Exempt Employees - What Do They Really Do?

Valuable lessons gleaned from a landmark case

True or False: Managers paid a salary are considered exempt employees and are, therefore, not entitled to overtime pay.

If you answered true, you have company. Family Dollar Stores hired managers for all of its locations and paid all of them salaries, classifying them as exempt employees required to work extended hours – whatever it took to get the job done. What the national chain failed to take into account were the actual duties performed by store managers and how much authority they had in making decisions.

Family Dollar's biggest mistakes regarding exempt employees were adopting a policy that was applied company-wide regardless of individual factors and not conducting an audit to identify exempt employees. These mistakes cost them more than $35.5 million in damages to employees, employees' attorney fees, and their own attorney fees.

So, where did Family Dollar go wrong? And, more importantly, how can you make sure your company doesn't fall into this trap?

Answer questions now or later

Q. "And the employer never did any study of the hours that the store managers were spending in the stores?"

A. "No."

Q. "And the employer never studied the tasks that the store managers were doing working in the stores?"

A. "No."

Q. "And the employer never studied or looked into the managerial duties or the amount of time spent on managerial duties?"

A. "No."

Q. "In fact, the employer doesn't even have a policy addressing Fair Labor Standards Act overtime requirements, does it?"

A. "Not that I am aware of."

This series of questions is only a small sample of those put to Family Dollar Store executives during a 2006 jury trial,1 where store managers alleged that although Family Dollar classified them as salaried exempt employees, their actual job duties were those of a non-exempt hourly employee.

The 2006 trial was merely a stop along the path of a lawsuit that started with a complaint in 2001 and ended with an order from the United States Court of Appeal for the Eleventh Judicial Circuit in 2008. The case had such a circuitous route that the court provided a table of contents for the 63-page opinion. The path included a nation-wide class of Family Dollar store managers who did everything from unloading trucks to stocking shelves, sweeping floors, running cash registers, cleaning the parking lot, pulling weeds and scouring bathrooms.

Family Dollar Stores operates more than 6,000 retail stores selling a wide...