The United States District Court for the Northern District of Alabama recently held that store managers of a large retail chain cannot pursue a nationwide Fair Labor Standards Act (“FLSA”) overtime collective action claiming they were wrongfully classified as exempt and, thus, improperly denied overtime compensation. In Richter v. Dolgencorp Inc., N.D. Ala., No. 06-1537, 10/22/12, that federal court held Dollar General store managers were not similarly situated regarding the extent of their management duties and the power to hire and fire. These differences resulted in a fundamental unfairness to Dollar General if the class were to remain certified.

Utilizing a three-factor analysis outlined in Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1260-61 (11th Cir. 2008) to determine whether plaintiffs were similarly situated, the Richter court first determined whether there were any disparate factual and employment settings of the individual plaintiffs. That analysis of similarity centered on whether certain criteria set forth by the Department of Labor for the executive exemption applied. Specifically, the court analyzed (1) whether the plaintiffs’ primary duty was management, and (2) whether they had the authority to hire or fire other employees or their suggestions and recommendations as to hiring, firing, advancement, promotion or other changes in status were given particular weight. The court found there were disparate factual issues raised because several class members admitted to simultaneously performing both exempt and nonexempt work. Further, there were differences among the class members in both the amount of time spent performing solely exempt work or performing such simultaneous work, as well as differences in the type of exempt work performed. The court held that “[b]ecause of the differing amounts and wide variety of exempt work performed,” the “primary duty of some would no doubt be found to be management, while the primary duty of others would not,” leading to a finding that the plaintiffs were not situated regarding their primary duty. Similarly, where some plaintiffs could hire or fire unilaterally, others had to have district manager input. Further, the frequency in which some plaintiffs made recommendations varied, as did the frequency in which any such recommendations were actually relied upon. Thus, the plaintiffs were found to not be similarly situated regarding their ability to hire or fire, or regarding the weight given to their recommendations.

The court next turned to the second of the Morgan factors – the extent to which the executive exemption could be asserted as a defense collective or individually. While Dollar General applied its executive exemption across-the-board, that defense was found to be individualized as the class members’ job duties and employment experiences were drastically different. For example, some performed uniform tasks mandated by a corporate manual, whereas others routinely exercised independent judgment.

Finally, the court addressed the “fairness and procedural concerns” prong of the Morgan test. Because of the fact-based inquiries required to determine the differences between individual class members, the court held it would be “fundamentally unfair to Dollar General if the class were to remain certified” and any “efficiency gained by holding one trial as opposed to many cannot be obtained at the expense of Dollar General’s due process rights.” Therefore, the collective action was decertified.