Many unwary employers fall into the trap of giving an employee the title of "Manager" or "Supervisor" only to find out that in fact the employee was misclassified. One of the most common mistakes an employer can make is to assume that a job title alone makes an employee "exempt" versus being "non-exempt."
Amongst other factors, a truly exempt employee is one that is primarily engaged in exempt work, 51% of the workweek. To determine whether an employee is primarily engaged in exempt work, the employer needs to analyze the actual work performed by the employee during the workweek. Most employees who are classified as exempt customarily and regularly exercise discretion and independent judgment in their jobs. Often times employers have Office Managers or Supervisors that do some exempt work, but also do non-exempt work during the workweek. That is how serious problems can arise.
In a recent case, Heyen v. Safeway, Inc. (2013) 216 Cal.App 4th 795, an multi-tasking assistant store manager sued Safeway for wage and hour violations stemming from a misclassification as an exempt employee.
Heyen worked for Safeway as an assistant store manager. The jury found that Safeway improperly classified her, and the Court entered judgment in her favor. The Court of Appeal affirmed, holding that the trial court properly found that time during which Heyen was performing both exempt and non-exempt tasks - for example, when she was both running a cash register and simultaneously managing the front end of the store, including instructing and coaching other employees - should count as non-exempt time for purposes of determining whether she was "primarily engaged in duties which meet the test of the exemption." The Court drew four general principles from the applicable Wage Order and the federal regulations incorporated therein:
1) Work of the same kind performed by a supervisor's non-exempt employees generally is "non-exempt," even when that work is performed by the supervisor. If such work takes up a large part of a supervisor's time, the supervisor likely is a "non-exempt" employee.
2) The regulations do not recognize "hybrid" activities-i.e., activities that have both "exempt" and "non-exempt" aspects. Rather, the regulations require that each discrete task be separately classified as either "exempt" or "non-exempt."
3) Identical tasks may be "exempt" or "non-exempt" based on the purpose they serve within the organization or department. Understanding the manager's purpose in engaging in such tasks, or a task's role in the work of the organization, is critical to the task's proper categorization. A task performed because it is "helpful in supervising the employees or contributes to the smooth functioning of the department" is exempt, even though the identical task performed for a different, non-managerial reason would be non-exempt.
4) In a large retail establishment where the replenishing of stocks of merchandise on the sales floor "is customarily assigned to a non-exempt employee, the performance of such work by the manager or buyer of the department is non-exempt." Similarly, in such a large retail establishment, a manager's participation in making sales to customers is non-exempt, unless the sales are made for "supervisory training or demonstration purposes."
The take-away from this important case is that employers must look at each individual manager or supervisor's job duties on a case-by-case basis. One of the best tools to undertake this analysis is creation of a Job Description for the role. Make sure all of the job duties are outlined in the Job Description. If the majority of the tasks appear to be non-exempt duties, then err on the side of caution and ensure that the employee is classified as non-exempt.
If you have any questions about classification of exempt employees, feel free to call or email Allyson K. Thompson, whose specializes in this type of analysis.
Allyson K. Thompson is an Associate with Kring & Chung, LLP's Irvine, CA office. She can be reached at (949) 261-7700 or email@example.com.