That's according to afrom the National Bureau of Economic Research, which found that companies avoid paying their employees overtime by taking advantage of a loophole in federal labor law, in which managers are paid their fixed salaries even when they work beyond their prescribed hours. That loophole involves misclassifying workers as managers, even if they don't have actual managerial duties.
The paper also cites a 2008 lawsuit involving the Family Dollar Store chain, in which store managers argued that they spent 60 to 90 hours per work performing manual labor tasks while being classified as managers, even though they rarely performed managerial tasks. They weren't getting paid for overtime, and an Atlanta court awarded them $35 million in addition to unpaid overtime. The court found that more than 1,400 store managers were owed more than $17 million.
The issue is widespread, the authors of the paper, Lauren Cohen, an economist at Harvard Business School, Umit Gurun, and N. Bugra Ozel, finance professors at the University of Texas, concluded. "Our central finding is that 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," the researchers said.
Hey ProfessorOrozco Perry_Binder lesliegarbarino Perry_Binder NewEnergyProf VolunteerTwit & others in ALSB … we include this in our courses, right?
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