MANAGERS/SUPERVISORS

DON’T LET THE TITLE FOOL YOU!

This page provides general information on the exemption from overtime pay for managers, assistant managers and supervisors.

California law requires that most employees in California be paid at least minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 8 hours in a day or 40 hours in a workweek.

However, the IWC Wage Orders provide an exemption from overtime pay for managers, assistant managers and supervisors who meet certain tests regarding their job duties and who are paid a salary of at least $640 per week, which is equivalent to $2,773.33 per month or $33,280 per year.

Job titles do not determine exempt status. In order for the exemption to apply, an employee’s specific job duties and compensation must meet all the requirements summarized below.

• The employee must be paid at least a salary of $640 per week.
  • The employee should not have any reduction in salary for variations in quality or quantity of work
  • The employee should not have any reduction in salary for Partial day absences.
• The employee’s “primary duty” must be the management of the enterprise in which you work or a customarily recognized department or subdivision.
  • The term " primary duty " means the most important duty
  • California requires that at least 50% of an employees working hours be spent in duties which are classified as exempt
  • Management duties that satisfy the test for executive employees:
    • Interviewing, selecting, and training employees
    • Setting and adjusting pay and work hours
    • Maintaining production or sales records
    • Appraising employee productivity and efficiency
    • Handling employee complaints and grievances
    • Disciplining employees
    • Planning and apportioning work among employees
• The employee must customarily and regularly and supervise the work of at least two or more subordinates in his or her department.
  • The two subordinates must be full time or the equivalent of two full time employees (i.e. one full time and two part time employees)
• The employee must have authority to hire or fire other employees or the employee’s suggestions or recommendations regarding hiring or firing must be given particular weight.
  • The employee need not to be the one that actually performs the hiring or firing, but your opinion must be given strong preference.
  • The employee must also take part in performance reviews or other activities which relate to the advancement of employees.
• The employee must customarily and regularly exercise independent business judgment.
  • The employee has to evaluate possible alternatives and choose or recommend (and the recommendation is given weight) a course of action. The choice has to be made free from immediate supervision and in regard to important matters of a business. However, employees can exercise discretion and independent judgment even if their decisions or recommendations are reviewed at a higher level.
  • Work that is routine that has no discretion does not qualify. Employees who merely use knowledge or follow procedures do not use discretion and independent judgment.
  • The employee’s decisions may consist of recommendations for action rather than actually taking action. The fact that an employee’s decision may be subject to review, and upon occasion decisions are revised or reversed after review, does not mean that the employee is not exercising discretion and independent judgment.
  • Discretion and independent judgment also does not include clerical or secretarial work, recording or tabulating data, or performing other mechanical, repetitive, recurrent or routine work. An employee does not exercise discretion and independent judgment as to matters of significance merely because the employer will experience financial losses if the employee fails to perform the job properly.

DID YOU KNOW:

• Keeping basic records of working time, as performed by a timekeeper and in such cases in non exempt. However, if the business is not large enough to hire a timekeeper, the supervisor of each department keeps the basic records of his own subordinates. Then the timekeeping is directly related to the function of managing the particular department and supervising its employees.
• Preparation of payroll by a supervisor is not exempt
• The keeping by a supervisor of production or sales records of his own subordinates for use in supervision or control would be exempt work.
• The maintenance of production or sales records of employees not under his direction would not be exempt.

For more information about Managers see Opinion Letters from the California Division of Labor Standards Enforcement:

If you are an executive employee, but feel your position has been misclassified to avoid overtime pay, please call our office at (310) 277-2323 or contact us online for a free consultation

QUICK CONTACT

Full Name  Email  Phone  Question Submit

NEWSLETTER

INFORMATION ON DISABILITY DISCRIMINATION COMPENSATATION FOR ON-CALL WORK ELIGIBILITY FOR UNEMPLOYMENT INSURANCE HOW TO CALCULATE OVERTIME PENALTIES FOR MINIMUM WAGE VIOLATIONS