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Posted: January 1st, 2021

Mims V Starbucks Case

LAW 150 Mims v. Starbucks Corp. Fact: * Kevin Keevican, Kathleen Mims, and other former managers filed a suit against Starbucks seeking unpaid overtime and other amounts. * In Starbucks Corp. Stores the manager’s responsibilities include supervising and motivating six to thirty employees including supervisors and assistant managers, overseeing customer service and processes employee records, payrolls, and inventory counts. * He or she also develops strategies to increase revenues, control costs, and comply with corporate policies. As a manager Kevin worked seventy hours a week for $650 to $800, a 10 to 20 percent bonus, and fringe benefits that were not available to baristas, such as paid sick leave. * An employee’s primary duty is usually what the employee does that is of principal value to the employer, not the collateral tasks that she may also perform, even if they consume more than half their time. * The Plaintiffs argued that they spent less than 50 percent of their time on managing and therefore they should be entitled to unpaid overtime and other amounts. Issue:Are the managers non-exempt from the FLSA’s overtime provisions?
Decision: NO Rationale: The court began by stating the even when an employee spends less than 50% of his time on management, as the plaintiffs claim they did, management might still be the employee’s primary duty if certain factors support that conclusion. The factors were 1) the relative importance of managerial duties compared to other duties; 2) the frequency with which the employee makes discretionary decisions; 3) the employee’s relative freedom from supervision; and 4) the relationship between the employee’s salary and the wages paid to employees who perform relevant non-exempt work.
The record showed that the managerial duties were more critical to success than other duties. The reasoning behind this was that if the managers of stores that made more than $1 million annually in sales were able to spend the majority of their time doing chores that other employees which they hired also perform, it’s still obvious that those activities of the manager were not as importance compared to the significant management responsibilities performed during the lesser part of their time.

In other words even though the managers spent more time doing less significant work, it still is not as significant as the management activities that they perform even though they do the management activities with 20 to 30 percent of their time. It was apparent that the plaintiffs were the highest paid being that they were the managers and given the significance of their activities they had to make many decisions such as inventory control and whom to deploy in certain positions.
A part of these activities was as the highest-ranking employees in their stores to choose who to hire when to discipline employees etc. This applies to the second factor. They argued that because the district managers had the authority to hire more senior employees and set rates of pay, that they did not have the full power to make discretionary decisions however this does not change that management was their primary duty because the discretion may be limited to the company and its desires for uniformity.
The third factor in determining if management was the employee’s primary duty was the employee’s relative freedom from supervision. The plaintiffs had claimed that this factor was not conclusive since the district managers were always coming into their stores. They had claimed that since the district managers came on a frequent basis they did not have the freedom from supervision. The court found that the managers still had enough discretionary power and freedom from supervision to qualify for the executive exemption.
In other words even though the district managers spent substantial amounts of time in the Plaintiffs’ stores they still had the responsibility of maintaining the store and its operations and had enough freedom from supervision according to the courts. The fourth factor was the relationship between the employee’s salary and the wages paid to employees who perform relevant non exempt work. Basically here the court said that there was no evidence that their compensation was close to that of some assistant managers which was the Plaintiffs argument on the matter.
And it was without a doubt that they had nearly twice the total annual compensation received by their highest-paid supervisors. And they also received bonuses that were not available to everyone. Thus after looking at all the factors the court decided in favor of Starbucks and dismissed the claims, who were exempt from the FLSA’s overtime provisions as executive employees. The court also said that the plaintiffs’ primary duty was management.
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The FLSA’s Overtime Provisions: A Case Study of Mims v. Starbucks Corp.

Introduction

The Fair Labor Standards Act (FLSA) is a federal law that establishes minimum wage, overtime pay, record-keeping, and child labor standards affecting full-time and part-time workers in the private and public sectors. The act provides that employees who work more than 40 hours a week must receive overtime pay, which is typically time-and-a-half their regular rate of pay. However, the act exempts certain employees from the overtime pay requirements, including executives, administrative, and professional employees. The question of whether an employee qualifies for an exemption is a factual determination that depends on various factors, including the employee’s job duties and salary. This article will examine the Mims v. Starbucks Corp. case, in which former managers sued Starbucks seeking unpaid overtime and other amounts, and analyze whether the managers were non-exempt from the FLSA’s overtime provisions.

