“Is it time for retailers to pay their managers OT?” by Tom Ryan via Retail Wire

“Is it time for retailers to pay their managers OT?” by Tom Ryan via Retail Wire

Photo: Getty Images/FG Trade

A university study concludes businesses, including many retailers, are increasingly giving workers promotions with “fabricated” managerial titles but no wage upgrade to avoid paying them overtime wages.

Researchers from Harvard University and the University of Texas-Dallas believe firms are exploiting a loophole in the Fair Labor Standards Act first established in 1938 after the depression.

The act established a national minimum wage, a standard 40-hour work week and time-and-a-half pay for weekly work past 40 hours.

In its current form, however, businesses don’t have to pay overtime wages to employees who are salaried managers, making more than $455 per week (or $23,660 per year).

Analyzing online job postings and compensation data from 2010 through 2019, researchers found a 485 percent surge in the use of managerial titles for salaried positions with earnings only slightly above the $455-a-week threshold. The overtime-exempt employees were found to share the same job tasks as equivalent non-managerial employees.

Some examples of “suspect” salaried job-listing postings offered included:

  • A front desk clerk position advertised as “Guest Experience Leader”;
  • A barber position listed as “Grooming Manager”; 
  • A restaurant host/hostess position advertised as “Guest Experience Leader.”

The study estimated the use of deceptive job titles saved companies 13.5 percent in overtime expenses for each so-called manager. The study stated the “incredibly high ROI on this activity of avoiding overtime wages might explain why we see firms across every industry — from Staples to JP Morgan, to Facebook, to Walmart, to Verizon, to Avis, to Lowe’s — engaging in this activity even up through the present day, with full knowledge of potential litigation.”

Speaking to Time magazine, Lauren Cohen, a Harvard professor and study co-author, said she believes the 85-year-old law should be updated so all employees, including managers, are eligible for overtime pay.

Retailers may be reluctant to pay managers or supervisors overtime pay since it’s more challenging to tabulate their weekly hours and the risks that some may pad their hours. Some staffers may also feel compelled to log well above 40 hours a week to prove their value.

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