The difference between “exempt” workers and “non-exempt” workers, an arcane piece of employment law that most people never think about, has become crystal clear for an Edison-based company that operates 55 Dunkin Donuts franchise locations in New Jersey and Staten Island, including four in the U.S. 1 circulation area.
In the aftermath of an investigation by the U.S. Department of Labor, the company, QSR Management LLC, has agreed to pay $197,787 in back wages owed to 64 employees.
Department of Labor investigators found that the company did not pay overtime to 56 store managers, as required by the Fair Labor Standards Act. QSR incorrectly claimed its managers were exempt from overtime, arguing that these managers were salaried. But, the labor department charged, the company actually treated them as hourly employees, reducing their pay when they worked less than 60 hours in a week.
According to press statement issued August 26, “Although the Fair Labor Standards Act (FLSA) allows an overtime exemption for management employees who perform certain job duties, the exemption only applies if the managers receive a guaranteed weekly salary of at least $455. Though these managers performed the duties required for the exemption, QSR failed to pay its managers a guaranteed weekly salary in all workweeks, and therefore store managers were entitled to overtime pay for hours worked in excess of 40 in a workweek.
“QSR has assured compliance with the FLSA and has agreed to pay all back wages. As part of its commitment to future compliance, QSR has changed its employee handbook to reflect its intent to properly apply any valid exemptions, and to no longer allow management to take tips from employees.”
The FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees, and also exempt certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week.
In addition to the overtime payments, the company was cited by the department for minimum wage violations, based on management at two locations taking tips from customer service workers to cover register shortages. Those violations amounted to $237 for eight employees.
The locations where the violations took place included the Princeton Shopping Center, 301 North Harrison Street; 200 Buckelew Avenue, Jamesburg; 1325 Route 206, Skillman; and 1 Tree Farm Road, Pennington.
“The FLSA was passed 75 years ago with minimum wage and overtime provisions to protect workers and level the playing field for employers. There are exemptions to some provisions but employers are responsible for determining exactly when and how these exemptions apply,” said Patrick Reilly, director of the division’s Southern New Jersey Office. “These managers worked long hours and are entitled to the protection the FLSA affords them. An employer’s failure to pay overtime when required gives them an unfair competitive advantage, violates the rights of the employee, and will not be tolerated.”
For more information about the FLSA and other federal wage laws, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243) or visit www.dol.gov/whd.