Editor's Note: On March 15, this story was updated to include a statement from McCoy's.
A federal magistrate has ordered McCoy's Building Supply to pay roughly $20,000 to a former assistant manager who alleged that McCoy's violated New Mexico law by improperly categorizing him as exempt from overtime pay.
The judgment reached earlier this month for plaintiff Joe Rivera by Carmen E. Garza, a U.S. District Court magistrate for the New Mexico district, involves a violation of the New Mexico Minimum Wage Act (MWA). Some of the conclusions Garza reached were based on interpretations of the federal Fair Labor Standards Act (FLSA), so there could be implications for cases outside as well as inside New Mexico, but McCoy's said in a statement (see below) that it believes the decision pertains only to Rivera and not to how McCoy's classifies assistant store managers as exempt from overtime..
Garza ruled against McCoy's even though she also concluded that the dealer wasn't liable for damages under FLSA because it showed it had reasonable grounds for believing the plaintiff was an exempt employee and because McCoy's had acted in good faith. In fact, McCoy's penalty is only two-thirds the $31,000 investment the San Marcos, Texas-based dealer made in Rivera when it put the plaintiff through a 14-week training program prior to his becoming an assistant manager.
Rivera worked as an assistant manager at McCoy's Roswell, N.M., branch from mid-May through mid-August, 2014. His salary was $38,000 a year, and because he was classified as an executive employee, he was exempt from overtime. Based on when he disarmed and armed the store's alarm system, the court concluded he worked about 11 hours and 40 minutes each day, five days a week.
"Although Plaintiff was solely in charge of the Roswell store once a week, Plaintiff spent the vast majority of his time performing manual tasks that were not management-related, such as cleaning, stocking, loading trucks, and helping customers," Garza's judgment declared, adding later: "Plaintiff did execute some managerial duties, like addressing two employee disputes and 'provid[ing] for the safety and security of the employees or the property' by opening and closing the store each day. But Plaintiff simply did not perform many quintessentially managerial duties like scheduling, maintaining and ordering inventory, or directing and apportioning employees' work."
Cases alleging FLSA violations have found that a person could spend as much as 95% of their time doing non-exempt work and still be regarded as having management be their primary duty, Garza said. But in those cases, the manager was the only person ever on site or else the only person bearing that title who was on location during that manager's working hours.
In contrast, the Roswell yard had a store manager who was at the store on four out of the five days each week that Rivera worked. Said Garza: "Here, Plaintiff was in charge of the Roswell store only one day a week, rather than every day, and did not schedule or direct employee work, determine the amount of inventory to order, train employees, or perform recordkeeping or inventory reconciliation."
Garza ruled that Rivera was entitled to $6,411.60 worth of unpaid overtime wages, plus $12,823.20 in treble damages, plus an unspecified amount of interest. More than $20,000 is due in total, Rivera's law firm said in its press release.
March 15 update
In response to the decision, McCoy's issued this statement:
"While McCoy’s is disappointed in and disagrees with the Court’s decision, it is important to note that the judge specifically held that her opinion applied only to the facts of the particular assistant store manager at issue, and not to McCoy’s overall classification of its assistant store managers as exempt.
"Here, Rivera chose not to perform the responsibilities and duties that were expected of him as an assistant store manager, or was simply not employed long enough to perform those responsibilities. In reaching her decision under New Mexico law, the Court did not follow well-settled federal law that an otherwise exempt employee cannot make himself non-exempt by failing or refusing to do the work he has been trained to do.
"McCoy’s believes that the Court’s opinion actually reaffirms the fact that assistant store managers at McCoy’s are properly classified as exempt employees under both New Mexico and federal law. This is because the primary duty of assistant store managers who properly perform the responsibilities expected of them, and on which they have been trained, is management. The judge recognized this fact when she specifically stated in her opinion that McCoy’s acted in good faith in classifying Rivera as exempt because it could have reasonably believed that the plaintiff would perform exempt work in general and that ASMs perform the exempt work they’re trained to do.
"If anyone has any questions, please contact Kent Williams at Kent.Williams@mccoys.com."