Manager In Name Only: How Employers Avoid Overtime Pay by Changing Workers’ Titles

“Congratulations! We’re promoting you to assistant manager!” This kind of news from your employer should be exciting. Unfortunately, all too often it is really just a smokescreen designed to deprive you of your right to get overtime pay.

A recent economic study by Lauren Cohen, Umit Gurun and N. Bugra Ozel from the National Bureau of Economic Research backs up what many employment lawyers have observed for a while: many employers overclassify employees as “managers” for the sole purpose of depriving them of overtime pay. The study found that an alarming number of workers around the country are classified as managers and paid just enough money to be exempt from eligibility for overtime pay.

This practice is designed to take advantage of language in the Fair Labor Standards Act (FLSA), which governs how most employers around the country have to pay their workers. Under the FLSA, most workers are eligible to receive time-and-a-half pay (i.e., an hourly wage that is 1.5 times their normal pay) for every hour they work after they hit 40 hours in a week. But the law exempts some workers from that requirement, including bona fide managers who are paid by salary, and make more than $35,500 a year. The study found that many employers try to take advantage of this by paying workers an amount just over the that threshold and give them a title that includes the word “manager.” The employers then schedule those “managers” to work long hours, often assigning them the same non-management tasks they did before their promotions.

The conclusion of this study is no surprise to employment lawyers who work on these issues. Just the other day I had an employer-side attorney describe several workers who are classified as “assistant managers,” but are actually doing very little management or supervision of other workers. I don’t know how his client his paying those people, but what he told me is consistent with what I have seen in many employment settings. As is documented in a recent news report on the study, assistant managers in places like restaurants, retail stores, and banks are often doing almost no management or supervision of workers and are instead spending most of their time on tasks like washing dishes, stocking shelves, and dealing with customers. They’re asked to work long hours, but don’t receive overtime when they work more than 40 hours in a week.

This practice is illegal. Employers can’t get out of paying their workers an overtime premium for the long hours they spend away from their families and friends doing backbreaking work, just by changing their job title. Under the FLSA, most workers in situations like this are only exempt from overtime pay requirements if they are a bona fide executive, meaning their primary duty is to manage at least two other employees and they play a significant role in decisions to hire and fire workers. Workers whose jobs don’t include those duties are entitled to overtime pay, no matter what job title they have or how much money they make.

Fortunately, workers who are being subjected to this illegal practice have legal options. Under the FLSA, if an employer is failing to pay a worker overtime pay for overtime hours based on a misclassification of somebody’s job, the worker has the right to recover twice the amount of unpaid overtime wages.

If you are being denied overtime pay for any reason, including misclassification as a manager, please give us a call. We challenge these unlawful practice, whether it’s on behalf of one person or a group of people. If you work in Minnesota or Washington and you want to learn more about whether you have a claim for unpaid wages, please call the Minneapolis Office of MacDonald Hoague & Bayless at 612.349.2720.