Authored by Alfred L. Sanderson, Jr.
Can a group of retail store managers who were uniformly classified as exempt under the executive exemption, who worked under the same job description, and who were all subject to the same company policies maintain a collective action for the nonpayment of overtime? According to a District Court in Kansas, that evidence alone is not sufficient to meet the “similarly situated” standard at the second stage of the certification process.
Harbor Freight sells tools and related products at over 400 retail stores throughout the United States. In Green v. Harbor Freight Tools USA, Inc., five store managers filed a collective action under the Fair Labor Standards Act against the company, alleging they had been misclassified as exempt from overtime. Two years ago, Kansas District Judge Julie Robinson conditionally certified the collective action as the first step under the now common two step method as applied in the Tenth Circuit. Eighty-one additional plaintiffs opted in, but 50 were dismissed, leaving 36 in the action. All 36 responded to discovery and were deposed. Two years later to the day, on August 17, 2012, Judge Robinson granted Harbor Freight’s motion to decertify, finding that the plaintiffs were not “similarly situated.”
In opposing the motion to decertify, the plaintiffs contended they were similarly situated because Harbor Freight classified as exempt all store managers as a group without performing an individualized exemption analysis, and gave them all the same job descriptions listing the same job duties. The court found that while this argument may have been persuasive at the conditional certification stage, it was insufficient to meet the plaintiffs’ burden at the second stage. The court also pointed out that the plaintiffs had testified that their job description did not accurately reflect their day to day duties. Moreover, Harbor Freight’s decision to classify all store managers as exempt without considering individualized differences in factual employment settings did not eliminate the need to make a factual determination as to whether they were in fact performing similar duties.
Plaintiffs also argued that store managers were similarly situated because they were managers in name only and actually spent the majority of their time performing manual labor. Again, based on the testimony of the plaintiffs, the court pointed out that the amount of manual labor allegedly performed by store managers varied considerably, some testifying that their managerial duties were more important than manual labor, others testifying that manual labor took precedence over managing.
The court also rejected plaintiffs’ argument that they were similarly situated because managerial discretion was severely limited by district managers through strict payroll budgets, specific product location direction, and Human Resources and corporate policies. According to the court, the determination of whether an executive employee’s judgment is so constrained as to be misclassified is a highly fact-intensive and nuanced inquiry into the particularized circumstances of the job. Here, there was a lack of uniformity with respect to how much control the various district managers actually exercised over store managers.
Finally, the potential defenses of Harbor Freight involved individual credibility determinations, and reliance on the plaintiffs’ contradictory deposition testimony and discovery responses. The plaintiffs’ testimony established, among other things, that it was not possible to develop common evidence regarding daily responsibilities and duties, or the weight given their recommendations on hiring, firing and discipline.
Overall, although the plaintiffs made a general showing of similarity with respect to some aspects of their job, it ultimately was not sufficient to satisfy the court that they were sufficiently similarly situated to make collective treatment of their claims proper and efficient under the FLSA.
Harbor Freightprovides a very helpful road map for retail employers challenging certification in wage and hour collective actions. Indeed, the factual variations cited by the court as problematic to certification are present in virtually every retail operation. In opposing certification in an exempt status classification case involving store managers, employers should keep in mind the factors that resulted in the decertification of the conditionally certified collective in Harbor Freight, as well as other factors that may present individualized determinations.