Wage & Hour Class Actions Gain Momentum: Gristedes Violates Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) requires employers to pay its employees overtime pay for all hours over 40 hours per workweek. Employees who work overtime hours must be paid at a rate not less than time and one-half their regular rates of pay.

Employers can avoid pay overtime pay only in limited circumstances. For example, managers and supervisors may qualify for the executive exemption if they: (1) manage at least two direct reports, (2) possess the authority to hire and fire employees, or whose input into such matters weight, and (3) regularly exercise discretion about how to carry out their job duties.

Unfortunately, to increase profits, some employers may classify an employee as exempt from overtime, even though the worker’s duties and responsibilities do not warrant such an exemption. To illustrate such a scenario, lets look at the TV sitcom, The Office. Specifically, as the the self-proclaimed Assistant Regional Manager, would
Dwight Schrute satisfy the executive exemption? The answer is obvious: Dwight would not meet the executive exemption because, despite his title, he has no direct reports; no authority to hire or employees; and spends the majority of his time selling Dunder Mifflin’s paper products, not managing employees.

On a much larger scale, a similar question recently arose in a lawsuit against the New York grocery store chain, Gristedes. In Torres v. Gristedes, Judge Paul A. Crotty of Federal District Court in Manhattan found that Gristedes violated federal and state laws by misclassifying department heads and so-called co-managers as exempt from overtime

[T]he overwhelming weight of the evidence suggests … that the class members were not salaried executives or administrators within the contemplation of the FLSA. Instead, … Gristede’s co-managers and department managers received a regular paycheck that was tied automatically to the amount of hours they worked during the pay period.

The decision affects approximatelt 400 current and former Gristedes’ managers who, collectively, may be owed as much as $25 million.

In reaching such a successful result, the plaintiff’s relied on well-known economist, Dr. Stephen A. Schneider of Nathan Associates, Inc., who provided statistical analysis regarding the gross underpayments made by Gristedes.

To read more about the settlement, visit the New York Times article entitled, Judge Rules That Gristede’s Broke Law on Overtime Pay.