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When is a manager not a manager?

The U.S. Sixth Circuit Court of Appeals considered this question earlier this month in Bacon et al. v. Eaton Corp. et al. The Bacon case involved shift supervisors who claimed that they did not receive overtime pay when they worked more than 40 hours per week.  Under the federal Fair Labor Standards Act (FLSA), employers generally must pay all employees who work more than 40 hours in a week overtime pay, which is time-and-a-half the employee’s regular rate of pay for the hours he works over 40 in a week. There are exceptions to this general rule; and one of these exceptions is for “executive” employees, which are employees who primarily perform managerial functions.

The shift supervisors in Bacon argued that, even though Eaton Corp. designated them as managers, they did not actually perform managerial functions.  The court looked to federal regulations from the U.S. Department of Labor to determine whether these shift supervisors performed managerial functions.  Under those regulations, an employer must satisfy a four-element test before it may decide not to pay a managerial employee overtime pay.  The employer must show that (1) the employee is compensated on a salary basis at a rate of not less than $455 per week; (2) the employee’s primary duty is management of the enterprise in which he is employed or of a customarily recognized department of subdivision of that enterprise; (3) the employee customarily and regularly directs the work of two or more other employees; and (4) the employee has the authority to hire or fire other employees or his suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees are given particular weight.

The court found that Eaton Corp. failed to establish that the shift supervisors had the authority described in the fourth element of this test.  Eaton Corp. disregarded the shift supervisors’ personnel recommendations; it provided them with no training on recruiting employees; and the shift supervisors’ job descriptions did not include decision-making regarding personnel.

Eaton Corp argued that its shift supervisors met the fourth element of this test because they reported employee misconduct which led to progressive discipline.  The court rejected this argument because the evidence showed that Eaton Corp. did not give much weight to the shift supervisors’ reports when it disciplined employees.  Human resources and upper managers removed the shift supervisors’ reports from employees’ files and, as such, the shift supervisors’ input could not be taken into account when employees were disciplined for repeated misconduct.  Also, some employees received the same forms of discipline for repeated infractions regardless of what the shift supervisors reported.

As this case illustrates, just because your employer says you’re an exempt manager does not mean that is necessarily so.  If you think your employer has misclassified you as an exempt manager, you should contact an experienced employment lawyer to learn more about your rights.  It is possible that you could be owed unpaid overtime pay plus an additional amount called “liquidated damages” to punish the employer for misclassifying you.