While I’m out on vacation for a bit, I thought I’d have one of my colleagues share a post on a recent case he’s focused on.

Mick Lavelle is no stranger to employment law issues, having successfully litigated the case of Bridgeport Hospital v. CHRO — an important Connecticut Supreme Court case which curtailed the damages that could be imposed by the agency on employers. 

Today, he discusses classification of workers and how a seemingly little issue can turn into big bucks:

A "store manager" certainly sounds like an exempt position, but what if the employee actually spends 80 to 90% of his time on non-exempt work, such as stocking shelves, unloading trucks, running cash registers and cleaning the store?

The U.S. Supreme Court has recently denied review in the case of Morgan v. Family Dollar Stores, originally decided by a jury in Alabama in 2006.

Although the appellate issue was a fairly technical one of when the Fair Labor Standards Act allows one trial to be a "collective action" for similarly situated employees (in this case, over 1400 store managers), the case is also yet another illustration that the rules as to exemption from overtime requirements focus on actual work activities.

Family Dollar Store managers worked up to 60 hours per week, but followed a detailed managers’ manual, spent up to 90% of their time on non-exempt work, and could not hire or fire or select outside vendors without the permission of the district managers. In fact, the store managers were closely supervised by the district managers, who were probably the real exempt employees.

Proper classification of employees as exempt or non-exempt should be a continuing exercise for all employers, especially when employees are incurring lots of overtime. Sometimes a bland title like administrative assistant can qualify as exempt if the proper tests are met, especially for independent judgment.

And unfortunately, sometimes positions that employers have always assumed were exempt turn out not to be.

For Family Dollar Stores, it was a $ 35.6 million error.