TikTok users @dannycog411212 and @cagedbirdhr have brought to light, a practice companies use to save billions of dollars annually – giving employees fake “manager” titles. According to a 2019 CBS News article, this practice allows companies to bill workers differently depending on their title, cheating them out of overtime pay. This practice is especially prevalent in labor-intensive companies that rely on cheap labor.
@dannycog411212 worked at an Old Navy store in New York and claimed that the company called some employees “leads” by giving them a break schedule and telling them they were in charge of controlling people’s breaks. The company then went back on its promise and made them sales associates. Other TikTokers called the practice manipulative as many people are looking to move up in companies and secure higher-paying positions by going above and beyond.
Researchers from the University of Texas and Harvard Business School found that companies save $4 billion in overtime payments annually simply by inflating employees’ titles and not paying them in full for overtime work. This practice results in employees receiving 13% less pay than they should. Workers have filed lawsuits against some of the largest employers in the U.S., including Bank of America, Family Dollar, JPMorgan Chase, Starbucks, and UPS, for wage theft resulting from this practice.
The loophole in U.S. wage laws allows salaried managers to receive the same pay each week as long as they earn above a certain minimum amount, and exempts them from receiving one-and-a-half times their hourly rate for working more than 40 hours in a week. During the period analyzed by the researchers, the cutoff to qualify for overtime was $455 a week, equivalent to an annual salary of $23,660. Companies use strategic title-fudging to save costs, resulting in a high return on investment. Inflated manager titles are more common in states with weaker labor laws, low union membership, and higher unemployment.
The Department of Labor warned companies as far back as 1940 that they will likely game the system if they were allowed to exempt particular titles from full legal pay. Despite this warning, companies continue to use strategic title-fudging. Workers are well aware that fancy titles can be used to mask insufficient pay.
In conclusion, the use of inflated “manager” titles to cheat employees out of overtime pay is a practice that is still prevalent in many companies. The impact of this practice is not only monetary but also has a negative effect on employee morale and motivation. Companies need to be held accountable for wage theft resulting from this practice, and there needs to be a reexamination of the wage laws that allow this loophole.
