Director of First Impressions or Receptionist? Companies avoid $4 billion in overtime pay by handing out false “manager” job titles to low-level employees
- Companies are increasingly giving their employees in production job titles that sound like management
- As a result, they don’t have to pay them overtime
- The fake job titles include a barber dubbed a “grooming manager.”
- Others are Assistant Bingo Managers and Lead Reservationists
- Workers who are exploited in this way lose 13.5 percent of their annual wages
- do you get ripped off Contact the Department of Labor
U.S. firms are increasingly giving their employees lofty job titles to refuse overtime pay, exploiting a loophole in federal law, an analysis by Harvard Business School has found.
The researchers discovered a five-fold increase in appointments from “managers” who earn just above a $455-week wage threshold, meaning they can work more than 40 hours a week without earning overtime.
They found that more and more workers were given dubious job titles, such as assistant bingo manager and director of first impressions — which translates to front desk clerk — to avoid being paid overtime wages.
Misclassifying workers saves US firms about $4 billion each year, according to the 57-page working paper released Monday by the National Bureau of Economic Research.
“There is a systematic, robust and sharp rise in the use of managerial titles by firms around the state legal threshold that allows them to avoid being paid overtime,” the document said.
Under the Fair Labor Standards Act, companies are not required to pay overtime to managers earning above the $23,660 per year threshold, as long hours can accompany high-level jobs.
But researchers say the scheme is being played by unscrupulous employers who give out fancy-sounding job titles so they can work 60-hour weeks for their employees without additional pay.
Examples include reservations staff titled “Lead Reservationists”, restaurateurs titled “Guest Experience Leaders”, carpet cleaners titled “Carpet Shampoo Managers” and hairdressers titled “Grooming Managers”.
According to researchers, such employees lose an average of 13.5 percent of their annual salary.
In one example, the top Panera Bread franchisee was fined $4.6 million in 2020 after more than 900 Ohio employees — defined by the firm as assistant managers — were fined for overtime violations under the Fair Labor Standards Act (FLSA).
Another involved so-called “managers” at Family Dollar Store, whose primary duties were stacking shelves, unloading trucks, cleaning and other non-executive duties, and working up to 90 hours a week without overtime.
Wage theft through overtime pay is most prevalent in retail, bars, restaurants and hotels, according to an analysis by Harvard Business School
Their class action lawsuit, filed in 2008, ultimately saw 1,424 employees awarded $35 million in unpaid overtime, researchers said.
Violations are more common in states with weak labor laws, including Texas, Florida and much of the South, according to Oxfam America, a charity that tracks wages and fair labor practices.
According to the study, which uses data from 2019, abuse is most widespread in retail, gastronomy and hotels. In the meantime, the salary thresholds have been revised upwards.
Kessler Matura, a New York-based employment law firm, says employees should be wary of inflated job titles.
Real managers aren’t usually asked to stack shelves. The company says they should have the authority to hire and fire employees, manage at least two other full-time employees, manage a department and likely make more than $100,000 a year, the company says.