Adding clarity to an often-litigated area of wage and hour law, the Sixth Circuit recently held that a small store manager was exempt from the FLSA's overtime requirements despite her performance of non-managerial tasks and close supervision by her district manager. The case – Thomas v. Speedway SuperAmerica, LLC, No. 04-00147 (6th Cir. 2007) – involved a Speedway gas station and convenience store manager who Speedway claimed was an exempt “executive employee” under the Fair Labor Standards Act. Even though the store manager was the most senior employee at the store, she was supervised by a district manager who visited the store twice a week. She was expected to work at least 50 hours per week, and often worked much more than that. She received a $500 weekly base salary as well as managerial bonuses equaling a percentage of the gross profit from certain products sold in the store. As for her day-to-day work duties, the manager spent about 60 percent of her time performing non-managerial tasks such as stocking merchandise, sweeping bathrooms, operating the cash register, and performing routine clerical duties. The remaining 40 percent of her time was spent performing several management functions, including supervising current employees, hiring new employees, preparing weekly work schedules, handling employee complaints, evaluating employees, and terminating employees.
After Speedway terminated the manager in 2003, she filed a lawsuit in the U.S. District Court for the Southern District of Ohio alleging, among other claims, that Speedway violated the FLSA by misclassifying her as exempt and failing to pay her overtime compensation as required by the Act. The district court held that the manager was an exempt employee under the FLSA and, as such, Speedway was not required to pay her overtime. The manager then appealed to the Sixth Circuit, which upheld the ruling for Speedway.
In its opinion, the court explained that it “cannot rely on the plaintiff’s or the employer’s description of the plaintiff’s position or authority; instead we must look at the plaintiff’s actual duties to determine whether she qualifies for the executive exemption.” The court noted that, while being “in charge” does not automatically qualify an employee as an executive employee, in this case, the fact that the manager was in charge of the store for a significant period of time each week made her an executive employee. And, even though she was supervised by someone else and was required to follow policies set by Speedway’s management, the manager still exercised everyday discretion in how she performed her duties.
The court also focused on the relative importance of her managerial and non-managerial job duties to the company. The court stated that if the store manager “failed to perform her nonmanagerial duties, her Speedway station would still function, albeit much less effectively. After all, most of us – even if unwillingly – have visited and spent our money at filthy gas stations with sparsely stocked shelves.” But if the store manager “failed to perform her managerial duties, her Speedway station would not function at all because no one else would perform these essential tasks.”
Although the court in this case found that Speedway properly classified its store manager as exempt, the case highlights the importance of properly classifying employees. If Speedway had been wrong in its classification, it would have owed the store manager tens of thousands of dollars for overtime it never paid her – not to mention being on the hook for the store manager’s attorneys’ fees. Most importantly, Thomas highlights that employers’ focus when making exempt v. non-exempt employee classification decisions needs to be on employees’ actual duties – not generic (and sometimes inaccurate) job descriptions.