¡Ay, caramba! Assistant Managers Pepper Taco Bell with Overtime Claims.
A federal judge in Pennsylvania this week approved conditional certification of a collective action lawsuit for overtime pay against Taco Bell on behalf of 900 assistant managers.
The assistant managers, led by named plaintiff Carrie Gallagher, claim that Taco Bell franchisee Charter Foods Inc. and Charter Central LLC misclassified them as salaried, exempt managers in order to avoid paying them overtime.
"Plaintiff has made a modest factual showing that [assistant managers] perform the primary duties (roughly 80-90% of their work time) serving customers, preparing food, working the drive-thru, counting inventory, unloading trucks, and cleaning the restaurant," ruled U.S. District Judge Robert J. Colville, in a preliminary decision that merely allows the case to move forward as a collective action.
The lawsuit covers the period from 2017-2020, and will now expand to the opt-in stage (where the other assistant managers can choose whether to join the case) and discovery on the merits. Tellingly, in early 2020 Charter Foods changed its policy and reclassified assistant managers as nonexempt, paying them hourly and overtime thereafter.
This scenario is not unusual – assistant managers and similar lower-level managers contending that they spend most of their days doing the same non-managerial work as the hourly employees who report up to them. The tests for determining whether an employee meets one of the “white collar” exemptions for overtime pay under the Fair Labor Standards Act (“FLSA”) can be complex and generally require a case-by-case, fact-sensitive inquiry as to each employee’s daily duties and responsibilities. That said, larger national restaurant chains like Taco Bell and large retailers are often targeted with these FLSA collective action lawsuits because they tend to have companywide policies and job descriptions for each position.
To avoid liability and litigation, employers are encouraged to conduct regular reviews or “audits” of their employee classifications and the work actually performed in those positions to ensure salaried employees classified as exempt from overtime meet the requirements of state and federal overtime exemptions. Legal counsel should be involved in such reviews. To permit otherwise risks a collective action like the one Taco Bell is now facing, with potential liability and litigation costs soaring into the millions of dollars.
Ms. Gallagher has not released a statement about the win but, like the little Taco Bell chihuahua, she could be smiling and saying, “Yo quiero Taco Bell.”