I’M NOT A SUPERVISOR; I JUST PLAY ONE AT FAMILY DOLLAR: OVERTIME SUIT DISMISSED DESPITE PREVALENCE OF NONEXEMPT DUTIES
Recently, a federal court in Kentucky dismissed a putative class action suit against Family Dollar, Inc. brought by store managers, stating that the claimants were exempt under a Kentucky labor law statute that delineates employees from supervisors. The named plaintiffs, Donna Barker and Janet DeKalands, claimed that their working conditions at Family Dollar prevented them from receiving applicable overtime pay, mandatory rest breaks, and additional compensation due for working seven days a week.
In Barker et al. v. Family Dollar, Inc., Ms. Barker and Ms. DeKalands, both “Store Managers,” were paid weekly salaries but worked the equivalent of seven days a week, with weeks topping sixty hours. When averaged out, their pay amounted to between $8.04 per hour and $10.83 per hour. Hourly employees at their respective stores made between minimum wage and $9.00 per hour. Due to this low disparity in rate of pay, the women alleged that they were store managers “in name only,” and that they performed essentially the same duties as the nonexempt employees whom Family Dollar claimed they supervised. According to the plaintiffs, the primary duties of store managers were to “sell merchandise and assist customers,” and they spent “80-90%” of their time at the store on non-supervisory tasks, including talking with customers, housekeeping, and inventory.
Family Dollar, of course, countered that the individuals were in fact supervisory employees. In contrast with the corresponding federal wage and hour regulations in the Fair Labor Standards Act, the Kentucky statute requires that the plaintiff bear the burden of proving that he or she is not an exempt employee. Under applicable Kentucky law, in order to be ruled an exempt employee, the plaintiff must customarily supervise or direct the work of two or more employees and must be compensated at a rate of more than $455.00 per week. The Court found that the plaintiffs fit this supervisor exemption. As store managers, both plaintiffs set employee schedules, apportioned job responsibilities, supervised other employees’ job duties and tasks, and gave directives to other employees in their stores. Furthermore, both plaintiffs customarily had two or more employees working in their stores.
While Plaintiffs correctly stated that much of their time was spent attending to nonsupervisory activities, that factor was not conclusive evidence under Kentucky law of their “primary” duty. Instead, the court attached importance to the vitality of their supervisory duties, stating that without their direction, the other employees at Family Dollar would not perform their jobs and “Family Dollar…could not function.” Additionally, the two store managers were free from direct supervision at their respective stores, again indicating that they were supervisory employees.
For employers who have supervisory employees who perform a majority of non-supervisory duties, the court’s decision in Barker provides some guide as to how to ensure exempt status. Employers must ensure that employees who they place on salary meet both the salary basis and duties tests under applicable statutes. However, this case also highlights the importance of the differences between state and federal statutory construction in the field of wage and hour law, and how such differences can alter the outcome of cases. The FLSA has narrower exemptions to its provisions and places the burden to prove an exemption upon an employer. Family Dollar would have had a harder road to travel under the Kentucky statute’s federal counterpart. Knowing these distinctions can make the difference in determining liability for pay issues when they arise.