Failing to Pay Managers Overtime to Reduce Labor Costs

Bearing the brunt of budget cutsEmployers often try to control costs by establishing labor or payroll budgets which limit the amount of payroll that can be spent on staffing the workplace.

For large companies with multiple locations, labor budgets are often set through corporate directives, and the managers at the locations have little or no input into deciding how much staff is needed for the operation to run smoothly. To keep labor costs low, the corporation often requires salaried managers to perform the same duties as hourly employees in addition to performing their managerial duties, or they will set a budget labor that is too low to adequately staff the business. However, that does not allow for hourly employees to work overtime hours.

When this occurs, it is common for managers to find themselves spending most of their time performing hourly duties instead of managing.  Managers who are salaried and classified as exempt work additional hours without exceeding the labor budget or causing the company to incur additional payroll costs, so they are often expected to work long hours, which they spend performing the same work as hourly employees.

In essence, the manager is a “glorified” staff member who can work limitless hours without having any impact on the labor budget. It is not uncommon for us to hear from managers who have compared their salary to what hourly workers would be earning if they worked the same number of hours and were paid overtime, only to find that their rate of pay is not much more than what the hourly workers earn.

Many salaried managers believe they can be legally required to work overtime hours without additional compensation. However, when a company’s model is to use a manager to perform a vast majority of non-managerial tasks, it is often the case that the manager’s non-managerial duties are more important than their managerial duties, particularly when the manager is also closely supervised by higher level managers or most of their duties are governed by corporate policies and directives.

Many “managers” will report that they spend as much as 90% of their time on the job performing the same tasks as hourly employees.  It is illegal for a company to classify a manager as exempt if the manager’s primary duty is to perform non-managerial tasks such as customer service, manual labor or sales, rather than actually managing the business and other employees. Under this scenario, the manager cannot be legally classified as exempt and must receive overtime pay for hours worked over 40 per week.

Shavitz Law Group has recovered hundreds of millions of dollars for managers who have been misclassified as exempt due to their primary duties being non-managerial. This is often driven by labor or payroll budgets that are set too low or that depend upon managers performing non-exempt tasks.

If you are working long hours as a manager due to labor budgeting, we can evaluate whether you may be misclassified.  If so, you could be entitled to recover overtime pay and other compensation for every hour you’ve worked over 40 each week. Contact us today at [email protected] or call us directly at (800) 616-4000 for a free consultation.



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