Mims v. Starbucks Corp.

Kathleen Mims, former coffee-store managers Kevin Keevican and Michael Terrazas, and other store managers (plaintiffs) sued Starbucks Corporation (defendant), alleging they had been classified improperly as exempt workers and not paid overtime for work exceeding 40 hours per week, as required for nonexempt employees under the Fair Labor Standards Act (FLSA). Under the FLSA, employees were classified properly as exempt if they were paid a weekly salary of at least $455, their primary duties were managerial, they supervised at least two employees, and they had input into or authority over hiring and firing decisions. As managers, Keevican and Terrazas were paid weekly salaries of around $800 and $750, respectively, almost double the pay of the next highest-paid store employees, and averaged 70 and 65 hours per week, respectively. Keevican and Terrazas held the highest positions in their stores. Keevican’s and Terrazas’s duties included exercising discretion in hiring, firing, training, and supervising between six and 30 employees. Keevican’s and Terrazas’s management duties included developing strategies for improved sales, managing costs and inventory, and processing payroll. Both managers were successful. For example, in less than 11 months, annual sales at Keevican’s store jumped from $500,000 to $1,400,000. Both managers reported to district managers but had relative freedom in the daily management of their stores. Despite managerial duties and critical successes, Keevican and Terrazas both argued that up to 80 percent of their hours were spent performing the same tasks as the baristas, who were hourly employees. Both managers argued that their primary duty was not management, and they sued Starbucks, seeking overtime pay, liquidated damages, and the like. Starbucks argued that management was Keevican’s and Terrazas’s primary duty, and that the managers were exempt from the FLSA’s overtime requirements. Starbucks moved for partial summary judgment in relation to Keevican’s and Terrazas’s claims.