EMPLOYEES WHO ARE TITLED MANAGERS MAY BE ENTITLED TO OVERTIME COMPENSATION

Lumber One hired three employees and titled them as managers of the company’s lumberyard. The company classified these employees as executives and accordingly paid them on a salary basis without overtime compensation. During their employment with the company, the employees performed various duties including assembling shelves and stocking merchandise and helping load trucks. The employees filed suit to recover unpaid overtime wages, based on the premise that they were misclassified as managers under the FLSA.

In order to be properly classified as a manager under the FLSA, an employee must be

• Compensated on a salary basis at a rate of not less than $455 per week ;

• have a primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof;

• customarily and regularly direct the work of two or more other employees; and

• have the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.

With respect to two of the employees in the case, the court did not find a single instance of either of them being involved in a personnel decision. As such, the court found that there was not enough evidence for a reasonable juror to conclude that the two employees were exempt executives, whose recommendations on personnel decisions were given “particular weight.” As a result, the employees were awarded overtime compensation.

This case emphasizes that employees titled as managers do not automatically lose entitlement to overtime based on their title. Their primary duty must be management, they must manage two or more full-time employees, and they have to be given weight in hiring and firing decisions. Employees who receive a hollow label as a manager and work overtime may be entitled to additional compensation.