Family Dollar Store Manager Exempt From Overtime, 3rd Cir. Rules

Author: Michael Cardman, XpertHR Legal Editor

April 13, 2015

As a new appeals court ruling illustrates, employees can spend the majority of their time performing routine work and still be exempt from federal overtime rules.

In Itterly v. Family Dollar Stores, Inc., 2015 U.S. App. LEXIS 5751 (3d Cir. Apr. 9, 2015), the 3rd Circuit Court of Appeals held that a Family Dollar store manager was exempt from the overtime requirements of the Fair Labor Standards Act (FLSA) even though he spent "virtually all of his time" performing nonmanagerial tasks and physical labor.

Under current FLSA regulations, an employer does not need to pay overtime to employees who spend a majority of their time performing nonexempt duties (e.g., taking inventory or manning a cash register) as long as they are free from direct supervision and their exempt duties (e.g., supervising subordinates) are a more important part of their job.

In the Itterly case, the store manager spent most of his time unloading freight, stocking shelves and working a register. But he concurrently performed exempt duties such as determining which employees worked which shifts; assigning work to employees; and interviewing and hiring cashiers.

Because the manager's exempt duties were critical to the successful operation of the enterprise, the 3rd Circuit ruled that they were more important than his nonexempt duties and thus were his primary duty.

The Itterly ruling may turn out to be among the last of this type, however. The Obama administration is expected to issue new FLSA rules soon, and among the changes it is considering is a "bright-line" overtime test that would require employees to spend a certain percentage of their time performing exempt work, regardless of how important those duties may be.