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[16 comments]

Another OT Suit Settled in Retail Land

June 21, 2012

A couple of hundred years ago, I used to "manage" a small convenience store. By small, I mean about the size of the typical walk-in closet. It was a drive-in business and having any more than one person in the store at a time put heavy demands on the oxygen supply. Anyway, while many of the duties of a manager were included in my responsibilities, I was an hourly employee in charge of managing myself.

Occasionally, I would work past my assigned hours because it took longer to reconcile the day's receipts or I needed to update orders of a product, etc. I rarely got paid for those hours, especially during the summer months, when they pushed me past 40 hours a week into time-and-a-half territory.

Back then I never made a big deal of it because I was happy to have a job where an adult left an 18-year-old on his own to run things. The owner also took care of me in other ways, such as free Coke and chips when I was on my shift. One time when my father was rushed to the hospital for a medical emergency, he told me to close the store and that he'd find someone to come in and cover for me. He didn't and the store was closed for the entire shift. The next week I found that my paycheck was higher than expected. He had paid me as though I worked the entire shift. When I mentioned he had paid me too much, his response was along the lines of, "Don't worry about it. You deserve it. I'm glad your dad is okay." That was it. He seemed uncomfortable accepting my thanks.

So, the reason for this walk down nostalgia lane is not to relive another childhood memory, but to express regret that so many retail employees today, both hourly and salaried, feel as though they are being pushed to work beyond the terms of their employment with companies with little to no recognition and compensation in return.

I'm not familiar enough with the merits of the lawsuit brought against Rite Aid by some 6,000 current and former assistant store managers and co-managers for unpaid overtime that the drugstore chain settled this week to comment on that situation. But I can say that when I saw the headline, my first thought was how common these settlements have become in recent years as retailers wind up addressing something in court that, to my mind, should never have become a legal issue in the first place.

A common retort in cases such as this is to blame it on the "trial lawyers," but it's clear based on the number and size of settlements in past years that the legal arguments have merit. In all these cases, companies announcing settlements come out and assert how much they value their workers. You can pretty much count on them doing so again after the next suit and settlement.

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Discussion Questions:

Discussion Questions: What is behind so many cases where retail employees feel they are not being compensated for the hours they work? What is the fix to this issue?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

In large U.S. retail chains, do you see the tide turning toward more respectful treatment of employees or less?

Comments:

The laws are simple. Over 40 hours in a work week, and you MUST pay time and a half. Not rocket science here. The old days of the hot dog and a bag of chips for working extra hard does not fit into the workplace anymore. People want to be paid for their time, and deserve to be. There are some ridiculous other rules from our lovely government that can be questioned, but the overtime rule is easy to follow, and no excuse will win the argument in court, if an employer fails to do the right thing.

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Tony Orlando, Owner, Tony O's Supermarket & Catering

Retail employees are living in the age of entitlements and they want to be paid for every second they work or even pretend to. That's understandable.

Retailers need certain jobs done each day and they want them finished within designated hours whether they are fair or not. That too is understandable.

But as George pointed out in his article, sometimes these two twains don't match. Employees want more respect and pay for time worked. Retailers want more appreciation for creating jobs for their employees. Thus lawsuits are accelerating and thousands of lawyers are anxious for this kind of business for their work hours.

The fix? There are numerous elements that affect any possible fix in this situation: employees, retailers, lawyers, the prevailing winds of today, and the media which influences one side or the other. That's the game today and one fears that there aren't any cohesive game changers on today's horizon.

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Gene Hoffman, President/CEO, Corporate Strategies International

Many employers view their employees as commodities and treat them as such, trying to get as much work from them as possible for as little compensation as possible. So long as this attitude prevails, employees will sue employers for full compensation.

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Max Goldberg, President, Max Goldberg & Associates

The key phrase here, I think, is "I was happy to have a job." Like George, I started as an assistant store manager working long hours to make a very small salary. The hours worked were related to what needed to get the job done, whatever that happened to be. The idea was that, if I worked hard and did a good job, I would get promoted to higher positions, which I did.

Today it seems that people entering the work force come with a sense of entitlement of what the company owes them with little regard to what they have to do to (keyword here) earn the rewards attached to hard work and dedication. Our culture, starting with our failing education system, has evolved into one that puts a high priority on building individual self-esteem regardless of actual accomplishment. The other part (sorry George) is the continuing growth of frivolous class-action suits, also known as "Jackpot Justice" or, more aptly, extortion.

As far as a fix, I think chronic high levels of unemployment will, over time, bring starting associates back to the place that George describes "I'm happy to have a job."

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Bill Emerson, President, Emerson Advisors

Working overtime is part of the very fabric of retail. I had that experience (also 100 years ago) for sure. I remember working every hour my store was open, 78, many times. And sadly, it still is one of the best ways to get promoted within ANY business; you get noticed when you consistently devote your most precious resource, time, to 'the company'.

Having said that, it definitely is a time for change, especially with Millenials now making up a larger part of the work force; they just don't buy into that system. Solving overtime issues should be a mandate on the part of the companies involved way before it becomes a law suit.

But I also think there should be a happy medium between workers and companies. Devotion and voluntary overtime are OK to an extent, it just can't be systemic methodology/mentality. And here's why I say that; on my trips to Asia, I have witnessed that it is very common for people to work overtime on their own dime to help the company out, no questions asked.

