Morgan v. Family Dollar Stores, Inc.

Court of Appeals for the Eleventh Circuit
551 F.3d 1233 (2008)

ELI5:

Rule of Law:

An employer's classification of an employee as an exempt executive under the Fair Labor Standards Act (FLSA) is improper if the employee's primary duty, based on the totality of their actual job functions, consists of non-managerial tasks and they lack meaningful discretion and freedom from supervision.

Facts:

Family Dollar Stores, Inc. classified all of its store managers as exempt executives, paying them a fixed salary for routine workweeks of 60 to 70 hours without overtime compensation.
The company provided all stores with comprehensive corporate manuals and directives that micro-managed nearly every aspect of day-to-day operations, including merchandise layouts, pricing, scheduling constraints, and detailed cleaning procedures.
Store managers spent approximately 80 to 90 percent of their time performing the same non-managerial tasks as hourly employees, such as stocking shelves, operating cash registers, unloading trucks, and performing janitorial duties.
Family Dollar's corporate policy was to apply the executive exemption uniformly to all store managers without conducting any individualized studies of their actual duties, the time spent on those duties, or store-specific factors like size or sales volume.
District managers, not store managers, retained authority over most significant managerial decisions, including approving the hiring and firing of assistant managers, setting employee pay rates, establishing store payroll budgets, and closing stores for emergencies.
The company enforced strict, fixed payroll budgets for each store, which limited the hours available for hourly employees and effectively required the salaried store managers to perform extensive manual labor to complete all necessary work.
When calculated on an hourly basis for their long workweeks, the store managers' compensation was often only slightly higher than that of the non-exempt, hourly-paid assistant managers.

Procedural Posture:

Janice Morgan and other store managers filed a collective action lawsuit against Family Dollar Stores, Inc. in the U.S. District Court, alleging willful violations of the Fair Labor Standards Act for unpaid overtime.
After initial denials, the district court conditionally certified a nationwide collective action, and approximately 1,424 plaintiffs opted in.
Following extensive discovery, Family Dollar filed a motion to decertify the collective action, arguing the store managers were not similarly situated.
The district court denied the motion to decertify.
The first jury trial resulted in a hung jury.
A second jury trial was held, where the jury returned a verdict in favor of the plaintiffs, finding they were not exempt executives and that Family Dollar's violation was willful.
The district court entered a final judgment against Family Dollar, which included overtime wages and an equal amount in liquidated damages.
Family Dollar appealed the judgment to the U.S. Court of Appeals for the Eleventh Circuit.

Premium Content

Subscribe to Lexplug to view the complete brief

You're viewing a preview with Rule of Law, Facts, and Procedural Posture

Issue:

Does an employer's company-wide classification of store managers as exempt executives under the Fair Labor Standards Act (FLSA) fail when evidence demonstrates that the managers' primary duty is non-managerial manual labor, they exercise little discretion, and are subject to close supervision?

Opinions:

Majority - Hull, J.

Yes, the classification fails. An employee's primary duty is determined by a fact-intensive inquiry into their actual work, not by their job title. The court affirmed the jury's verdict, finding overwhelming evidence that the store managers' primary duty was not management. The analysis relied on the Department of Labor's multi-factor test: 1) Time Spent: Store managers spent 80-90% of their time on non-exempt manual labor. 2) Relative Importance: These manual tasks were essential to Family Dollar's business model, not incidental to a managerial role. 3) Discretionary Powers: Managers exercised virtually no discretion, as corporate manuals and district managers dictated nearly every action. 4) Freedom from Supervision: They were closely and constantly supervised by district managers. 5) Salary Comparison: Their effective hourly wage was not significantly higher than that of non-exempt assistant managers. The court rejected Family Dollar's 'in charge' argument as a categorical approach that improperly bypasses the required factual analysis. The court also affirmed the denial of decertification, finding the plaintiffs were similarly situated due to uniform corporate policies and job duties, and upheld the jury's finding of willfulness based on evidence that Family Dollar never studied whether its classification complied with the FLSA.

Analysis:

This decision solidifies the principle that the FLSA's executive exemption depends on the substance of an employee's duties, not on their title or job description. It serves as a significant precedent against employers who use a 'one-size-fits-all' exemption policy for employees whose actual roles are primarily non-managerial. The case reinforces that a uniform corporate policy that leads to FLSA violations can itself be the common thread justifying a large-scale collective action. Furthermore, an employer's failure to investigate the legality of its own pay practices can be used as evidence to establish a 'willful' violation, extending the statute of limitations and triggering mandatory liquidated damages.

Gunnerbot

AI-powered case assistant

Loaded: Morgan v. Family Dollar Stores, Inc. (2008)

Try: "What was the holding?" or "Explain the dissent"

Premium Feature