What You Need to Know About Managerial Positions and Overtime

What is a manager? Well, a manager’s primary job is to manage and to instill real authority. However, managers are usually doing all the grunt work finding it hard to pushback. Ms. Palliser was working at least 50 hours a week without overtime pay. Her employer, Panera, considered her a manager and paid her an annual salary instead of an hourly basis. She was making from $32,000 to $40,000 as an assistant manager. According to federal law, employers are required to pay time-and-a-half overtime to hourly workers after 40 hours. Most salaried workers whose salary is below a certain amount, about $35,500 a year, must also be paid time-and-a-half overtime. Managerial positions are extremely helpful when it comes to professional success for many individuals who don’t have college degrees. However, employees that are mislabeled as managers are provided salaries just above the federal cutoff in order to save their employers from paying them overtime.

Starting in 2019, jobs declined by millions but the number of managers barely changed. It was suspected that businesses were mislabeling employees as managers to save on overtime. This prevailed during the pandemic considering most businesses were short-handed.

According to experts, the denial of overtime pay is part of a bigger plan to decrease labor costs by employing as few workers as possible. If a worker calls in sick, or more customers turn up than expected, the misclassified manager is often asked to perform the duties of another employee without additional cost to the employer. Dierdre Aaron, a former Labor Department lawyer, said “they have assistant managers there who can pick up the slack.” Ms. Palliser’s normal shift at Panera would be from 5 a.m. to 2 p.m., however she was frequently called in to close the store or would be asked to stay after her shift had ended to cover for an employee who had not shown up. She would usually pick her kids up at 2 from school but had to ask her husband to quit his job and help with child-care responsibilities. Ms. Palliser won a portion of a multimillion-dollar settlement under a lawsuit accusing Panera of failing to pay overtime to many assistant managers.

Gassan Marzuq, who was a manager of a Dunkin’ Donuts earning a salary of $40,000 a year, said in a lawsuit that he typically worked more than 70 hours a week. He would spend most of his time serving customers and cleaning, and he wasn’t able to delegate this work to others because they were always short-staffed. Gassan eventually won a $50,000 settlement against T.J. Donuts, the owner of Dunkin’ Donuts.

Many workers along with their lawyers have accused employers of exploiting their desire to climb the professional ladder to avoid increasing labor costs. Gonzalo Espinosa, who was working 80 hours a week without receiving overtime pay as a manager at Jack in the Box in California, claims that employers often use workers weakness to their advantage. Most employees want a better opportunity and a better life for their families. Gonzalo’s salary of $30,000 was based on an hourly wage of $16 for a 40-hour work week. However, his true hourly wage was close to half that amount, which is considerably less than the state’s minimum wage.

These issues also occur in white-collar industries like tech and banking. Justin Swartz, a partner at the firm Outten & Golden, has helped bring more than two dozen overtime cases against banks, claimed that most cases involved branch managers who were often the only employees on site performing bank teller duties.

According to some lawyers, an increase in the limit below which workers receive overtime pay is the only possibility for misclassifications to decrease. With a higher limit, paying employees overtime would be cheaper than increasing their salary and classifying them as managers to avoiding overtime costs. When the Obama administration introduced the 2016 Labor Department rule to raise the overtime limit from $23,500 to $47,500, many companies fought against it. The rule was suspended by a federal judge who argued that the Obama administration did not have the authority to raise the salary limit by that amount. Then, the Trump administration introduced the current cutoff of $35,000, and the Biden administration indicated that they will propose to raise the limit this year. As claimed by many business groups, this change would not favor workers since employers are more likely to lower base wages to counterbalance overtime pay.