New York Employment Lawyer Blog

We have been getting calls from store managers around New York who are working long hours and they want to know if they are entitled to overtime pay. Many of them claim to do very little "managing" and instead spend the bulk of their time doing menial labor such as stacking boxes, pumping gas, sweeping floors etc... At first glance it seems that since most of their time is spent on non-exempt work that these managers are not exempt. But this is not always the case.

I was doing some research on this issue and found a great blog post by Greg Mersol of the Employment Class Action Blog that really explained the issue well as it relatses to a recent decision from the Northern District of New York. Here it is:

In Guinup v Petr-All Petroleum Corporation.pdf. (case 5:07-CV-1120, 8/23/2010) the plaintiff was the manager of a combination convenience store and gas station. She asserted both federal claims under the FLSA and class action claims under the New York wage and hour law, claiming that the company misclassified all of its retail outlet managers. She made many arguments in support of this contention, including, for example, that she was required to perform numerous nonexempt duties such as counting cigarettes, verifying gas readings, monitoring security tapes, comparing prices as nearby gas stations, and working alone at times.

Interestingly, the plaintiff withdrew her class allegations early in the case as part of a compromise regarding a motion to dismiss filed by the defendant. The court thus technically ruled on her individual claims on the defendant's motion for summary judgment, although its reasoning theoretically would have applied to the class of store managers as a whole. The court accepted the plaintiff's description of the nonexempt duties she performed, and even her argument that she performed such duties 80 percent of the time, but noted that she also performed numerous exempt duties such as evaluating employees, scheduling, and supervising other employees. It noted that while her performance of nonexempt duties was helpful to the store's operations, and quite possibly filled the bulk of her time, her managerial functions were more important. As the court reasoned, the store largely could not function well, if at all, were she not there to perform the exempt managerial duties. It further found that despite the existence of regional supervision, she spent most of her day free from direct supervision because the regional manager generally was not in the store. Therefore, the court found, the managerial duties were the “primary” duties as a matter of law, and entered judgment for the defendant.

The Bottom Line: Even in small individual retail operations, and even when the amount of time spent strictly managing the store is relatively small, managerial duties or often still the primary duties and will support the executive exemption.

So, in New York, many of the store managers for smaller operations may well be exempt from overtime pay. Even though they spend most of their time on non-exempt work, they are still exempt. But each case is different and dependent on the facts of the position.

A common defense to claims for unpaid overtime is the argument that overtime pay is not required because the employee's position falls within the administrative exemption. The overtime laws "exempt" certain kinds of jobs or positions such that overtime pay is not required. Employees who fall into the "administrative" exemption are not entitled to overtime pay. But as a federal judge told us in court today, the Second Circuit takes a narrow view of the administrative exemption argument. Therefore in New York, the administrative exemption is reserved only for those positions that squarely meet the standards.

But what exactly is the "administrative" exemption? First, an administrative position must directly relate to the management or general business operations of the company or the employer's customers. This means that the job must involve assisting with the running of the company as opposed to creating the product or service offered by the company. Classic administrative positions are marketing, compliance etc - jobs that involve the running of the business itself.

Second, in order for a position to fall within the administrative exemption, the job must also involve the exercise of independent discretion or judgment. For example, the position must involve fairly high level decision making that might involve advising the company on important matters or making plans for the companies near or long term goals or negotiating and binding the company with respect to significant matters.

So what does all of this mean? Basically it means that a job falls within the administrative exemption if the work involves the running of the business such as marketing and that the marketing position itself is a high level (non-routine) position that involves making important decisions and rendering advice and the like. Low level routine or clerical positions do not qualify. The courts in New York will closely scrutinize these administrative exemption arguments as the Second Circuit has recently reversed a trial court for erroneously determining that certain pharmaceutical sales representatives were exempt under the administrative exemption.

The New York State Legislature just passed the Wage Theft Protection Act and it will become law once Governor Patterson signs the bill. This new law will provide New Yorkers with greater protection from overtime pay and minimum wage violations. Under the Wage Theft Protection Act, an employer can be forced to pay wronged workers twice the amount that was due as well as other penalties and legal fees.

New York is not the only state on the bandwagon against wage piracy. Last summer Illinois passed a similar law and Washington State, Massachusetts and New Mexico have toughened their wage theft laws.

