The Supervision Requirement For Executive/Management Overtime Exemptions

Many employers classify employees as “exempt managerial” for overtime purposes without actually having the employees do any managing. In order to qualify as an “exempt executive employee,” an employee needs to have a number of different characteristics that, in general, require the
employee to actually manage and not just be a glorified clerk or cashier with an impressive-sounding title (like “store manager”).  One such requirement is that the employee’s primary duty must be management.  That’s a complicated topic that we’ll leave for another time.  There’s a related requirement though – To be exempt, a managerial employee must “customarily and regularly direct the work of two or more other employees,” i.e., actually manage and supervise people.

Some employers don’t bother to give their management employees anyone to actually manage or supervise.  Without that supervisory role, the employee cannot be considered an exempt executive and should be paid overtime.

“Customarily and regularly” means a frequency greater than occasional.  The two-or-more employees requirement can be met by supervising two full-time employees or their equivalent, as long as the supervisory time is eighty hours or more.  Under various circumstances less than eighty hours of employee supervision may be sufficient, but those circumstances are rare and eighty hours is the recognized standard.

Small businesses or chain convenience stores/gas stations that don’t usually have many employees onsite at a given time pose an interesting problem under the supervision test.  What if a location usually has only one manager and one employee on hand at a time?  Does the manager have to physically supervise two employees for the full eighty hours?  Or does the manager’s remote supervision or post-shift review of
employees’ work count towards the eighty hours even though the manger and the employee may not be simultaneously at the location?  The answer to that question will really depend on the circumstances of each case.  I think that, looking at the issue as a continuum, at least as far as
store managers are concerned the less time they spend actually working with and supervising employees the more likely they are to be considered nonexempt employees and thus entitled to overtime.

I can help you with any overtime law  questions that you might have.  Please feel free to contact me for a free initial consultation about employment law or labor law.


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