Kmart Should've Paid OT, Former Assistant Manager Says

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By Kevin McGowan

Kmart Corp. violated federal and state law by not paying overtime to assistant managers who worked more than 40 hours a week, according to a federal district court lawsuit in Chicago ( Roselan v. Kmart Corp. , N.D. Ill., No. 16-11667, complaint filed 12/28/16 ).

Lawsuits against retailers seeking overtime pay for salaried employees who are called managers or assistant managers are common under the Fair Labor Standards Act and state wage laws.

Kmart earlier this year settled for $3.8 million a separate FLSA lawsuit that covered about 425 assistant managers. The current lawsuit, filed Dec. 28, seeks relief for a nationwide class of current and former assistant store managers.

Statutory Exemption at Issue

Retailers generally contend that employees who are called managers or assistant managers fall under the FLSA’s “white collar” exemption to overtime pay.

But the employees argue that despite their job titles, they lack managerial authority and their job duties don’t differ much from those of hourly employees who are entitled to overtime pay.

The Labor Department issued a final rule in May that would require employers to pay overtime to any employee whose salary is less than $47,892 a year. The FLSA’s white collar exemption would only apply to managers whose annual salary exceeds that amount, the department said.

But a federal district court in Texas blocked the new rule from taking effect while a lawsuit challenging the DOL’s test is pending. That means a manager or assistant manager earning at least $23,660 a year still can be denied overtime pay.

Kmart Aims to Limit Costs, Suit Says

In the current lawsuit, Kelliann Roselan, a former Kmart assistant manager in New York, seeks relief for current and former store assistants who worked for the retailer anywhere in the U.S. during the past three years.

Kmart didn’t pay assistant managers for overtime even though their job duties don’t qualify them for the FLSA exemption, Roselan alleges. The retailer willfully denied overtime pay to the store assistants to minimize its labor costs, she said.

Kmart scheduled Roselan to work 48 hours a week, but she actually worked 60 to 65 hours each week she was scheduled for five shifts, she said. The company paid assistant managers no overtime for their hours in excess of 40 a week, she said.

Roselan seeks to pursue a class action under the New York Labor Law as well as an FLSA collective action.

A spokesman for Sears Holdings Corp., which owns Kmart, said the company doesn’t comment on pending litigation.

Attorneys representing Roselan weren’t available for comment Dec. 29.

Klafter Olsen & Lesser LLP, Werman Salas PC, Hepworth Gershbaum & Roth PLLC, Whitfield Bryson & Mason LLP, Winebrake & Santillo LLC and Migliaccio & Rathod LLP represent Roselan. No attorney has yet entered an appearance for Kmart.

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

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