Comment   |   Volume 160, Issue 1

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

Drew Frederick

December 2011

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.

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