Radio Shack is the latest big company to get caught in the web of federal and state overtime regulations. The Dallas Morning News reports that Radio Shack has just concluded a settlement with a class of plaintiffs consisting of about 4,000 Radio Shack store managers.
The settlement calls for payment of $8.8 million to the "managers." The court found that they were entitled to overtime pay because, despite their managerial titles, they were not exempt from the overtime requirement of the FLSA. The court had "ruled that store managers who did not supervise at least 80 hours of subordinate time at least 80 percent of their workweeks did not meet the legal standard for exemption and were therefore entitled to overtime pay.
The Fair Labor Standards Act, along with many state law analogs, requires that most employees be paid time and one half every time they work more than 40 hours in a week. There are exemptions for certain classes of employees, such as executive, administrative, and professional employees. As demonstrated once again by the Radio Shack case, the correct classification of employees is a problem that continues to plague business. The United States Department of Labor has useful information on its web site, including this fact sheet.
The proper classification of employees for FLSA purposes is deceptively complex. The fact that sophisticated employers continue to have trouble in this area teaches us that all employers, large and small, should periodically review their wage and hour practices to ensure that they comply with applicable federal and state laws.