Labor & Employment Law

Starbucks Hit Again With FLSA Class Action: A Bitter Brew

By Mark E. Tabakman, Esq.

A former Assistant Manager at a Starbucks has filed a collective action under the Fair Labor Standards Act (“FLSA”). The suit is for overtime on behalf of himself and a class of Assistant Managers who worked more than 40 hours per week but were not paid overtime compensation. The plaintiffs assert that they were compelled to perform non-exempt duties a disproportionate amount of their work day and this amount of rank-and-file work destroyed the exemption.

Starbucks is no stranger to FLSA class actions by Assistant Managers. In March 2008, the Company settled with 356 Store Managers in several States, who accused the company of compelling them to work off the clock. This was ironic because, as far back as 2002, Starbucks had changed the compensation of Assistant Managers to an hourly basis, eliminating the exemption controversy, but then violated the law in another way. Due to the tightness of labor budgets, the Managers encouraged/pressured the Assistant Managers to work off the clock. In other words, the Company traded one headache (i.e. the exemption dilemma) for another (i.e. uncompensated off the clock work).

Another case, which settled in August 2008, also was based on a theory that too much non-exempt work was performed, undermining the exemption.

The Assistant Manager classification has always been problematic from an FLSA exemption perspective. These employees must be endowed with some actual/real authority relating to hiring and firing as well as other employee terms and condition or the employer will be an easy target for a class action suit. Moreover, they must supervise and manage the majority of the time. This becomes a fine line that often gets crossed in the hectic world of store operations, where the job has to get done.

Additionally, and this is the lesson learned from this case, in industries that historically utilize tight labor budgets (e.g. fast food franchises), the pressure to stay within budget must be resisted if the “price” paid is Assistant Managers (or other employees) are forced to work off-the-clock. This will only come back around and leave a bitter taste.
 

Full post as published by Wage & Hour - Development & Highlights on February 06, 2009 (boomark / email).