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MATTHEWS, N.C. -- Dollar store retailer Family Dollar Stores, Inc. here said Friday it plans to appeal a jury verdict that Family Dollar should have classified a number of its store managers as hourly employees entitled to overtime pay rather than as salaried managers. If it stands, the jury's decision could cost the retailer up to $19.1 million in damages.
"We are confident that the federal appeals court will ultimately find in our favor," said Howard Levine, chairman and c.e.o. of Family Dollar, in a statement. "Family Dollar store managers are critical to the success of our stores. Our store managers work hard to provide our customers with great values in clean, friendly stores, to hire and coach employees, and to drive store profitability. They deserve to be recognized and rewarded for the important responsibilities they bear, their hard work, and their dedication to our customers. We believe we are correct in classifying our store managers as salaried managers, and we intend to continue to fight for what we believe is right."
Under the Fair Labor Standards Act (FLSA), salaried employees are exempt from overtime pay if they meet certain criteria. Under the regulations in effect prior to August 2004, these criteria included a minimum weekly pay of $250, the primary responsibility for managing a business unit, and the supervision of at least two full-time individuals. Two other federal courts have found that Family Dollar store manager positions meet and exceed these criteria, as has the U.S. Department of Labor.
However, as the jury in this particular case came to a different conclusion, the court has awarded damages in the amount of approximately $19.1 million, plus an amount to be determined for an award of attorneys' fees to the plaintiffs' counsel.
Family Dollar said it expects to recognize between $25 million and $45 million, pending the court's decision, as an expense in its second quarter. The company said the recognition of this expense would not have an impact on cash flow while it pursues its appellate rights with respect to this judgment. During the appellate process the company will not be required to pay the amount of the judgment.
Family Dollar operates more than 6,000 stores in a 44-state area.