In the US retail industry, one of the most pressing issues for luxury brands continues to be appropriately classifying employees as exempt versus nonexempt from overtime payment. It is a particularly challenging issue for multi-state retail employers who must comply with federal, state and local obligations. Misclassifying employees creates significant consequences for brands that do not carefully manage the process.

Indeed, many wage and hour lawsuits are brought as class or collective actions, so the amounts at stake can be substantial. In the last few years, Comme Des Garçons, Hermès and Louis Vuitton, among others, have each faced class or collective actions related to alleged wage and hour violations. For example, in a pending collective action against Comme Des Garçons in New York, the fashion brand was sued by current and/or former employees who claim the company improperly classified them to avoid paying overtime.

Specifically, retail employees claimed that, while they were designated as ‘sales managers’, ’floor managers’ and ‘assistant floor managers’, and paid a salary, their primary duty was making sales and they did not schedule, interview, hire or fire other employees, oversee projects, dictate operations or perform other tasks aligned with being considered exempt from overtime. Unfortunately for retail employers, these types of wage and hour litigations have become the newest fashion trend in the US.

As most retail employers likely already know, some...

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