A Dunkin’ Donuts franchisee operating several locations across the Mid-Atlantic region has been hit with a proposed class and collective action alleging that it systematically misclassified store managers as exempt from overtime pay, despite requiring them to perform the same manual tasks as hourly employees. Filed on Friday, September 4, 2026, in the U.S. District Court for the Eastern District of Virginia, the lawsuit claims the operator violated the Fair Labor Standards Act (FLSA) and state labor laws by failing to compensate managers for hours worked in excess of 40 per week.
The lead plaintiff, a former store manager who worked for the franchisee for over three years, alleges that while her job title suggested executive authority, her actual daily responsibilities consisted almost entirely of non-exempt work. According to the complaint, the plaintiff spent the vast majority of her 50-to-60-hour workweeks serving customers, preparing food and beverages, cleaning the premises, and operating the cash register—tasks typically performed by hourly crew members. The suit argues that because these primary duties did not involve the exercise of independent judgment or high-level management, the "manager" designation was a legal fiction used to avoid paying overtime premiums.
The Core Allegations of Misclassification
At the heart of the litigation is the distinction between "exempt" and "non-exempt" employees under the Fair Labor Standards Act. To qualify for the "executive exemption," an employer must generally prove that the employee is paid on a salary basis, earns at least a specific threshold amount, and—most importantly—has a primary duty that involves managing the enterprise or a recognized department. This management role must include the regular direction of two or more full-time employees and the authority to hire or fire, or at least provide significant input into such decisions.
The plaintiff in the Virginia filing contends that the Dunkin’ Donuts operator failed the "duties test" of this exemption. The complaint alleges that the franchisee’s business model relied on lean staffing, which forced managers to spend nearly all their time performing "front-line" duties. By classifying these individuals as exempt, the operator allegedly saved thousands of dollars per month in labor costs per store, as managers were expected to cover staffing gaps without receiving any additional compensation for their extended hours.
"The title of ‘Store Manager’ was used as a shield to circumvent the mandatory overtime requirements of the FLSA," the complaint states. "In reality, the plaintiff and others in the proposed class were glorified crew members who worked excessive hours for a flat salary that, when calculated on an hourly basis, often fell near or below the minimum wage during particularly busy weeks."
Chronology of the Dispute
The timeline of the dispute spans several years of operations under the defendant’s management. According to court documents, the lead plaintiff was hired in early 2023 and promoted to a management position by late 2024. At the time of the promotion, she was allegedly informed that her new status as an exempt employee meant she would no longer be eligible for overtime, regardless of how many hours she worked.
Throughout 2025 and the first half of 2026, the plaintiff allegedly worked an average of 55 hours per week. During holiday rushes and periods of high staff turnover—common in the quick-service restaurant (QSR) industry—those hours reportedly spiked to 70 hours per week. Despite the increased workload, her compensation remained fixed. The lawsuit notes that the plaintiff made several internal inquiries regarding the lack of overtime pay but was told that her "salaried" status precluded any additional earnings.
The decision to file the suit in September 2026 follows a string of similar legal challenges across the hospitality and fast-food sectors. Legal experts note that the filing comes at a time of increased scrutiny on the "white-collar" exemptions by the Department of Labor (DOL), which has recently sought to clarify and narrow the definitions of who qualifies as a bona fide executive.
Supporting Data and the QSR Landscape
The misclassification of managers is a recurring issue in the QSR industry, where profit margins are often thin and labor is the highest variable cost. According to data from the Bureau of Labor Statistics and various labor advocacy groups, wage and hour violations in the food service industry remain among the most frequent in the United States. In 2025 alone, the Department of Labor’s Wage and Hour Division recovered over $180 million in back wages for food service workers nationwide.
Research into "managerial misclassification" suggests that the practice is particularly prevalent in franchise-heavy brands. A 2024 study by the National Employment Law Project (NELP) found that "lower-level managers" in fast-food environments often spend upwards of 80% of their time on manual labor. This creates a legal vulnerability for franchisees who rely on the executive exemption to maintain 24/7 operations without paying overtime.
In the Virginia case, the proposed class includes all current and former store managers who worked for the defendant at any time during the three years preceding the filing of the lawsuit. If the court grants collective action status, hundreds of managers across the franchisee’s network could be eligible to join the suit, potentially exposing the operator to millions of dollars in back pay, liquidated damages, and attorney’s fees.
Official Responses and Potential Defenses
While the Dunkin’ Donuts franchisee has yet to file a formal response in court, legal representatives for the industry typically argue that store managers possess significant discretionary power that justifies their exempt status. Common defenses include the manager’s role in scheduling, ordering inventory, maintaining safety standards, and being the "face" of the franchise to the corporate brand.
A spokesperson for the franchisee’s parent company issued a brief statement following the filing: "We are committed to fair labor practices and comply with all federal and state employment laws. We value our managers and the leadership they provide to our teams. We intend to vigorously defend against these allegations, which we believe mischaracterize the nature of the management role within our organization."
Dunkin’ Brands, the franchisor, is generally not named as a direct defendant in such suits due to the "joint employer" legal standards that often insulate a parent brand from the labor practices of its independent franchisees. However, the outcome of this case could prompt Dunkin’ Brands to issue new compliance guidelines to its operators to mitigate future litigation risks.
Broader Impact and Legal Implications
The implications of this lawsuit extend beyond a single Dunkin’ Donuts operator. It highlights an ongoing tension in the American workforce regarding the "salaried" status of middle management. If the Virginia court finds in favor of the managers, it could set a persuasive precedent for other QSR managers in the Fourth Circuit, leading to a wave of similar filings against other major fast-food chains.
Legal analysts point out that this case also touches on the "Salary Level Test." Recent updates to federal regulations have increased the minimum salary required for an employee to be considered exempt. For franchisees, this means that even if a manager performs purely executive duties, they must still be paid a salary that meets the updated federal threshold. The Virginia lawsuit alleges that in some instances, the total hours worked by managers resulted in an effective hourly rate that challenged the legality of their exempt status altogether.
Furthermore, the shift toward collective actions allows employees to pool their resources, making it more feasible to challenge large corporate entities or well-funded franchisees. "These cases are about more than just one person’s paycheck," said a labor attorney not involved in the case. "They are about ensuring that the ‘manager’ title isn’t used as a loophole to avoid paying people for the work they actually do. If you’re spending your day flipping donuts and cleaning floors, the law says you should be paid like the person next to you who is doing the same thing, regardless of what it says on your business card."
Future Outlook
As the case moves into the discovery phase, the court will likely examine internal emails, scheduling logs, and testimony from crew members to determine the "primary duty" of the managers. The defendant will likely move to dismiss the collective action status, arguing that each manager’s experience was unique and cannot be adjudicated in a single proceeding.
For the QSR industry, the Sept. 4 filing serves as a stark reminder of the financial risks associated with aggressive labor cost management. As labor markets remain tight and regulatory oversight increases, the "Store Manager" exemption remains one of the most contentious battlegrounds in employment law. The resolution of this case in the Virginia federal court will be closely watched by franchisees and labor advocates alike as a bellwether for the future of overtime compensation in the fast-food industry.
