Family Dollar Settles Store Manager Overtime Claim

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Dollar.Stacked.XSmall.jpgOn September 12, 2012, Family Dollar announced that it will pay up to $14 million to settle a class action in the Southern District of New York. Similar to other class actions filed against Family Dollar over the years, New York store managers claimed that the Company failed to pay them overtime. Although the agreement has not yet been finalized, the proposed settlement would affect more than 1,700 store managers in New York who are covered by the certified class.

As we mentioned in our prior blog post back in April, court rulings have come down on both sides of the issue as to whether store managers at discount retailers, such as Family Dollar, are exempt from overtime. Back in 2008, the Eleventh Circuit upheld a $35.6 million judgment in favor of Family Dollar Stores managers on the basis that those managers did not meet the executive exemption. Since then, court rulings addressing this issue have varied depending upon the facts of each case. Most recently, in April 2012, a federal district court in South Carolina determined that two Dollar General store managers met the executive exemption from overtime pay under the FLSA. Gooden v. Dolgencorp and Thomas v. Dolgencorp. Similarly, in August 2012, a North Carolina district court found that a Family Dollar store manager met the executive exemption. Ward v. Family Dollar Stores.

Given some of the more recent rulings finding that the executive exemption applied to store managers, it is not entirely clear why Family Dollar chose to settle this New York class action. Needless to say, each case must be reviewed based upon its own set of individual circumstances. Like all employers, Family Dollar likely looked at the facts and risks associated with further litigation and made a determination as to whether the settlement made sense. In any event, this case does not suggest that Family Dollar and other retailers cannot meet the executive exemption by demonstrating that management is the primary duty for its store managers in the future. At most, this is a reminder to employers that such a determination will always be based on the specific facts at issue and the individuals involved.