So, if we want to compete on a global scale, we need to think about that. As Larry Bird once put it, "My Dad always told me to keep in mind that there was someone out there working harder than me. I didn't believe him. Then I met him when his team beat us in the championship game."

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Lee Peterson, EVP Creative Services, WD Partners

Lawsuits of this nature only increase in direct proportion to the decrease in trust between the retailer/retail management and the employees. Trusting relationships create flexibility, the employment lubrication that enables employees to work longer occasionally and employers to give paid time off for emergency or important personal situations. As retail has become more industrial engineering centric, trust has diminished and lawsuits become more frequent.

The larger business impact is that employees who feel they need to use lawsuits are likely not going to be as focused on customer experience.

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Verlin Youd, Principal, VPY LLC

As Tony pointed out, the overtime rules are fairly simple when it comes to hourly workers. I am not an attorney or a labor law expert, but know this is not as true for management. You can hold a manager's position and still eligible for overtime pay if your position does not meet certain criteria. These have to do with a variety of factors including your job duties and the basis (salary/hourly) for your pay. Those assistant store managers and co-managers may not have met the legal criteria to be considered exempt from overtime.

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Steve Montgomery, President, b2b Solutions, LLC

The answer to this one is simple. Based on the law, employees are not being classified correctly in the job they are being paid for as hourly or salaried and they are not being paid for all of the hours they on considered to be at work.

Warning to anyone who hires hourly employees: the Department of Labor has create a phone app where employees can track all of the hours they work.

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Mel Kleiman, President, Humetrics

I can assure you the labor laws in California (for example) are quite a bit more complex than "work over 40 hours a week and you have to pay time and a half." It can be very difficult for a well-intentioned employer to keep track of, much less comply with, labor laws which vary widely from state to state, and even in some municipalities.

That said, many large retail employers simply don't make a good faith effort to comply. In many of these cases, the employer is doing things like classifying many employees as "managers" who are "Exempt" from overtime pay, even though that employee doesn't have any of the responsibilities of a manager, or requiring the employee to perform significant job functions while "off-the-clock," etc. Many of these settlements are for quite extreme systemic violations on the part of the employer.

Ironically, the notion that getting employees to work more hours makes a retailer more profitable turns out not to be true. In almost every case, when employees are forced to cut back from 50-60 hours a week to 40, productivity actually goes up. Which is why businesses didn't lobby very hard against a 40 hour work week in the first place.

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Jason Goldberg, VP Commerce Strategy, Razorfish

I agree with Mel. The law is pretty straight forward. Any company that tries to reduce its labor costs by skirting the law are violating the law. It is the responsibility of any retailer to know, understand and follow the law.

Do I see the tide turning? No, I think far too many retailers will push the envelope. My guess is that the cost of these settlements is actually less than the wages that would have otherwise been paid.

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Ted Hurlbut, Principal, Hurlbut & Associates

To fix this issue you must first identify the problem. Are the workers fully aware of what is expected of them and is management fully aware of what they are actually asking of their employees. It would go a long way to resolving situations like this if people in retail were hired properly and trained accordingly. It would also help if management would limit the amount of paperwork an employee is required to complete as a part of their duties.

Ed Dennis, Sales, Dennis Enterprises

This reflects old pay systems. A simple electronic clock with individualized hand print access is only a few hundred dollars, and can "manage" all of the hours every employee at a location is working, including overtime. This ensures proper accounting, bookkeeping of the hours and record keeping for future review. These types of systems pay people what they should receive, according to state and federal laws, not what a store owner believes they should be paid.

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Kai Clarke, President, Kowa Optimed, Inc.

Assistant managers are the whipping boys of retail. On salary, but low paid and long hours. You gotta drink the Kool-Aid to love it. It's part of being a "salaried" person. I recall working 60-70 hours a week, but I also took some time off as needed. Everyone whines when they work over 40 hours, but when the boss gives you a day off now and then, where's the gratitude? I think retailers often forget to tell new assistant mangers that they are expected to work 50-60 hours week. No one gets ahead working only 40 hours. And no one gets ahead suing their employer. Suing your employer is committing career suicide. It makes you unemployable.

David Livingston, Principal, DJL Research

"What is behind so many cases where retail employees feel they are not being compensated for the hours they work?" It's probably that many retail workers AREN'T being compensated. A number of commentators here have claimed that employees expecting the law to be followed feel "entitled." Well, gee, I guess they do; in the same way that employers feel "entitled" to prosecute shoplifters and embezzlers (although actually taxpayer money covers this task). Maybe everyone should follow David's oft-given advice to become an independent contractor...and then we can spend all of our time in court.

'notcom'

George's walk down memory lane opened many thoughts from my past when I was so happy to have a job and money I did not have to ask from my parents. In fact, it made me feel good when I was able to give some of my take-home earnings to them. What I never knew was they took what I gave them, matched it and put it in a savings account for me. You remember savings accounts don't you? They are reminders of when we could actually earn something for depositing our money.

Tony is right on the "money" with his comments about the law and its clarity. It makes me believe he is the type employer one would enjoy working for. Fair, but expecting a fair day's work for the agreed to pay rate.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

Co-managers and assistant managers work horrendous hours and the work is hard and sometimes not particularly satisfying. Store management can be one of the most thankless tasks in the American economy. That they should be paid for it is perfectly logical. Unfortunately the culture of retail is that they must do more than they are paid for. It is not a good commentary of retail chain management that managers have to take their employer to court to get what is almost certainly due to them.

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Roy White, Editor-at-large, RetailWire

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