Jack in the Box Operator Must Pay $900,000-Plus for Misclassifying Managers Exempt from Overtime

 
Nor-Cal Venture Group, Inc., the owner of 26 Jack in the Box franchises in California, is one of the recent targets of the Labor Commissioner’s public campaign for employers to heed this state’s wage and hour laws. The commissioner’s Division of Labor Standards Enforcement  (DLSE) has directed Nor-Cal to pay $903,084 for failing to pay 40 restaurant managers daily and weekly overtime, rejecting the employer’s claim that these workers met the tests as exempt executives or administrators.

California is one of five states or territories that requires businesses to pay their employees premiums for hours worked over a weekly or daily maximum. For this state, overtime kicks in after 40 hours in a week or eight in a day.

Executives or administrators that meet several specific requirements – including higher operational “oversight” skills and responsibilities and minimum salary levels – can be legitimately exempt from such overtime premiums. An employer is entitled to pay a validly classified exempt-from-overtime worker his/her salary no matter how many weekly or daily hours that person works.

While the managers in question may have theoretically possessed qualifying duties for exemption, the DLSE found that these workers were actually performing the same duties as other, hourly employees.

The state thus assessed Nor-Cal $416,783 in unpaid overtime and penalties, $218,277 in minimum wage violations and penalties, another $169,427 in automatic (“liquidated”) damages for minimum wage underpayments, and $98.647 in other underpayments.

Commissioner Julie Su warned: “For these employees, being misclassified as managers resulted in being paid less than minimum wage. That’s not an acceptable way of doing business in California, and my office will continue to enforce labor laws that uphold that wage floor.” She asserted that worker misclassification results in an estimated $7 billion annually in uncollected payroll tax revenue.

Employers should of course ensure that their exempt managers consistently satisfy all requirements for such classifications. See also:

• Working Overtime in California
• California’s Exemptions from Overtime Pay (January, 2012)
• The California Executive Exemption (November, 2009)
• The California Administrative Exemption (November, 2009)
• Location, Location, Location…Location, California Municipal Minimum Wage Rates Continue to Grow (July, 2017)
• Larger California Employers Must Pay Higher Minimum Wages and Salaries (November, 2016)

For more information, please contact one of our attorneys Tim Bowles, Cindy Bamforth, or Helena Kobrin.

Tim Bowles

October 17, 2017