US firms dodge $4bn in overtime payments by doling out bogus 'manager' job titles to low-level staff

US firms increasingly give employees highfaluting job titles in a bid to deny overtime pay, exploiting a loophole in federal law, a Harvard Business School analysis has revealed.

Researchers uncovered a five-fold jump in appointments of 'managers' earning just above a weekly salary threshold of $455, meaning they can work more than 40 hours per week without meriting overtime pay.

They found ever-more workers getting dubious job titles, such as Assistant Bingo Manager and Director of First Impressions — which translates as a front desk attendant — to avoid paying overtime wages.

By misclassifying workers, US firms save about $4 billion each year, says the 57-page working paper, which was released on Monday by the National Bureau of Economic Research.

Companies do not need to pay overtime to managers who earn more than the government set minimum of $455 per week, leading to a spike in 'managers' in that pay bracket 

Oxfam America ranks Texas, Florida and many states in the South poorly for their workplace protection rules 

'There is a systematic, robust, and sharp increase in firms' use of managerial titles around the federal regulatory threshold that allows them to avoid paying for overtime,' says the document.

Under the Fair Labor Standards Act, companies need not pay overtime to those classed as managers earning above the threshold of $23,660 per year, as long hours can go hand in hand with high-level jobs.

But researchers say the system is being gamed by unscrupulous employers who dole out fancy sounding job titles, so they can work staff 60-hour weeks without extra pay.

Examples include booking clerks being titled 'Lead Reservationists,' restaurant hosts as 'Guest Experience Leaders,' carpet cleaners as 'Carpet Shampoo Managers,' and barbers as 'Grooming Managers.'

Such employees lose out on average 13.5 percent of their annual salary, researchers found.

In one example, Panera Bread's top franchisee was in 2020 ordered to pay $4.6 million after more than 900 Ohio staffers — defined by the firm as assistant managers — sued for overtime violations under the Fair Labor Standards Act (FLSA).

In another, so-called 'store managers' at Family Dollar Store who were mostly tasked with stacking shelves, unloading trucks, cleaning and other non-managerial tasks, working as many as 90 hours per week without overtime.

The wage-theft of overtime pay is most widespread in retail, bars, restaurants, and hotels, a Harvard Business School analysis has revealed

Their class action lawsuit, filed in 2008, ultimately saw 1,424 employees awarded $35 million in unpaid overtime pay, researchers said.

Violations are more common in states with weak labor laws, including Texas, Florida and much of the South, according to Oxfam America, a charity that tracks wages and fair labor practices.

Abuse is most widespread in retail, bars and restaurants, and hotels, says the study, which uses data from 2019. The salary thresholds have since been revised upwards.

Kessler Matura, a New York law firm specializing in labor law, says employees should be wary of inflated job titles.

Genuine managers are typically not asked to stack shelves. The firm says they should have the authority to hire and fire staff, manage at least two other full-timers, run a department and likely earn in excess of $100,000 per year, the firm says.