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Wage Claims, Overtime & Other Employee Compensation

ARE “MANAGERS” ENTITLED TO OVERTIME PAY?

A: You are correct in saying that an employee’s job title does not necessarily determine whether the employee is exempt from overtime pay. California law strictly applies the “executive exemption” or “managerial exemption” to employees. This means the laws are generally interpreted in favor of protecting employees.

     One of the most important factors in determining executive exemption focuses on the employee’s actual duties. “Managers” are expected to perform “managerial duties.” These duties include managing the business, hiring, firing, and disciplining employees, deciding on employee salaries and wages, and creating work policies and procedures. Simply issuing memos on work policies and procedures when these policies actually come from upper management is not enough.

     Additional managerial or executive duties include:

       a) planning the work;
       b) determining the techniques to be used (to perform the work);
       c) apportioning work among the workers;
       d) directing work;
       e) appraising work and efficiency for the purpose of recommending promotions or other changes in employee status;
       f) handling workers' complaints and grievances and disciplining them where necessary;
       g) controlling the flow and distribution of materials or merchandise and supplies; and
       h) providing for the safety of the workers and the employer's property.

     An employee, to be truly exempt from overtime, must not only perform these managerial duties. These duties must take up more than 50% of their work time. If, for example, managers work 10-hour days, they must spend more than 5 hours per day on managerial work.

     Other factors considered when determining executive exemption include:

       1) the manager earns at least twice the state’s minimum wage for full-time employment;
       2) the manager regularly directs the work of 2 or more subordinates;
       3) the manager regularly and customarily exercise discretionary powers.

     It is important to know whether an employee has been correctly classified as a true manager or not. In today’s economy, employees need to determine if their employers are paying them correctly. It may not hurt if an employee is underpaid for one day. But spread across a period of four years, that amount is ultimately significant for the working person.

© Law Offices C. Joe Sayas, Jr.