Eleventh Circuit Affirms Major FLSA Verdict for Employees

The Eleventh Circuit recently upheld a major verdict for managers of Family Dollars Stores. The employees claimed that they worked 60 to 70 hours per week without receiving overtime pay. The Defendnat claimed the executive exemption. The Eleventh Circuit affirmed a trial verdict for the Plaintiffs.

The case involved an opt-in class of 1,424 store managers in a collective action under the Fair Labor Standards Act. The Eleventh Circuit wrote:

"Plaintiffs presented evidence that store managers rarely exercised discretion because either the operations manuals or the district managers’ directives controlled virtually every aspect of a store’s day-today operations. The manuals and other corporate directives micro-managed the days and hours of store operations, the number of key sets for each store, who may possess the key sets, entire store layouts, the selection, presentation, and pricing of merchandise, promotions, payroll budgets, and staffing levels. The manuals even instruct store managers on the smallest details, such as how to arrange clip boards, what items go in each of the four drawers of the single file cabinet, and how to remove spots and chewing gum from store mats. The few decisions not mandated by the manuals and corporate headquarters are vested in the district manager. These decisions include the power to change store hours, close for bad weather, approve changes to store layouts, establish all employees’ initial rates of pay, approve all pay raises, set payroll budgets, control the total labor hours allocated to each store, approve the hiring and firing of assistant managers, and even approve the use of appliances such as coffee pots. Even when a store manager exercised discretion in scheduling employees for the week, she did so within the strict constraints of mandatory store hours, a limited payroll budget, a prohibition on overtime work by hourly employees, and a staff scheduler. This evidence supports a reasonable jury finding that Family Dollar’s store managers had few, and infrequently exercised, discretionary powers. "

One of the most damaging pieces of evidence was the testimony of Dollar Stores' Senior Vice President of Store Operations. He testified -- or attempted to testify -- about how the company reached its decision to classify all its store managers as exempt:

Q. Now, my question is, did you make that decision?
A. No, sir.
Q. Did your boss, Mr. Barkus, make that decision?
A. To my knowledge, it’s been in place -- it was in place when I camehere 29 years ago. So --
Q. Okay. So, do you know anybody that will own up to that decision;say, “that was my decision”?
A. I do not.
Q. Mr. Levine, has he ever told you that’s his decision?
A. No, sir.
Q. Can you give us any clue? And the reason I’m asking you this, Iasked you this in the deposition and we’ve been asking a lot of peoplein depositions: Who made this decision, do you know?
A. I do not.

New Civil Rights Act

The Obama administration, along with a new Congress, will almost certainly consider new employee rights legislation. The 1991 Civil Rights Act changed the landscape of employment law by granting the right to a jury and additional monetary damages to victims of employment discrimination. A new "civil rights act" is being explored. Among those things being discussed:

-either eliminating or raising the existing caps on Title VII and ADA awards

- allowing compensatory and punitive damages under the Fair Labor Standards Act

- condition states' receipt of federal funds on the states waiving Eleventh Amendment immunity under, among others, the ADEA and FLSA.

New Administration

With each new administration, we can expect changes in federal labor and employment laws. In February, I will attend the Federal Labor Standards Legislative Committee meeting of the American Bar Assocation, where high ranking officials of Department of Labor will discuss the future of wage and hour laws. Stay tuned. In the meantime, here is a statement from the committee that might be of interest:

With Barack Obama's inauguration next month, our Committee anticipates that change will be coming in the area of employment and labor law. Minimum wage, overtime pay, hours of work, enforcement, exempt/non-exempt regulatory changes, Family Medical Leave Act regulations and coverage expansion, and Ledbetter, all issues within this Committee's jurisdiction, are likely to receive significant attention in the next four years. The Wage and Hour Division will certainly continue to issue opinion letters, with different emphases and, likely, different outcomes in some of the more controversial areas. In the context of the explosion in wage/hour class action litigation across the country, the changes at the Labor Department and in statutory/regulatory law could have far reaching impacts for both employers and employees.

These issues will be explored in depth at the Committee's midwinter meeting in Los Cabos, Mexico, February 18-20, 2009. Although the new Secretary of Labor has yet to be named, the Committee will have knowledgeable representatives from the Department of Labor and other agencies who can speak on issues within our Committee's jurisdiction including issues that the Obama Administration will take on in the Wage and Hour context.