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Kohl’s Faces New Employee Misclassification Overtime Lawsuit

National retailer Kohl’s has been accused of improperly classifying employees as “assistant managers” to cut down on overtime costs, according to a new class action lawsuit filed in federal court against the company.

In her class action, a former Kohl’s employee from Connecticut says she was wrongly classified as a management employee, exempt from overtime pay, even though she spent much of her day stocking shelves and checking up on inventory. The lawsuit, filed in Connecticut in January, was recently transferred to Wisconsin, where Kohl’s is headquartered.

Former “Assistant Manager” Hits Kohl’s With Overtime Suit

Employee misclassification is a common problem across the nation. It seems particularly prevalent at large retailers, where the distinction between management and labor can get blurred. According to the Milwaukee Journal-Sentinel, at least 26 settlements have been reached under similar circumstances since 2013, with lower-level “managers” accusing their employers, usually from the retail or food service world, of misclassifying them as exempt from overtime.

Shopping Mall

Federal labor law says that American workers, in the main, become entitled to premium overtime wages after they work 40 hours in a single week.

Overtime Exemption Stymies Employers

But some employees are “exempt” from this overtime provision, including so-called “executive” workers who guide (“direct”) the work of at least two other employees and make a salary of at least $455 per week.

Stacy Collins fulfills the second condition in that definition; she makes at least $455 per week, and she earns a salary. But if you take a look at her job duties, according to attorney Richard Hayber, the lawyer representing Collins, it becomes clear that she’s not really a management professional.

“We don’t challenge that [assistant managers] perform some management functions,” Hayber told Wisconsin Public Radio, “but we challenge Kohl’s belief that their primary duty is management. We believe their primary duty is to perform hourly non-management functions.”

Job Titles Don’t Matter

In her lawsuit, which is currently seeking certification as a collective action under the Fair Labor Standards Act, Collins says that, during her shifts, she was busy doing everything from “unloading freight, stocking shelves, filling on-line orders, ensuring that the merchandise was arranged according to company standards” to “counting inventory and organizing the store.”

Those just aren’t management-oriented tasks, she argues. And the management tasks that she did perform, Collins says, were highly-routine and overseen by supervisors. Totally absent was the independent sort of thinking suggested by federal law and Supreme Court doctrine. To be exempt from overtime, though, directing the work of other employees has to be the main part of your job, not an afterthought with supervisors looking over your shoulder.

Assistant Managers

Assistant managers sit in a legal gray area, says Russell Berger, a Baltimore-based attorney who defends corporations in wage and hour litigation. Assistants sit between two extremes: cashiers, who are clearly eligible for overtime, and store-wide managers, who are clearly exempt. Assistant managers, on the other hand, sit at “that in-between where there are some managerial duties but they’re not the person in charge.”

Kohl’s Case Could Become Collective Action

Collins is joined in the suit by an assistant manager from New York, and another from Massachusetts. But Hayber has asked the Wisconsin court to make the lawsuit a collective action, which would allow other Kohl’s assistant managers to become part of the suit. He believes that around 5,000 other employees could be eligible, if the collective action is approved. Naturally, Kohl’s, a chain of over 1,100 stores nationwide, opposes the idea of collective action vociferously.

Nor is this Kohl’s first time in court over similar issues. A nearly-identical lawsuit was filed on behalf of several assistant managers from New York a few years ago. In 2016, that case was settled for $4 million in back wages. Kohl’s maintains that the workers were classified correctly under American labor law.

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