Risk of employees’ losing exempt status rises during times of short-staffing

In times of short staffing, it’s important to remember exempt employees may lose their exempt status if they spend too much time performing nonexempt work. A recent ruling by the U.S. District Court for the District of Minnesota serves as a stark reminder that exempt employees may perform nonexempt work but only if their primary duty remains exempt.

Facts

Tammy Babbit was an executive team leader (ETL) for food and beverage sales in Target’s South Rochester, Minnesota, store in 2019. The company classified her as an exempt employee under the Fair Labor Standards Act (FLSA). In her position, she oversaw 75 employees and allegedly worked between 60 and 70 hours a week. She filed an FLSA lawsuit against the employer seeking overtime wages and claiming her main duty wasn’t management but hourly work.

Target argued Babbit was exempt under the FLSA’s executive exemption. The U.S. Department of Labor’s (DOL) regulations set forth a four-prong definition for the work of an executive employee who is exempt from overtime. The rule states, among other things:

• An executive is one whose “primary duty” is “management of the enterprise or a customarily recognized department thereof”; and
• The term “primary duty” means the “principal, main, major, or most important duty that the employee performs.”

Court’s decision

The court reviewed whether Babbit’s primary duty was performing exempt management work or hourly, nonexempt work. Target argued her primary duty was managing the food department, and her managerial activities included: