Employers of all shapes and sizes must decide whether their assistant managers are exempt from the requirements of the Fair Labor Standards Act (“FLSA”) or whether they are non-exempt and must be paid overtime for hours worked in excess of forty hours per week. The answer to this question is unique to each employer and, in some cases, there may be a different answer for assistant managers working for the same company.
Employers struggle with the application of the FLSA to assistant managers because of the ambiguity in the law. While the FLSA makes clear that managers that customarily and regularly direct the work of at least two or more other full-time employees and have particular weight as to the hiring, firing, advancement, promotion or any other change of status of other employees are eligible for exemption, the confusion arises because 1) determining whether there is sufficient authority is not always clear and 2) managing must be the employee’s primary duty. This confusion is prevalent with assistant managers who may not have sufficient authority or who may primarily be engaged in other aspects of the business only assisting in management as a secondary function.
The problem of assistant manager classification impacts employers both big and small. Many large retailers have been involved in litigation on this issue. Recently, nationwide retailer Kohl’s agreed to a settlement that could reach as high as $4 Million to resolve assistant manager overtime claims (Costello v. Kohl’s Illinois, Inc.). As this recent example demonstrates, it is of paramount importance that employers properly classify assistant managers depending on the actual authority entrusted as well as the importance of the assistant manager’s managerial function. Employers that fail to ensure proper classification increase the risk of costly litigation that could result in not only unpaid overtime, but also statutory penalties and attorney’s fees. For these reasons, it is prudent for employers to take the time to ensure that assistant managers, as well as all exempt employees, are properly classified.