Steak ‘n Shake Working Managers Win Overtime

When does a “manager” get overtime pay? Some managers sit in a back office and supervise, without getting their hands dirty. Other “managers” are working supervisors out on the floor with the same job duties as the workers they supervise. Who is exempt from overtime pay?

On May 10, 2019, a judge ordered Steak ‘n Shake to pay $7.7 million in back pay and liquidated damages for misclassifying store managers as exempt employees and failing to pay overtime.

I. Misclassification of Managers.

Working supervisors or managers can earn overtime, even if paid a salary. To be exempt from overtime pay under the Fair Labor Standards Act (FLSA) under the “executive exemption”, an employee’s primary duties must involve tasks related to managing the business and directing the work of other employees. When a manager is also working normal restaurant or retail duties as his/her primary duties of the job, the manager is not an exempt supervisor.

II. Primary Duties of a Working Manager.

The Steak ‘n Shake managers typically work 50- to 70-hour weeks, regularly performing duties typically assigned to hourly workers. The Company claims they were not owed overtime because their primary duties were manager duties.

III.  Good Faith Misclassification?

Steak ‘n Shake’s claimed that its failure to pay overtime was a good faith mistake. The issue of good faith did not depend on whether the managers ever did manager duties. The issue was whether their primary duties were normal staff, non-manager duties because of how busy they were on under-staffed shifts.

The company’s regular response for understaffed stores was to use salaried managers working overtime in place of hourly staff. Steak ‘n Shake must have known that “managers were simply too busy performing production and service duties to meet the definitions for exempt employees.”

The judge also ordered the company to pay nearly $1.6 million in attorney fees and $40,000 in costs.

IV. Executive Exemption.

To qualify for the executive employee exemption, all of the following tests must be met:

  • The employee must be compensated on a salary basis;
  • The employee’s primary duty must be managing the enterprise;
  • The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
  • The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

V. Are You Misclassified?

Are you denied overtime because you are called a “manager” even though your primary responsibilities are the same as the workers you supervise? Is most of your time and effort spent on non-supervisory duties?

The Ken S. Nugent, P.C. Overtime Team of attorneys can help misclassified “working managers” collect (1) any unpaid overtime, plus (2) liquidated damages in an additional amount of the same back wages and overtime, and (3) attorney’s fees and costs.

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