Western District Refuses To Dismiss FLSA Claim

In Hale v. Dolgencorp, Inc., the Western District of Virginia denied the defendant’s motion for summary judgment on an FLSA claim based on the executive exemption to overtime pay. A copy of the opinion is here. More after the break.

The plaintiff, Teresa Hale, was a former employee of Dolgencorp, Inc., which operates Dollar General stores across the country. During the relevant time, Hale was employed as a store manager and earned a salary. Hale claimed that she did not fall within the executive exemption for overtime pay under the FLSA and was therefore entitled to overtime compensation. Under the FLSA, employers are required to pay time and a half to employees who work over forty hours a week, unless the employee falls under an exemption. The executive exemption under the FLSA applies to employees who qualify as “executive or managers.” The FLSA regulations state a test for determining whether an employee is exempt: (1) the employee is compensated on a salary basis at a rate of no less than $250 per week; (2) their primary duty is management of the enterprise; and (3) the work includes customary and regular direction of the work of two or more employees.

Here, the issue involved was whether the employee’s primary duty was management of the enterprise. Hale testified that she spent about ten percent of her time in a given week performing management duties, and the remainder was spent on performing menial labor, such as cleaning, stocking, and working the register. In its analysis, the court first laid out the factors used in determining what constitutes a “primary duty”: (1) the amount of time spent performing managerial duties; (2) the relative importance of managerial duties compared to other duties; (3) the frequency with which the employee exercises discretion; (4) the relative freedom from supervision; and (5) the relationship between the employee’s salary and the wages paid to other employees for nonexempt work performed by the supervisor.

With respect to the first factor, the court held that a reasonable jury could conclude that Hale spent very little time actually managing the store based on her testimony that she spent the majority of her time performing menial tasks. With respect to the second factor, Dollar General argued that it principally valued Hale’s management abilities. The court found, however, that a reasonable jury could conclude that Dollar General mainly valued Hale’s ability to perform store clerk duties (such as stocking shelves and working the register), as well as her ability to promptly report any problems to her supervisor, who would then advise her on how to proceed. As to the third factor, the frequency with which Hale exercised discretion, the court found that even though Hale was permitted to engage in the hiring, training, and discipline of employees, as well as in setting work schedules, Dollar General had rules in place that limited Hale’s ability to truly exercise discretion. For example, the court stated that although Hale created the work schedules, she had no control over the amount of labor hours allotted to her store, and that she did not have authority to discipline or terminate employees without the district manager’s approval. With respect to the fourth factor, the court noted that while the district manager spent very little time actually supervising Hale’s store, he left frequent voicemails for Hale with specific instructions regarding the operation of the store. Finally, the court found that Hale’s salary, when converted to an hourly rate, was essentially the same as what a clerk earned. The court concluded that based on application of the five-factor test, a reasonable jury could determine that Hale’s primary duty was not management, and therefore denied the defendant’s motion for summary judgment.