Research

January 31, 2023

Walk into a restaurant, retail store or hotel, and you might encounter a manager who seems to be doing the same tasks as the people he’s managing. Maybe you’re in one of those jobs.

A lawsuit by employees against a retail store revealed how meaningless the title of manager can be: the store managers were “stocking shelves, running cash registers, unloading trucks and cleaning parking lots, floors and bathrooms.” Hardly the types of responsibilities that go with overseeing one’s coworkers.

The employees were suing for overtime pay under a Depression-era federal law to receive back pay for overtime when they worked more than 40 hours per week.

Employers are exempt from paying overtime under this rule, however, if the employee is a manager earning more than $35,568 per year, rather than an hourly wage. One last requirement to qualify for the overtime exemption is that employers must give the worker executive or administrative duties that include supervising others on the job.

To satisfy the amorphous definition of who qualifies as a manager, new research finds that U.S. employers are much more likely to come up with creative, “fake-sounding” managerial titles – bingo manager, food-cart manager, director of first impressions, carpet-shampoo manager, and lead shower-door installer – for jobs paying just above the overtime pay threshold.

Employers “strategically use job titles to exploit regulatory [pay] thresholds,” which saves more than 13 percent for each manager who qualifies as exempt from the overtime rule, said the researchers, who include a Harvard Business School professor. The practice is “systematic” and saves U.S. employers some $4 billion in payroll costs every year.

The situation for workers used to be worse, however. Millions more became eligible for overtime pay when the pay threshold was increased 50 percent, to $684 per week – or $35,568 per year – in January 2020, from the $455 per week rate in place at the time of this study. …Learn More