Why are these laws being passed? Why suddenly do politicians care about these long standing employee abuses? The reason is that governments are now strapped for funds and these wage violations also short the government on tax revenues. By forcing companies to pay all that is due to workers they also increase tax revenue.

A recent study has also helped raise awareness. The study showed that each week New York workers lose 18.4 million in unpaid overtime pay and minimum wages or about one billion a year. Worse, the average low wage worker loses $2600 a year in unpaid overtime pay or about 15 percent of their yearly income. Moreover, 75% of those who work overtime are not paid the required overtime pay premium equal to time and a half and 69% of workers don't get meal breaks.

New York's new Wage Theft Protection Act sounds like a good solution but don't be fooled. Remember, laws are just words on the books - they don't really mean anything unless they are vigorously enforced. For example, employment discrimination has been illegal since the 1960's but employment discrimination is still rampant. In my view, the laws need to be dramatically improved in favor of workers so that the unpaid overtime pay is immediately taken from the accused employer and held in trust for the worker until the case is concluded. Companies need to feel the pain immediately. Now, these cases linger for years and the company is allowed to keep the unpaid wages while the case plods on. Worse, the amount owed is usually negotiated down during the process such that the employer often gets off paying less than what was owed and they get to keep the unpaid wages for years. I am glad that NY has passed the Wage Theft Protection Act, but it is not enough.

Retaliation cases are usually very simple. A typical retaliation case consists of an employee engaging in protected conduct, such as reporting her boss for sexual harassment or employment discrimination, and then being fired or subject to unwarranted discipline. At its core, a retaliation case is nothing more than an employer punishing an employee for making a complaint. Obviously our employment laws will not work if employers can get away with retaliation and in recent years the U.S. Supreme Court has attempted to strengthen the anti-retaliation laws.

The current case before the Court involves a twist - namely what happens when an employer retaliates by firing a family member of the complaining employee? In the pending case, a female employee, Miriam Regalado filed a sex discrimination complaint against her employer with the EEOC. Three weeks later her employer fired her fiance, Eric Thompson.

Yesterday the Court heard oral argument from the lawyers. Some of the conservative justices such as Justice Scalia and Chief Justice Roberts asked where the line should be drawn. Does it cover only family members? Should it also cover friends of the complaining employee? I don't think the Court needs to answer those questions.

Under the New York City Administrative Code, any conduct that might reasonably deter an employee from making a complaint is prohibited. The NYC law does not attempt to draw bright lines and instead it just prohibits any type of retaliatory conduct. I think that the NYC law is excellent because it does not attempt to get into the details. There is no way to predict what kind of schemes an employer might cook up in order to retaliate, so the best approach is to just prohibit any kind of retaliatory conduct. If the U.S. Supreme Court tries to set clear lines then it might be making things needlessly complex and limiting. I think that the comments by Justice Scalia were simply attempts to make the law look unworkable but the answer is simple - just prohibit any conduct that is calculated to reasonably deter employees from making complaints.

Employees in California enjoy a few protections that New Yorkers don't have. For example, noncompete agreements are generally unenforceable in California. This means that Californians have more freedom to move from job to job while New Yorkers can be restricted. Mark Hurd, the former CEO of California tech giant Hewlett-Packard recently exercised this freedom when he left HP to join HP's rival, Oracle. HP tried to stop Hurd but it was unable because California courts typically refuse to hinder an employee's ability to change employers. If Mr. Hurd was employed in NY, he most likely would have been bound by an enforceable noncompete clause that would have prevented him from joining a competitor.

Likewise, California employers are required to reimburse employees for necessary expenditures or losses that they incur in the performance of their duties under California Labor Code section 2802. NY employees do not enjoy this protection. We are currently handling an expense reimbursement case in California. The case is entitled Brian Mas v. Cumulus Media, Inc. That case is a putative class action and it is alleged that Cumulus Media did not reimburse is sales executives for the business expenses that they incurred in the performance of their duties in violation of California Labor Code section 2802. It is alleged, among other things, that Cumulus sales executives incurred expenses in traveling to meet with potential and existing clients and in entertaining clients. California law also makes it clear that an employee cannot waive their right to reimbursement as section 2804 of the Labor Code voids any such agreement.