By Jeffery J. Greenberger
Just when I thought it was safe to go back in the water, I find self-storage wage and hour issues still lurk in the shallows. The last time I addressed this topic in an article was in 2002 when there were class-action lawsuits pending against several large self-storage operators for violations of the Fair Labor Standards Act. There now seems to be a new round of these claims being made in the self-storage world.
Many self-storage owners operate under the misconception that if an employee carries the title “manager,” it’s enough to exempt the employee from being paid overtime. You think you can simply pay the manager a salary, regardless of the hours worked or job duties performed. While it’s not impossible for a facility manager to be exempt, there are benchmarks that must be met.
To begin, an exempt employee should receive a fixed salary even if he doesn’t work 40 hours in a week. If you consider your manager to be exempt but dock hours for personal appointments, late reporting times, etc., he does not fit the definition.
You can’t have it both ways. If you want your employee to be exempt, his wage must be fixed, no matter what. If he fails to show up on time, work full days or do the job as required, discipline or discharge are your remedies.
Professional, Executive or Administrative
Exempt status is reserved for employees who are considered professional, executive or administrative. I’ll exclude discussion of the professional classification from this article because that category is generally reserved for professions such as doctor, accountant, attorney, etc.
An executive employee must manage at least two other employees and exercise a significant amount of discretion and independent judgment in doing his job. While your manager may manage two other staff members, the test really looks to the latter half of that definition. For example, if a manager has the power to waive late fees for tenants but must otherwise follow the owner’s policies and procedures to a T, he is not exercising a “significant amount of independent judgment and discretion.”
An administrative employee must exercise a substantial amount of independent discretion in the position, be empowered to make important decisions that directly relate to the company’s management policies, and operate with only general supervision. A good example of an exempt administrative employee is a project manager. It’s difficult to find a self-storage manager who fits into this category.
Further, in an executive or administrative position, the manager’s work must significantly relate to the success or failure of the business. Examples might include but are not limited to setting rental rates, determining marketing sources, purchasing hardware and software, and negotiating vendor contracts for services. If your manager doesn’t do any of these things, he may not fit into the executive or administrative categories.
Finally, if your employee makes a salary of less than $455 per week, there is no way he can be exempt from overtime, even if he meets the rest of the criteria listed above. This is important because many of you offset salary with an apartment, and a manager's actual monetary compensation may be less than $455 per week. In such cases, your employee is entitled to overtime regardless of whether he meets the test of the administrative or executive categories.