Incentives matter. Compensation drives decisions.
Those economics fundamentals drove two researchers in the Naveen Jindal School of Management to wonder why seemingly inflated job titles kept appearing in listings. This line of inquiry would ultimately win them the 28th annual Glen McLaughlin Prize for Research in Accounting Ethics.
Drs. Umit Gurun and N. Bugra Ozel, both professors in the Jindal School’s Accounting Area, and lead author Dr. Lauren Cohen of Harvard Business School, won the award for their paper, “Too Many Managers: The Strategic Use of Titles to Avoid Overtime Payments.”
Ozel said the team’s inspiration for the paper came to them when they kept seeing over-the-top job titles in postings.
“We started looking at job postings and kept seeing these ridiculous titles,” he said. “What does a ‘Carpet Shampoo Manager’ do? Manage the carpet? The shampoo? Then ‘Grooming Manager.’ That’s just a barber. ‘Director of First Impressions’ is a receptionist answering phones.”
Ozel said at first it seemed like harmless corporate nonsense, that companies were trying to make boring jobs sound fancy.
“Everyone wants to feel important, right?” he asked. “But then we started plotting the data and something jumped out. These inflated titles weren’t random. They clustered just above $455 per week, the Fair Labor Standards Act overtime exemption threshold at the time. That’s when we realized this wasn’t about boosting morale. This was about money. A case brought against Family Dollar clinched it. So-called ‘Store Managers’ were working 60 to 90 hours weekly. Sounds impressive until you learn they spent 5 to 10 hours managing and the rest stocking shelves and cleaning bathrooms. The court basically said, ‘You’re lying. You gave people fancy titles to dodge overtime.’”
Allegations such as these have become common. Bank of America, JPMorgan, Starbucks, UPS, and Walmart have all faced lawsuits.
“The common claim was the same: workers were given managerial titles without corresponding managerial duties, allowing firms to avoid paying overtime,” Ozel said. “We estimate that companies were saving $4 billion annually through such practices. Affected workers were losing 13% of their potential pay.”
Professors at the Jindal School push students to understand how rules shape behavior. Gurun said students learn that the Fair Labor Standards Act (FLSA) created what seemed like a simple rule: salaried managers above a certain wage don’t get overtime.
“But that simple rule created a huge incentive to label workers as ‘managers’ regardless of what they actually do,” he said. “We wanted to know how widespread this was and whether we could prove it in the data. This is exactly the kind of research the Jindal School values. Not abstract theory. Real problems affecting millions of workers who are losing money because their boss calls them an ‘Assistant Bingo Manager’ instead of a ‘Bingo Caller.’”
Ozel said that Jindal School faculty members push each other to dig deep in their inquiries.
“Our colleagues make sure we understood that finding patterns doesn’t prove intent,” he said. “Faculty workshops here are brutal in the best way. For this study, they kept pushing us: Is this just natural clustering at that salary level? Could there be another explanation? Those challenges forced us to run test after test, ruling out alternative explanations one by one. Beyond the intellectual push, Jindal School leaders give us the infrastructure to pull this off — access to massive datasets, funding to present at conferences, colleagues who spotted problems before reviewers did. This kind of research doesn’t happen in isolation. It happens in places that demand rigor and give you the tools to meet it.”
The team hopes to achieve three things with the recognition they have earned for this study. First, give labor regulators a real tool.
“The Department of Labor can’t investigate every company,” Gurun said. “They need to know where to look. Our measure works. Firms with lots of ‘managers’ earning just above the threshold get hit with enforcement actions at much higher rates. We’re basically handing regulators a screening algorithm.”
Second, they hope to help workers see what is happening.
“If you’re a ‘Guest Experience Leader’ seating people at tables, you’re probably being misclassified,” Gurun explained. “If you’re a ‘Sanitation Supervisor’ mopping floors, you’re owed overtime. Fancy titles don’t eliminate legal rights. People need to know that.”
Third, they hope their insights will discipline firm behavior.
“This strategy exists because it can lower labor costs in the short run,” Gurun said. “But it also exposes firms to legal risk, penalties and reputational damage. Family Dollar paid $35.6 million. Our evidence suggests this behavior is most common where worker protections are weaker and firms face financial pressure, settings where firms appear willing to accept higher risk. By making misclassification easier to detect, our approach helps change that calculus.”
The team said it is already seeing real impact as it relates to the study.
“Attorneys call us, cite our research in class actions,” Gurun said. “Our research was cited in a November 2023 letter from Julie Su, the acting Secretary of Labor, signed by several U.S. Senators supporting the overtime rule change. Secretary Su said it directly: ‘This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid more for that time. Too often, lower-paid salaried workers are doing the same job as their hourly counterparts but are spending more time away from their families for no additional pay. That is unacceptable.’
Ozel explained that the Department of Labor reviewed more than 33,000 comments before finalizing the rule.
“Our research helped make the case,” he said. “When policymakers use academic research to justify real regulatory change, that’s when you know the work matters.”
The hardest part about the study, Gurun explained, was showing intent.
“Anyone can say, ‘Sure, there are more managers at that salary level, so what?’” he said. “We needed ironclad evidence this was strategic, not coincidental. The breakthrough came when we looked at hourly workers. Same firms, same locations, same $455 compensation level. If the managerial title spike reflected real business needs, we should see it for hourly employees too. We didn’t. No spike at all. You can’t avoid overtime for hourly workers by calling them managers, so firms don’t bother with the fake titles. That told us everything.”
A breakthrough came when the team did a ‘within-firm’ analysis and found patterns that would be difficult for companies to explain.
“Take a restaurant chain operating in multiple states,” Gurun said. “In states where labor markets are tight and workers have options, there are fewer inflated titles. In states where the company has more power over workers, there are far more ‘managers.’ Same company, same business model, different labor market conditions, totally different behavior.”
Ozel said the final validation of their study’s success came from enforcement data.
“Our measure predicts future Department of Labor actions,” he said. “We’re not just finding statistical noise. We’re detecting actual violations that regulators independently discover through investigations. Those moments where the evidence just clicks into place, where alternative explanations fall apart, that’s when we knew we have something real.”
Gurun said this research now lives in his classroom.
“We tell students, ‘Here’s the rule. Here’s what firms do. You’re the manager. What do you decide?’” he said. “The room always splits. Some see the ethical problem immediately. Others focus on staying competitive. That’s exactly the conversation they need to have before they’re sitting in a real boardroom making these calls.”
The McLaughlin Prize means something special, Ozel explained.
“Glen McLaughlin grew up during the Great Depression, became a successful Silicon Valley CFO and created this award because he understood something fundamental: accounting shapes behavior,” Ozel explained. “Rules create incentives. When companies game those systems, real people lose real money. He wanted researchers to shine a light on that. This award proves we did. Look, we have powerful tools. We can analyze millions of records, find patterns and show when something doesn’t smell right. With those tools comes responsibility. Not every problem needs a journal article. But systematic wage theft affecting millions of workers? That demands our attention. Winning this award tells us two things. We got it right. And the profession still cares about getting it right.”
