Clarks Companies, N.A., a national shoe retailer, is having its “inside sales” pay plan challenged in court.
Usually, retailers try to save money on salaries by calling their Assistant Managers and Store Managers “executives” and not paying them overtime wages. True executives under the law are not entitled to overtime pay. Retailers sometimes stretch this definition and classify managers as “executives” even though they spend the vast majority of their time unloading trucks and stocking shelves.
In a recently filed federal class action, a new employer practice is being challenged. Clarks Companies, a shoe retailer with stores nationwide, pays its store managers, assistant managers, and full time key holders a very low base salary (from $200 to $300 per week) and commissions and bonuses. This pay scheme cannot comply with the executive exemption, since the salary needs to be at least $455 per week. It is closest to the federal exemption for inside sales persons at a retail establishment.
The lawsuit claims that this compensation plan violates Federal , Connecticut and Massachusetts law. It claims that federal law is violated because the commissions do not equal at least one half of the employees’ total pay. It claims that Connecticut law is violated for many reasons, including that the employees “sole duty” is not simply sales (they also manage). It claims that Massachusetts law is violated because Massachusetts has no such “inside sales” exemption.
If this lawsuit is successful, Clarks will owe back overtime pay to all of its store managers, assistant managers and full time key holders for the past three years.
The plaintiffs are being represented by the Hayber Law Firm, in Hartford, Connecticut.