Exempt Executives? Dollar General Store Managers’ Embattled Quest for Overtime Pay Under the Fair Labor Standards Act

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Beginning
in the early 1980s, and continuing for nearly three decades, federal
circuit courts unanimously found retail store managers exempt from overtime
pay under the Fair Labor Standards Act of 1938 (FLSA).
The overwhelming consensus even within the Department of Labor (DOL)
itself—the body responsible for promulgating and enforcing the overtime
regulations—was that supervisors in charge of a free-standing store
were highly likely to fall within the exempt category of the statute.
However, in 2008 the Eleventh Circuit broke the unanimity by upholding
a thirty-six million dollar jury verdict against Family Dollar for misclassifying
its store managers as exempt executives. While the
extent to which the Eleventh Circuit’s decision will affect retail
store managers’ status under the FLSA remains unclear,

it has undoubtedly resuscitated managers’ hopes that they can prevail
on overtime claims by providing them with circuit precedent on which
to stand.

As
the Eleventh Circuit’s decision in Morgan v. Family Dollar Stores,
Inc.
, pointedly illustrates, the financial repercussions for large
retailers of misclassifying employees can be immense.
Tens of millions of dollars hinge on complex judicial determinations
of whether retail supervisors are exempt executives and therefore not
owed overtime pay. Getting this determination right has serious
implications not only for businesses but also for workers who stand
to lose substantial wages to which they are statutorily entitled.

To
a large extent, the DOL has already performed the interest balancing
between employers and employees through notice-and-comment rulemaking,
with judges determining only the remainder through case-by-case applications
of the white collar exemptions. The regulations that have emerged
from the administrative decisionmaking process purportedly strike a
compromise between the competing interests of employers and employees.

This Comment argues that the current regulations governing the executive
exemption, as well as the circuit case law that has developed around
them, unduly favor the employer and pose a nearly insurmountable obstacle
to overtime claims, at least in the context of low-salaried retail supervisors.

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