Misclassified Managers and Unpaid Overtime

You were promoted to assistant manager, shift supervisor, or store manager. Your pay went from hourly to salary. Your hours went from forty to fifty-five. And nobody explained that the salary was now supposed to cover all of them, because you were told you had become exempt.

Frequently that is wrong. A title and a salary do not make an employee exempt from overtime. The exemption depends on what you actually do all day, and on a salary threshold that in New York is higher than the federal one. Managers who spend most of their time doing the same work as the people they supervise are the most commonly misclassified employees in New York City.

The Law Offices of Albert Goodwin represents managers and supervisors in unpaid overtime claims.

Two Requirements, and the Employer Must Satisfy Both

To treat you as exempt under the executive exemption, an employer must satisfy a salary test and a duties test. Failing either one means you were entitled to overtime for every hour over forty, for as far back as the limitations period reaches. The employer bears the burden of proving the exemption applies, not the other way around.

The Salary Test

New York sets its own salary threshold for the executive and administrative exemptions, tied to the minimum wage and increasing each year. In New York City, an employee must be paid a salary of at least $1,275.00 per week, which is $66,300 annually, to qualify for those exemptions as of January 1, 2026. Because the threshold rises annually, verify the figure for the years in your claim rather than assuming the current number applied throughout.

The federal threshold under the Fair Labor Standards Act is materially lower and has been the subject of litigation over recent rulemaking. Where the two differ, the more protective rule governs in New York, so a manager paid below the New York threshold is non-exempt under state law regardless of the federal figure.

The salary must also be paid on a salary basis, meaning a predetermined amount not subject to reduction because of variations in the quality or quantity of work. Employers undermine their own exemption by docking salaried managers for partial day absences, for cash register shortages, or for leaving early, and a pattern of improper deductions can defeat the exemption for an entire group of employees.

The Duties Test

The executive exemption requires all of the following:

• Your primary duty is management of the enterprise, or of a customarily recognized department or subdivision of it;
• You customarily and regularly direct the work of two or more other full-time employees or their equivalent; and
• You have authority to hire or fire, or your recommendations as to hiring, firing, advancement, or promotion are given particular weight.

Management means things like interviewing and selecting employees, setting and adjusting pay and hours, directing work, appraising performance, handling complaints, disciplining, planning the budget, and determining techniques to be used. It does not mean running a register, cooking, stocking, driving, cleaning, serving customers, or performing the same production work as your reports, however competently you do it while also supervising.

The primary duty analysis is qualitative rather than a simple percentage count, and performing exempt and non-exempt work at the same time does not automatically defeat the exemption. But time is strong evidence. A manager who spends the large majority of a shift on the same tasks as the crew, who cannot deviate from a corporate playbook, who has no authority over pay or hiring, and whose scheduling decisions require approval, has a strong misclassification claim regardless of what the job description says.

Related exemptions raise their own issues. The administrative exemption requires primary duties involving the exercise of discretion and independent judgment with respect to matters of significance, which is a demanding standard that routine office and operational work does not satisfy. The retail commission exemption and the highly compensated employee test have their own specific requirements.

The Facts That Decide These Cases

When we evaluate a manager's claim, the questions are concrete:

• Can you hire or fire anyone, or does every decision go to a district manager or human resources?
• Do you set schedules freely, or within a labor budget and headcount you cannot change?
• Are you counted in the store or shift staffing numbers, meaning the operation cannot run without you performing non-managerial work?
• What percentage of a typical shift do you spend on the same tasks as the employees you supervise?
• Do you have authority over pay, promotions, or discipline beyond recommending?
• Does a corporate manual dictate the decisions you make?
• Were you told to work off the clock, or to record forty hours regardless of hours worked, before or after the promotion?

Employers defending these cases rely on job descriptions and on the manager's own self-evaluations, which typically describe the role in the most managerial terms possible. That is a real obstacle and it is one reason to speak with counsel before completing another performance self-assessment while considering a claim.

What You Can Recover

New York remedies are substantially better than federal ones, and most claims are brought under both.

• Unpaid overtime at one and a half times your regular rate for hours over forty. For a salaried employee, the regular rate is computed from the salary, and how it is computed matters, since employers frequently argue for a method that reduces the rate.
• Liquidated damages equal to one hundred percent of the unpaid wages under New York law, unless the employer proves a good faith basis for believing it complied.
• Six years of back wages under the New York Labor Law, compared to two years federally, or three for a willful violation.
• Prejudgment interest on the unpaid wages.
• Attorney fees and costs, which shift to the employer when you prevail. This is what makes these claims viable to bring.
• Wage notice and wage statement damages where the employer failed to provide compliant documents, subject to statutory caps and to standing requirements that federal courts have applied in recent years.

A worked example. An assistant manager paid $58,000 a year works an average of 52 hours a week for three years. The weekly salary is roughly $1,115, and the regular rate approximately $27.88 an hour. Twelve overtime hours a week at half time or time and a half, depending on how the salary is treated, produces roughly $10,000 to $17,000 a year in unpaid overtime. Across three years that is $30,000 to $51,000 before liquidated damages, which can double it, before interest, and before fees. Extend the period to six years under New York law and the figure grows accordingly.

Off the Clock Work and Hours Proof

Employers frequently argue that they have no records showing the hours claimed, which is their own problem. Where an employer fails to keep accurate time records, an employee may prove hours worked by reasonable recollection and just and reasonable inference, and the burden shifts to the employer to disprove it. Useful corroboration includes door badge data, point of sale login and logout records, alarm codes, email and message timestamps, delivery and closing paperwork, schedules, and phone location history you control.

Collective and Class Actions

Misclassification is usually a policy rather than an individual mistake, which means every assistant manager in the chain is likely in the same position. Claims can proceed as a collective action under federal law, in which similarly situated employees opt in, and as a class action under New York law, in which they are included unless they opt out. Group claims change the economics considerably and reduce the individual exposure of the person who steps forward first, though the decision to bring one is significant and worth thinking through carefully.

Retaliation

New York Labor Law section 215 prohibits retaliation against an employee who complains about wage violations, whether internally to the employer or externally, and provides its own remedies including reinstatement, back pay, liquidated damages, and civil penalties. A complaint about pay is protected activity, and a termination that follows it closely in time is evidence. See whistleblower and wage retaliation.

Related Pages

See unpaid overtime generally, being paid incorrectly, unpaid bonuses and commissions, and New York City wage rates.

You can contact us by phone at 212-233-1233 or by email at [email protected].