Employees restock groceries at a Target store in Minnesota. Photo by Max Nesterak/Minnesota Reformer.
Target Corp. has quietly settled half a dozen class action lawsuits and still faces two more from workers who allege the company has failed to pay overtime they’re owed.
Target calls these workers “executive team leaders” and pays them managerial salaries — as opposed to hourly wages — that keep them from earning overtime.
But the workers say they are worker bees like other Target staff, restocking shelves, hauling garbage and bagging groceries. In legal filings, workers say Target regularly requires its low-level managers to work 50 hours a week or more because they don’t earn overtime, while rank-and-file workers’ hours are closely monitored and kept below full-time.
“I don’t think they’re executives,” said Richard Hayber, a Connecticut attorney who filed the case in federal court in Minnesota with the Minneapolis-based firm Nichols Kastor. “I don’t think most people who hear that word would imagine someone who unloads trucks and stock shelves and moves U-boats full of merchandise around a huge retail store.”
Hayber’s client is Andrew Davis, who worked in a store in Connecticut and claims he had very little managerial authority and spent most of his time doing the same tasks as hourly workers. Hayber declined to make Davis available for an interview. (Read Davis’s complaint here.)
Target has not yet responded to this most recent lawsuit in court, but in an email, company spokeswoman Jenna Reck wrote, “We have a long history of investing in our team and providing them with industry-leading wages and clear roles and responsibilities for their work at Target. We’re aware of the lawsuit and confident that our executive team leaders are appropriately classified as exempt employees, given their management responsibilities.”
The stakes could be significant for both Target workers and the company: If either lawsuit is successful, Davis and the plaintiff in a parallel case, Priscilla Jibowu, could win back pay for themselves and thousands of other executive team leaders going back up to three years. That would likely cost the retailer tens of millions of dollars, although lawyers in both cases wouldn’t speculate on how much Target would owe. (Read Jibowu’s complaint here and Target’s response here.)
So far, none of the eight class action lawsuits has overcome the most significant hurdle: convincing a judge to approve bringing the case on behalf of all executive team leaders and notifying them of the lawsuit.
The cases have all been brought under the Fair Labor Standards Act, signed into law in 1938 by President Franklin Delano Roosevelt as the country was digging out from the Great Depression. It was a landmark piece of New Deal legislation that established the federal minimum wage, a 40 hour work week and time-and-a-half pay for every hour worked beyond that.
“Except perhaps for the Social Security Act, it is the most far-reaching, the most far-sighted program for the benefit of workers ever adopted here or in any other country,” Roosevelt boasted on the radio the day before he signed it into law.
The law was designed to provide a more humane work environment and increase employment. By forcing companies to pay more for more than 40 hours of work, the businesses were more likely to hire additional workers while also increasing the income of workers who toiled longer.
But the law explicitly exempts certain workers from its protections including managers, who are not entitled to overtime pay no matter how many hours they work.
Companies are allowed to claim their workers are exempt from overtime if they regularly direct the work of two or more employees, have the authority to hire and fire workers and earn a minimum salary set by the federal government ($35,568 a year as of last fall).
While these “exempt” workers are allowed to do non-management work, under the law, their primary duty must be management.
In Target’s hierarchy, executive team leaders are the lowest-ranking managers. There are as many as 14 in some stores, and they specialize in departments — technology, groceries and human resources, among others.
In each of the lawsuits, including Davis’s, former Target employees claim that they had virtually no managerial authority. When they set up sales displays, they did it according to corporate instructions. When they sent out work schedules, they followed a computer algorithm. When they wanted to hire or fire another employee, they did it only with the permission of store managers.
Executive team leaders must even check off tasks that are recorded in a central computer system, according to one plaintiff.
“They’re largely just following orders and carrying them out,” Hayber said.
For retail workers, whose starting wages are typically minimum wages, management jobs offer the opportunity to climb into the lower rungs of the middle class with steady pay, health benefits and even a retirement account.
