Retail Observer

RETAILOBSERVER.COM JUNE 2019 32 T he Fair Labor Standards Act places clear limits on how compensation must be paid. Specifically, when employees work more than 40 hours in a week, the FLSA requires payment at an overtime rate of "time-and-a-half." If a retailer wants to pay a manager a straight salary without overtime, it must be able to show that the manager's duties meet the "duties test" for an available exemption. It must also show that the manager's salary exceeds the threshold set by the Department of Labor's "salary test." The most commonly employed exemption is the "executive exemption." To meet this exemption, the manager must supervise at least 80 hours of work by subordinates each week; must participate in hiring, firing, or other employment decisions regarding those subordinates; and must have management as his/her primary duty. As many retailers have learned, application of this exemption is highly fact-specific. Even a position that is properly designed at the corporate level can lose the exemption in specific cases when the manager fails to perform the duties of the job as designed. This has led to the rise of plaintiff's firms that specialize in suing retailers over what they allege to be failed exemptions. These law firms seek recovery of significant back wage damages in collective actions brought on behalf of classes of managers. While many of these lawsuits focus on assistant managers, some have focused on store managers. In both cases, the risk level may depend on the retailer's ability to establish that the manager has performed exempt work as his or her primary duty. Plaintiff's lawyers like to paint assistant managers as "working foremen" who usually do non-exempt work. Retailers must be able to point to real management duties that are the manager's primary responsibility. In this environment, the focus has long been on the duties test. Retailers could easily satisfy the salary test, since its requirements had been the same since 2004: payment on a salary basis of at least $455 per week ($23,660 annually). However, that minimum salary requirement may now be raised. Earlier this year, the Department of Labor released a proposal to update its overtime-exemption rules for so-called white-collar employees – those covered by the executive, administrative, and professional exemptions. The updates would raise the salary test to require payment of at least $679 per week ($ 35,308 per year). Employers may recall that the Obama DOL tried to update the white-collar regulations in 2016, raising the salary test from $23,660 annually to $47,476. Eight days before the rule was to go into effect, the U.S. District Court for the Eastern District of Texas issued an injunction blocking its enforcement. Ultimately, the court granted summary judgment in favor of business groups that had sued to block the rule. The DOL appealed that ruling to the Fifth Circuit Court of Appeals, which stayed the appeal based on representations R E T A I L E R S K N O W T H A T G E T T I N G C O M P E N S A T I O N F O R S T O R E M A N A G E R S A N D A S S I S T A N T S ' R I G H T S I S O N E O F T H E M O S T I M P O R T A N T F O U N D A T I O N S O F A N E F F E C T I V E B U S I N E S S S T R A T E G Y NEW SALARY REQUIREMENTS AHEAD FOR EXEMPT MANAGERS? E M P L O Y M E N T [ N E W S ]

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