Paying Managers Overtime – What The Law Says

What does California law have to say about paying managers overtime? It has been a long, arduous journey – and continues today – with the state appearing at the forefront of the U.S. in strengthening overtime policies for employees, despite opposition from employers and the state legislature.

The daily overtime rule dates back to 1918, which requires businesses to pay extra compensation whenever an employee works more than eight hours a day. These laws were originally put into place to to prevent any safety hazards at factories caused by overwork.

There have been many twists and turns in California occupational laws since then, of course, and we will explore what employees need to know about their rights when on the job.

What are More Recent Job Overtime Laws in California?

California is no stranger to the “duties test” exemption law which is used for managerial obligations, which says an employee who manages other workers – even a few – for at least 50 percent of their shift is exempt from overtime pay.

Needless to say, a more detailed definition of a manager has erupted into debates on the floor of the California State Legislature. In 2020, in fact, the legislature answered with stronger protections for employees with the approval of a bill which allows overtime for some contract employees who were previously exempt.

App-based companies, such as Uber, Lyft, and DoorDash, fought back with a referendum to repeal the law, but it was actually ruled unconstitutional, and the California legislature will argue in defense of Proposition 22 in a state court later in 2022.

What Legally Determines an Employee to be a Manager?

First of all, California law requires an employee to be classified as a manager by more than just having the job title of “manager.” Under wage laws, it is not that simple to make this employee exempt from overtime pay and commission.

It actually depends on the employee’s job duties and how long the employee performs those duties, which needs to be 50 percent of the time. Primary managerial job duties must consistently include the following:

• Regularly overseeing the work of at least two or more employees.
• Communicating directly with leaders of the company.
• Has the authority to hire and fire an employee.
• Regularly exercising power and training with his or her discretion.
• Can sign purchase receipts.
• Can make suggestions and give input about personnel, which is then highly considered by his/her employer or supervisor.

Employees also legally qualify as a manager in California if they earn a monthly wage, which is equal to at least two times the state minimum wage for full-time employment.

If an employee is considered a manager by his or her employer and marked as exempt from overtime pay, but the employee does not follow the above duties or monthly wage, they may be eligible to file a lawsuit against the employer to relinquish their unpaid compensation.

When Managers are not Exempt from Overtime Pay

Because of the recent economic slowdown in California, many employers are cutting costs, labor force, wages, and benefits to survive, which also means that the workers left to pick up the slack could be faced with more job duties and longer shifts without an increase in pay.

Right now, however, employees in managerial positions should really take a closer look at their day-to-day duties to determine if they are actually managing others or spending the same amount of time performing the same tasks as those they manage. In other words, those who were once considered managers and exempt from overtime may now be eligible to receive overtime (time and one-half), even double time, depending on the overage of eight hours a day or 40 hours in a week.

What Do Federal Laws Say About Overtime Pay?

While the U.S. Department of Labor’s Occupational Safety & Health Administration (OSHA) does not enforce any overtime limits, it does have guidelines designed to protect worker safety and advise employers to follow, which include:

Defining the Workweek

According to the Fair Standards Labor Act, the workweek for employees in the United States is set at 40 hours in a seven-day period. After 40 hours per week, overtime (base pay plus half) is required to be paid for each hour of work. While there is no limit, federally, to the number of hours an employee can work, OSHA warns of the dangers caused by these extra hours and extra shifts, and extra days.

Symptoms Associated with Overtime

The Center for Disease Control and Prevention (CDC) and OSHA report that overtime hours worked can cause these symptoms:

• Decreased alertness
• Increased fatigue
• Increased chance of injuries
• Higher tension and anxiety
• Lower cognitive function
• Increased vulnerability to illness
• Depression

Solutions to Risks Caused by Overtime

OSHA recommends employers provide additional breaks and lunches during overtime. It is also recommended that, if overtime is necessary, the number of hours per shift should be reduced each day, and the number of days per week should be increased. Employers are encouraged to keep an eye out for fatigue and the symptoms above and to take action if employees show these signs.

How Can Managers Protect Themselves and be Paid for Overtime?

Employers benefit from classifying employees as managers because they can work long hours without the additional pay. But beware of employers who are misclassifying employees as managers; this is illegal.

An employee has a legal right to recover any overtime wages he or she is owed, along with any penalties connected to the misclassification, by filing a claim with the Division of Labor Standards Enforcement, or labor commissioner. Falsely classified employees can also file a civil lawsuit against their employer.

There is a limited amount of time to file these claims in California, so it is critical for employees to hire an attorney experienced in all of the nuances of overtime compensation claims and lawsuits to be sure they do not lose their rights to compensation and receive the wages they are owed.