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XIV. Your Turn: From Barista to Manager
Summary of Case
a barista as well, at times. A comparison with your friends working in other industries has
resulted in a sense of inequity, since they get paid one and a half times the wages for working
Learning Objective
Discuss the issues of legal compliance with Fair Labor Standards Act (FLSA) and analyze the
consequences of non-compliance. Identify if the classification of a store manager as exempt
from the FLSA is legally correct or not. Research if other companies in this industry have faced
any FLSA issues and analyze the course of action for the management.
Teaching Guideline
Use this case to discuss the features of the Fair Labor Standards Act (FLSA) and help students
understand the challenges in doing a self-evaluation
Discussion of Case Issues
1. Is this company running afoul of the Fair Labor Standards Act (FLSA)? Refer back
to the discussion earlier in this chapter. Would this company be able to document that
the store managers are exempt from the FLSA (not to mention similar state laws)?
Also, what would it cost to re-classify your store managers as non-exempt?
Students’ answers may vary.
worked” over a prescribed “threshold” (typically 40 hours per week), for “nonexempt”
employees.
by employees performing compensable, job-related activities
activities during their “off-the-clock” time, such as taking work home,
making/receiving job-related telephone calls at home, working through lunch,
To qualify for the executive employee exemption, all of the following tests must be met:
more other full-time employees or their equivalent.
compensation.
results:
Job: Coffee Shop Manager
Experience Median Salary Range
compliant. This will be most probable case.
amount.
The second option would be more costly to the company. But, it will address the issue of
equity and the concerns of the store manager. The cost to the company would be either the
2. If managers feel overworked and underpaid, what do you project that they will do
when the economy picks back up? Is that a concern for the company? Is the company
in compliance with the FLSA?
picks up, they will look out for other jobs. Since employees are able to access externally
competitive salaries, the pay difference would cause concern. The company is in
3. What would it cost to have a lawsuit filed against the company? Have other
companies in your industry (e.g., Starbucks, Caribou, Peet’s, etc.) had any FLSA
issues? If so, what can you learn from their experiences? Would you advise meeting
with corporate counsel? What facts and observations would you recommend be
presented at such a meeting?
for these expenses only if they lose the case.) Individual arrangements with particular
lawyers may also involve the employees paying some additional expenses directly, or
not.
oA similar case was filed, in June 2004, by two managers alleging that 70
percent of their work-time was spent doing the work of a barista.
managers as exempt from overtime pay.
The Coffee Bean & Tea Leaf chain had agreed to pay $100,003 to 350 current
and former California employees on an overtime lawsuit.
Data and statistics on overtime lawsuits
Salaries paid by competitors
XV. Still (yes, still) Your Turn: “I was Gaga’s Slave”
Summary of Case
This case focuses on how Jennifer O’Neill, employed by Pop superstar Lady Gaga as a
Learning Objective
Better understand the Fair Labor Standards Act and the provisions that it covers—especially
relating to minimum wage and hours of work.
Teaching Guideline
Use this case to understand the FLSA and issues relating to minimum wage and overtime when
employing anyone in a business.
Discussion of Case Questions
1. Is Ms. O’Neill exempt or non-exempt under the Fair Labor Standards Act? Which
exemption would be most relevant in this case?
Ms. O’Neill is non-exempt under the Fair Labor Standards Act. Ms. O’Neill alleges that
The administrative employee exemption seems to be most relevant in this case. To qualify
work directly related to the management or general business operations of the
employer or the employer’s customers.
2. Can you find any other examples in the news of similar lawsuits? If so, please again
form an opinion on whether the plaintiff is exempt or not and which exemption is
most relevant.
Student’s answers to this question will vary.
Answers to Review Questions
1. What is the nature of government’s role in compensation?
compensation decision-making, affecting decisions in several areas:
oFairness of procedures for determining pay (pay discrimination)
an employer.
2. Explain why changes in minimum wage can affect higher-paid employees as well.
The effect of raising the minimum wage has differential effects on the wages of workers.
service firms that tend to pay at or near minimum wages to many employees.
3. What is the difference between access discrimination and valuation discrimination?
The second standard is equal pay for work of comparable worth. It has been
proposed that valuation discrimination also occurs when men and women hold
entirely different jobs, i.e. office jobs staffed by women and craft jobs staffed by men.
4. Consider contemporary practices such as skill-competency-based plans, broad
banding, market pricing, and pay-for-performance plans. Discuss how they may
affect the pay discrimination debate.
specific than job duties specified in a job description. When job tasks are fairly routine,
pay differences are difficult to justify on a work-related basis.
5. What factors help account for the pay gap?
Differences in union membership
Discrimination
6. What kinds of proactive activities can an employer undertake to enhance the
regulatory environment?
opinion.
A compensation manager can constantly review compensations practices and
