More Store Managers Found to Meet Executive Exemption

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DollarStore.edited.XSmall.jpgOn April 3, 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. Granting summary judgment to Dolgencorp, the court held that Gooden’s and Thomas’s primary duties were managerial in nature based upon the facts in these cases.

In order to meet the executive exemption, an employee’s primary duty must be management. Primary duty is defined as the “principal, main, major or most important duty that the employee performs.” 29 CFR § 541.700(a). In analyzing whether management was the primary duty of Gooden and Thomas, the court looked at the following factors: amount of time spent performing managerial duties, the relative importance of those duties, the frequency in which discretion was exercised, freedom from supervision, and comparison of compensation to nonexempt employees. Gooden and Thomas met each of these factors:

  1. Gooden and Thomas testified that they spent 70 to 75 percent of their time performing managerial duties, and even when performing nonexempt duties, they were still concurrently responsible for leading and overseeing their stores’ operations.
  2. Both testified that their most important duty involved running the stores and ensuring their success, and that the stores could not operate absent their management.
  3. Both exercised daily discretion in hiring, demoting and firing employees; training; setting and adjusting schedules; delegating and prioritizing tasks and assignments; and disciplining employees.
  4. Their discretion was rarely limited by Dollar General’s extensive standard operating procedures manual or district managers who visited once every few weeks or months. The court noted that the company’s desire for standardization and uniformity does not take away a manager’s primary duty to manager her store.
  5. Both were paid more than nonexempt employees, and earned approximately 10 to 30 percent more than assistant managers at their stores. They also earned bonuses based on their stores’ profitability.

Based on these factors, the court found that Gooden and Thomas met the executive exemption under the FLSA.

Insight for Employers

These latest cases join other recent district and circuit court rulings that have granted summary judgment to Dolgencorp and other retailers on this very issue. However, it is important to remember that a manager’s ability to qualify for a FLSA exemption is a fact-specific determination. Just because one store manager meets the executive exemption does not necessarily mean that a manager in another store or company will meet the same exemption. A 2008 decision by the Eleventh Circuit makes this crystal clear. There, a $35.6 million dollar judgment in favor of Family Dollar Stores managers was affirmed on the basis that those managers did not meet the executive exemption. The Court disagreed that management was the primary duty for these managers based on the facts in that case.

So while these Dolgencorp cases are encouraging to employers who classify store managers as exempt, a company’s ability to establish management as the primary duty will always be determined based on the specific facts at issue and the individuals involved.