were the type that exempted them from overtime.”

However, the court rejected that argument. In his ruling, U.S. District Judge John Ross said that the restaurant’s senior-level management had testified that it knew about understaffing. He noted that Steak ‘N Shake’s “primary solution” was to “use salaried managers working overtime,” who were “too busy performing production and service duties to meet the definitions for exempt employees.”

When Is an Employer Exempt from Paying Overtime for Managers?

Managers can be exempt
if they are paid more than $455 per week and are responsible for:

• Managing the store and its employees as their primary duty
• Supervise two or more employees on a regular basis
• Set worker schedules
• Make hiring and firing decisions
• Write up employee evaluations and administer disciplinary action

Any worker in a management position who does not make the minimum income and perform all of the above-listed duties is not exempt from overtime rules.

Join a Free Assistant Manager Overtime Pay Lawsuit Investigation

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.

Learn More

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