Facts of the Case

Kevin Keevican, Kathleen Mims, and other former managers filed a suit against Starbucks seeking unpaid overtime and other amounts. In Starbucks Corp. stores, the manager’s responsibilities include supervising and motivating six to thirty employees, including supervisors and assistant managers, overseeing customer service, and processing employee records, payrolls, and inventory counts. He or she also develops strategies to increase revenues, control costs, and comply with corporate policies. As a manager, Kevin worked seventy hours a week for $650 to $800, a 10 to 20 percent bonus, and fringe benefits that were not available to baristas, such as paid sick leave. An employee’s primary duty is usually what the employee does that is of principal value to the employer, not the collateral tasks that she may also perform, even if they consume more than half their time. The Plaintiffs argued that they spent less than 50 percent of their time on managing and, therefore, should be entitled to unpaid overtime and other amounts.

Issue

The issue in the case was whether the managers were non-exempt from the FLSA’s overtime provisions.

Decision

The court held that the managers were exempt from the FLSA’s overtime provisions.

Rationale

The court began by stating that even when an employee spends less than 50% of his time on management, as the plaintiffs claimed they did, management might still be the employee’s primary duty if certain factors support that conclusion. The factors were the relative importance of managerial duties compared to other duties; the frequency with which the employee makes discretionary decisions; the employee’s relative freedom from supervision; and the relationship between the employee’s salary and the wages paid to employees who perform relevant non-exempt work.

The record showed that the managerial duties were more critical to success than other duties. The reasoning behind this was that if the managers of stores that made more than $1 million annually in sales were able to spend the majority of their time doing chores that other employees, which they hired, also perform, it’s still obvious that those activities of the manager were not as important compared to the significant management responsibilities performed during the lesser part of their time. In other words, even though the managers spent more time doing less significant work, it still is not as significant as the management activities that they perform, even though they do the management activities with 20 to 30 percent of their time. It was apparent that the plaintiffs were the highest paid being that they were the managers and given the significance of their activities, they had to make many decisions such as inventory control and whom to deploy in certain positions. A part of these activities was as the highest-ranking employees in their stores to choose who to hire when to discipline employees, etc. This applies to the second factor.

They argued that because the district managers had the authority
However, the court rejected this argument, noting that the discretion of the managers may be limited by company policies and standards. As such, the court found that the plaintiffs had enough discretion to make significant decisions regarding the management of their stores.

The third factor in determining whether management was the employee’s primary duty was the employee’s relative freedom from supervision. In this case, the plaintiffs claimed that because district managers frequently visited their stores, they did not have sufficient freedom from supervision to qualify for the executive exemption.

However, the court disagreed, stating that the managers still had enough discretionary power and freedom from supervision to qualify for the executive exemption. Although district managers spent substantial amounts of time in the plaintiffs’ stores, they still had the responsibility of maintaining store operations, and the managers had the autonomy to make significant decisions regarding the store’s management.

The fourth factor in determining whether management was the employee’s primary duty was the relationship between the employee’s salary and the wages paid to employees who perform relevant non-exempt work. The plaintiffs argued that their compensation was close to that of some assistant managers, indicating that they were not exempt from the FLSA’s overtime provisions.

However, the court found that the plaintiffs had nearly twice the total annual compensation received by their highest-paid supervisors, and they also received bonuses that were not available to everyone. As such, the court found that the plaintiffs were exempt from the FLSA’s overtime provisions as executive employees.

Conclusion

In conclusion, the case of Mims v. Starbucks Corp. highlights the importance of understanding the factors that determine whether an employee is exempt from the FLSA’s overtime provisions as an executive employee. The court found that even when an employee spends less than 50% of their time on management, they may still be exempt from the FLSA’s overtime provisions if certain factors support that conclusion.

In this case, the court found that the plaintiffs were primarily engaged in management duties, which were more critical to the success of the company than other duties. The court also found that the plaintiffs had enough discretion and freedom from supervision to qualify for the executive exemption, despite frequent visits from district managers. Additionally, the court found that the plaintiffs’ compensation was significantly higher than that of their highest-paid supervisors, and they received bonuses that were not available to everyone.

As a whole, this case highlights the importance of thoroughly analyzing the nature of an employee’s work duties to determine whether they are exempt from the FLSA’s overtime provisions as an executive employee. Employers should ensure that their employees are properly classified to avoid potential legal issues and ensure compliance with federal labor laws.
References:

U.S. Department of Labor. (2016). Fact Sheet #17A: Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees Under the Fair Labor Standards Act (FLSA). Retrieved from https://www.dol.gov/agencies/whd/fact-sheets/17a-overtime-exemption-executive-administrative-professional

Mims v. Starbucks Corp., 765 F.3d 842 (9th Cir. 2014).

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