Similarly Situated? Not So Fast…

Contributed by Samantha Esmond

On October 22, 2012, the U.S. District Court for the Northern District of Alabama held that a class of Dollar General store managers failed to show they are “similarly situated” for purposes of the Fair Labor Standards Act’s collective action provision (Richter v. Dolgencorp Inc., N.D. Ala., No. 06-1537, 10/22/12).

On August 7, 2006, a large, nationwide collective action was filed by store managers of the retail chain alleging the retailer improperly classified them as FLSA-exempt and denied them overtime compensation based on the prevalence of non-managerial duties they performed. In March 2007, the collective action was conditionally certified. Dollar General moved to decertify the conditional class. The court granted Dollar General’s Motion and decertified the collective action for the following reasons.

First, the court distinguished the oft-cited case of Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233 (11th Cir. 2008). The court reasoned that the Eleventh Circuit merely decided whether the district court abused its discretion by finding plaintiffs similarly situated – but it did not hold that a contrary ruling given the same evidence would have been an abuse of discretion. In other words, even though the Eleventh Circuit upheld class certification in Morgan, it did not necessarily mean that it was right.

Second, the court recognized that the FLSA executive exemption turns on the employee’s actual managerial duties and should be decided on a case-by-case basis. The court noted that managers with larger stores would spend more time managing associates and a larger stock room, while managers with smaller stores would have more time for manual labor. The court further noted that managers in high-crime locations may spend more time managing safety and protecting company assets, while managers in high-income or highly competitive locations might spend more time interviewing and training associates. The court concluded that, unlike the employees in Morgan, some managers were given significant authority to run their stores, while others could be described as shelf-stockers. Accordingly, the court concluded that the managers were not similarly situated.

Finally, the court recognized that “[i]t would be fundamentally unfair to Dollar General if the class were to remain certified,” as there is an abundance of evidence concerning the differences among the managers in the class. The court reasoned that due to “the differing of amounts and wide variety of exempt work performed,” if each Plaintiff’s claim were tried separately, some would be found exempt and some would not. The court concluded that while a single collective action trial may be the most efficient; such efficiency “cannot be obtained at the expense of Dollar General’s due process rights.”

IMPACT:  While this is an important decision for employers facing the continuing threat of FLSA collective actions, it is unlikely to signal the end of these misclassification cases. This decision highlights that even where two people are ostensibly performing the same job, the possibility remains for one person to be classified as exempt and the other person to be classified non-exempt based on the actual duties performed. Employers should routinely review employee job descriptions and FLSA exemptions to ensure that each individual employee is actually performing the job duties stated therein.