U.S. Court of Appeals for the 4th Circuit has thrown out multidistrict litigation against Family Dollar Stores Inc., ruling that the company did not violate the Fair Labor Standards Act against current and former managers who alleged they deserved overtime pay as non-exempt employees.
Family Dollar, a national discount chain that operates more than 6,800 stores in 44 states, has considered store managers to be executives who are exempt from FLSA overtime pay requirements, according to the ruling handed down last week (PDF).
The lead plaintiff, Irene Grace, argued that since she spent most of her time performing non-executive duties, such as stocking and cleaning her store, she and other store managers in similar situations shouldn’t have been classified as executives and are entitled to overtime compensation.
The court ruled that time spent on non-executive tasks isn’t the sole factor in determining executive status.
“While she catalogs the non-managerial jobs that she had to do, claiming that they occupied most of her time, she does so without recognizing that during 100 percent of the time, even while doing those jobs, she was also the person responsible for running the store. Indeed, there was no one else to do so, and it cannot be rationally assumed, nor does the record support a claim, that the store went without management 99 percent of the time,” Judge Paul Neimeyer wrote.
“This multi-tasking—doing management jobs while doing nonexempt work—is explicitly recognized as a managerial duty by the Department of Labor’s regulations,” Neimeyer continued. “We conclude that Grace was performing management duties whenever she was in the store, even though she also devoted most of her time to doing the mundane physical activities necessary for its successful operation.”
Robert Long, partner at Covington & Burling’s Washington office, argued the appeal for Family Dollar. “The number of FLSA actions has grown exponentially in recent years and the Fourth Circuit’s decision could have an influence on other cases raising similar issues,” he said in a written statement.
Grace filed her action in May 2004 in the Middle District of Georgia. The district court transferred the case to the Western District of North Carolina. The suit then became part of multidistrict litigation against Family Dollar.
In Sept. 2007, the district court denied Grace’s motion for preliminary certification as a collective action to facilitate notice to other potential plaintiffs; however, 74 other store managers joined Grace’s collective action. The court concluded, “This court cannot assume that every store manager at Family Dollar spent a majority of their time doing non-managerial tasks….Given the variation in duties among managers in different stores, the pleadings do not meet the standard of commonality needed for this court to find the plaintiffs are similarly situated.” The district court granted Family Dollar’s motion for summary judgment in July 2009.
Grace argued that summary judgment was inappropriate in light of another FLSA suit against Family Dollar, Morgan v. Family Dollar Stores Inc., but the 4th Circuit ruled that the facts in that case, in which a jury did award overtime compensation to store managers, were not identical; the managers in that case did not perform exempt and non-exempt duties.