DOL clarifies overtime rules for Taco Bell managers, assistant managers

The Labor Department is telling restaurant operators to look past job titles and into the work itself before calling Taco Bell managers and assistant managers exempt from overtime. Under federal rules, an employee generally must be paid on a salary basis at least at the regulatory threshold, have management as a primary duty, direct at least two other workers and have real authority or influential input on hiring and firing decisions.

That matters because the department’s restaurant guidance says many workers in the industry are protected by minimum wage and overtime rules, and a salary alone does not erase those obligations. The general salary threshold for the executive exemption is $684 a week. If those conditions are not met, time over 40 hours in a workweek can trigger overtime pay at time and one-half.

For Taco Bell stores, where assistant managers and shift leads often jump from one task to another in a short-staffed rush, the distinction can get blurry fast. A manager who is mostly covering the line, working the register, preparing food, and closing the store when staffing runs thin may look different under the law from a manager whose primary duty is actually running the operation. The department’s message is simple: payroll teams need records that show what the employee actually did, not just what the schedule called the role.

The risk is not theoretical. In July 2022, the Labor Department said it recovered $56,000 for 31 managers at Taco Bell franchisee Hagan and Hagan Inc. in New Bern, North Carolina. In that case, more than 10 percent of the managers’ salary came from bonuses, incentives and commissions, which defeated the overtime waiver and forced payment for hours over 40.

A separate misclassification lawsuit involving Taco Bell assistant general managers raised the same warning in more painful detail. The allegations said those managers were doing housekeeping, customer service, cash handling and food preparation, and that off-the-clock work could add up to about 15 extra hours beyond a required 50-hour week. That kind of claim is exactly where weak records become expensive: if a store cannot show exempt duties, the title can collapse under scrutiny.

The stakes are bigger because Taco Bell operates at scale across the United States and leans heavily on franchising. In March 2025, the brand said it remained No. 1 in North America for the fifth consecutive year in Entrepreneur’s franchise ranking. In a system that large, one bad exemption call can spread across dozens of stores, turning a payroll shortcut into back pay, overtime liability and a problem franchisees cannot ignore.