Newark, NJ/ June 1, 2004/ PR Newswire -- In a ruling announced today, the Superior Court of New Jersey concluded that four general managers at Friendly's Restaurants in northern New Jersey functioned in a managerial capacity, despite claims that they spent most of their time cooking, cleaning, dispensing drinks and serving customers. Following a week-long trial, the court determined that such work was done in a managerial capacity, and it denied the managers the more than $450,000 in overtime pay they sought in their lawsuit.
In Marx v. Friendly Ice Cream Corporation, the plaintiffs - Ronald Marx, Iyad Khawaja, Samer Abualouf and Joseph Limoli - claimed as general managers they spent less than 40 percent of their time performing managerial duties and sought overtime pay back to 2000. Judge Richard J. Donohue ruled that the general manager's day-to-day duties involved constantly monitoring the restaurant, supervising and coaching the employees, and ensuring compliance with Friendly's written policies, rules and procedures. This took place even while the managers performed other tasks, supporting Friendly's contention that they acted in a managerial capacity at all times, regardless of what specific tasks they may have done.
"In essence, the court ruled that a company is entitled to have, at a bare minimum, one overtime exempt employee in the building," said Eric Savage, an attorney with the Newark office of Littler Mendelson, P. C., who defended Friendly Ice Cream Corporation. "This decision has a major impact on the operation of chain stores and restaurants throughout New Jersey."
"The head of any operation inevitably performs some crew-like duties," Savage continued. "If the judge had adopted the narrower definition of manager that the plaintiff's suggested, no manager of any chain store or restaurant would be considered exempt from overtime."
In the Friendly's case, the general manager was the only employee exempt from overtime in the location. Other crew positions, including assistant managers, received hourly wages and earned overtime pay.
The court decision also clarified two terms previously undefined by the New Jersey Department of Labor regarding the criteria for overtime exemption: "primary duty" and "discretionary powers."
During the past several years, courts across the country have experienced a surge in cases from exempt employees testing their wage and hour classifications, due to vague criteria and several highly publicized settlements. The United States Department of Labor's new regulations, scheduled to go into effect August 23, are intended to modify and clarify the distinction. Still, many such cases await trial.
Friendly's operates more than 535 company and franchised restaurants throughout the Northeast, serving burgers, chicken, ice cream and other items in a casual, family environment. It also manufactures and distributes ice cream to 3,500 supermarkets and retail operations.
With more than 400 attorneys and 28 offices in major metropolitan areas nationwide, Littler Mendelson is the largest law firm in the United States devoted exclusively to representing management in employment, employee benefits and labor law matters. The firm's client base ranges from Fortune 500 companies to small-business owners. Established in 1942, the firm has litigated, mediated and negotiated some of the most influential cases and labor contracts in the nation's history. For more information, visit www.littler.com.