For big retailers, where wages are typically the largest expense, hiring salaried assistant managers to work 50, 60 or even 70 hours a week and avoid paying hourly employees overtime offers massive savings.
That’s why so many retailers do it, and so many workers accept it.
For its part, Target pays higher starting wages than many retailers. It plans to pay all its hourly employees $15 an hour by the end of the year. But that could also make limiting the hours of those workers and leaning on executive team leaders to make up the difference all the more valuable.
As common as it is for retailers to use this strategy, it’s also illegal if managers’ primary duties aren’t managing.
“When companies violate a law over and over and over again and it becomes a standard operating procedure, it doesn’t necessarily mean they’re not all violating the law,” said Hayber, the Connecticut attorney who’s built a career on suing companies for unfair labor practices.
In five previous cases, Target has been able to persuade the plaintiffs to settle for themselves before judges decided whether to certify the cases as class actions.
In 2010, Target settled a case in Minnesota with 10 former executive team leaders for an undisclosed amount. In 2012, they settled in Florida with two workers for $22,000 total. In 2015, they settled in Texas with two workers for $15,000. In 2016, they settled in New Jersey with two workers for $83,000. The next year, they settled in Arkansas for an undisclosed amount.
In one case brought in state court in California in 2004, a judge decided not to certify the class, ruling that workers were not similar enough for the case to be brought on behalf of all executive team leaders in the state.
Target is not alone in facing these allegations. Most big box retailers have been the subject of a lawsuit alleging they called workers managers to avoid paying overtime. Walmart, Home Depot, Family Dollar, Lowes and Big Lots have all settled such lawsuits, sometimes costing the retailer millions of dollars.
The most money employees can get when they bring these cases is what they’re owed in back wages. Sometimes they can get double if they can prove their employer cheated them out of wages on purpose. But they don’t win retire-to-Hawaii money.
Despite the relatively small amounts, the promise of a quick settlement is often more appealing than sticking it out through a years-long class action process that could make all executive team leaders whole.
“They decided they had to take a payout,” said Fran Rudich, a New York labor attorney who brought the case in 2016.
Shortly after her clients decided to settle, Rudich and her colleagues filed a similar lawsuit in federal court in New York on behalf of Jibowu. That case has been on-going since 2017.
Both Rudich and Hayber say their clients are in it for the long haul and they won’t settle until a judge approves their class. Eventually Target may have to ask that the two lawsuits be combined, but for now, they’re playing out simultaneously in two different federal courts.
Similar Kohl’s Corp. lawsuit
Target is not the only retailer whose classification of low-level managerial employees has drawn scrutiny. A Fair Labor Standards Act lawsuit by a Kohl’s assistant manager in Connecticut against Wisconsin-based Kohl’s Corp. is scheduled to go to trial May 18 in federal court in Milwaukee.
That suit, brought by Stacy Collins of Connecticut along with two other people, was also filed by Hayber, the Target plaintiffs’ lawyer; 825 Kohl’s employees have signed on to be included, according to court records. A company spokeswoman said the company does not comment on pending litigation.
While the Kohl’s assistant managers are assigned some management duties, “those duties are routine, and are closely and directly supervised by their superiors,” the Kohl’s lawsuit states, and “most of their time is spent performing non-exempt duties, such as unloading freight, stocking shelves, filling online orders, ensuring that the merchandise was arranged according to company standards, counting inventory, and organizing the store.”
“The reason these laws came about and exist today is that if they didn’t, owners of companies would work their employees as long as they could and pay them as little as possible,” Hayber told the Wisconsin Examiner.
In 2016, Kohl’s settled two suits in New York, agreeing to pay about $4 million to nearly 500 plaintiffs who said they, too, were misclassified and owed overtime pay. In settling the company admitted no wrongdoing.
(Erik Gunn contributed reporting to this story.)
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