by Charles H. Kaplan

The U.S. Court of Appeals for the Second Circuit (which covers employers in Connecticut, New York, and Vermont) recently reinstated an overtime pay claim by former employees of a high-end fashion retailer in New York. The employees alleged their regularly scheduled workweek included more than 40 hours per week of work. They claimed they were entitled to overtime pay under the federal Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL) because their employer misclassified them as managerial employees even though their actual job duties were not managerial.

Exemption Requirements

The executive exemptions from the FLSA and the NYLL require that all of the following tests must be met:

• The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less per week than that set forth in federal and state regulations;
• Their primary duty must be managing the enterprise or managing a customarily recognized department or subdivision of the enterprise;
• They must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
• They must have the authority to hire or fire other employees, or their suggestions and recommendations about the hiring, firing, advancement, promotion, or any other change of status of other employees must be given particular weight.

Level of Specificity

The U.S. District Court for the Southern District of New York had dismissed the workers’ FLSA claims for failure to allege the specific number of hours they worked. The Second Circuit ruled their complaint adequately stated a claim under the FLSA because it alleged their regularly scheduled workweek exceeded 40 hours and they were denied overtime as a result of being misclassified as managers.

The employer argued the employees needed to list specific weeks during which they worked more than 40 hours. In other words, it contended a complaint must identify each week they worked their regular schedule. For example, one employee would need to list each and every one of the more than 100 weeks he worked his regular schedule.

The Second Circuit found the level of specificity the employer demanded went too far. It would generate voluminous, tedious complaints and compel employees to record their work schedules with a level of precision and care at odds with the court’s admonition that employees in FLSA cases aren’t obligated “to keep careful records and plead their hours with mathematical precision.”

Instead, the Second Circuit explained its precedents require only that employees “sufficiently allege 40 hours of work in a given workweek as well as some uncompensated time in excess of the 40 hours.” This pleading standard is unmet, the court explained, if all that employees allege is that at some undefined period in their employment they worked more than 40 hours in a single week. Such an allegation, the Second Circuit reasoned, would be far too vague and unhelpful for putting a defendant on notice of the alleged violation.

The pleading standard is satisfied, however, if employees allege their regularly scheduled workweek for a given period included more than 40 hours of work, so that they were eligible for overtime during every week in which they worked their regular schedule. In that case, the court observed, an employee need only allege the period during which they were employed. Accordingly, the Second Circuit concluded the employees’ overtime claims were sufficiently specific to move forward. Abbott v. Comme Des Garcons, Ltd.

Bottom Line

Simply giving an employee the title of store manager or assistant manager doesn’t satisfy the executive exemption. The Second Circuit’s ruling in Abbott is a reminder that employers need to convert lower-level managers, who aren’t executives under the FLSA, to nonexempt status to avoid costly overtime claims.

Charles H. Kaplan is an attorney for Hodgson Russ LLP in New York City. Charlie is a Partner in the Labor and Employment Practice and has counseled employers in the New York City metropolitan area and throughout the United States concerning the law of the workplace. He can be reached at ckaplan@hodgsonruss.com or 646-218-7513.