California: Clarification on Defining Exempt Managerial Duties

APPLIES TO

All Employers with CA Employees

EFFECTIVE

December 18, 2019

QUESTIONS?

Contact HR On-Call

(888) 378-2456

In The Safeway Wage and Hour Cases, the California Court of Appeal revisited how to determine whether a manager’s duties qualify as exempt or nonexempt. Generally, the court identified two types of work that each qualify as exempt from overtime.

  • A manager must spend more than one-half the employee’s work time performing typical managerial and supervisory functions (as specified under the Fair Labor Standards Act (FLSA)); or
  • A manager must perform work that is “directly and closely related” to the management of a department and the supervision of employees, which includes “activities which are closely associated with the performance of the duties involved in such managerial and supervisory functions or responsibilities.”

The “directly and closely related” test must be reviewed based on the purpose for undertaking the task. There, the court clarified that the purpose of work performed by a manager was irrelevant to determining how much time a manager spent on tasks unrelated to management, thereby distinguishing the components of the two types of work that qualify for exempt status.

Further, the court said that a task does not qualify as exempt work just “because it is helpful in supervising employees in the store or because it contributes to the smooth functioning of the store ….” Rather, there are relevant limiting principles that must be considered. For example, the work must be “different from the work performed by subordinates”; while it may be seemingly identical to tasks performed by the manager’s subordinates, it must serve a different function, directly and closely related to the management and supervision of the business. If work that is not inherently managerial “takes up a large part of the employee’s time,” it is evidence that this work “is a production operation rather than a function directly and closely related to the supervisory or managerial duties.”

Although the case involved workers covered by Wage Order 7, the court interpreted the federal regulations that generally apply to California wage orders. Employers should review this case with legal counsel to see how it may impact them.

Action Items

  1. Have employee overtime exempt classifications reviewed in connection with this ruling.
  2. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2020 ManagEase

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *