To be properly classified as a "manager," you must meet certain criteria set forth in the Executive Exemption to overtime pay. Generally, a manager must meet the following criteria:
· A manager must be paid a salary which is equivalent to at least two times the state minimum hourly wage for full-time employment;
· A manager must be involved in the management of a business, or the management of a department or smaller division within a business;
· A manager must customarily direct the work of two or more employees;
· A manager must have authority to hire, fire or promote or recommend the same;
· A manager must be able to customarily exercise his/her discretion in performing his/her duties;
· A manager must spend more than 50% of his/her time essentially performing managerial or supervisory duties.
California law requires that employers pay non-exempt employees overtime pay for hours worked over the standard number of hours. Employees are entitled to overtime compensation, regardless of whether they are paid salary or hourly, if more than 50% of their time is devoted to duties termed as "non-managerial duties". Such non-managerial duties include, but are not limited to: lifting, handling and unloading merchandise or stock; setting up and shelving stock; cleaning merchandise; cleaning the store; waiting on and selling to customers; working the cash register; inputting data into the computer information system; and other similar duties. Employees are considered to be overtime exempt only if the employer can prove the employee spent more than 50% of his or her work time engaged in activities like managing, directing, supervising, training and delegating work to subordinate employees.
If an employee is classified as a manager, but does not meet the above criteria, they may be misclassified, entitling them to overtime pay for time worked in excess of eight hours per day or forty hours per week during the last four years. Managers are not the only category of salaried employees who can be misclassified. There are several other employment categories that carry with them their own criteria for purposes of determining whether overtime pay is required. Often times, even properly classified employees lose their exempt status as a result of certain actions by employers. This, too, may entitle these employees to overtime pay. For instance, a company that takes deductions from salary for time off caused by the employer or for time off due to slow periods, risks the loss of exempt status to those employees. As another example, under certain circumstances, deductions taken for personal or sick time may also compromise the validity of an employee's exempt status.
There are many different mistakes an employer can make that would compromise exempt status; entitling salaried employees to overtime pay. Many times, overtime claims due to misclassification result in class actions.