Are Coffee Shop Managers Exempt From the FLSA?

A Starbuck’s coffee shop claimed that two of its managers were exempt from the overtime provisions of the Fair Labor Standards Act (FLSA).  The managers claimed that most of their time (70 percent to 80 percent) was spent on routine tasks such as pouring coffee, waiting on customers, cleaning up, and performing many of the same tasks handled by non-management employees.

The store managers were the highest-ranking employees in their stores and supervised as many as 30 employees, including assistant managers and shift supervisors.  The managers also were responsible for increasing revenues, controlling costs, and ensuring compliance with corporate policies.  While acknowledging that they exercised some managerial authority, the two managers claimed that they were “glorified baristas” who should not be considered executive employees under the DOL regulations.

Award:  The managers were executive employees and therefore not entitled to overtime pay under the FLSA, the U.S. District Court for the Southern District of Texas decided January 2, 2007.  (Mims v. Starbucks Corp)

The court said that even if the managers spent the majority of their working time on “barista tasks,” like pouring coffee, their employer considered their most important duty to be the management functions that affected the success of each store.

Courts have not applied a simple “clock” standard to determine an employee's primary duty, the court said.  The managers acknowledged that they led other employees by example, and served as role models for non-supervisory employees, the court said.  For example, pouring coffee for customers not only assisted in the basic operation of a store, but also served to train other employees, it said.

Even if the employees spent the majority of their time on nonexempt tasks, the court said, their non-management work was of less importance to Starbucks than the “management responsibilities that directly influenced the ultimate commercial and financial success or failure of the store.”

The two store managers also exercised discretion in interviewing, hiring, training, and making disciplinary decisions, as well as deciding employee assignments and determining how much inventory to maintain in their stores, the court said.

Even with oversight or control by district managers, the court said, the store managers still were the highest-ranking employees in their stores, were paid nearly twice as much as employees without management duties, and received bonuses that were available only to store managers.  “This marked disparity in pay and benefits between Plaintiffs and the non-exempt employees is a hallmark of exempt status,” the court said.

If you have any questions regarding FLSA in your workplace, please contact Jack Lipovac or Clint Davis at HR-OneSource (515) 221-1718, lipovacj@hr-onesource.com or davisc@hr-onesource.com.