Employers most commonly assert the "Executive Exemption" as their legal defense in overtime cases. For an employee to qualify as exempt under the "executive exemption," the employer must prove ALL of the following about the employee:
The employee's duties involve actual management of an enterprise or recognized department of a business.
The employee spends over half of his or her weekly work time engaged in actual exempt work. What constitutes "exempt" and "non-exempt" executive work is discussed in the "What You Should Know" section below.
The employee directs the work of two or more other employees (or the equivalent of 80 hours a week of subordinate time).
The employee can hire or fire other employees, or make recommendations (which are actually given weight by the employer) on hiring, firing, or promotion of other employees.
The employee customarily and regularly exercises discretion and independent judgment on the job.
The employee must be full-time and salaried. The monthly salary must be twice California's minimum wage for full-time employment, currently $8.00 per hour as of January 1, 2010.
If the employer cannot prove all of the above elements, the employee is "non-exempt" under the executive exemption and should be paid overtime.
Sometimes the executive exemption is called the “supervisors exemption.” This is incorrect as many supervisors are entitled to overtime. Another myth has to do with supervising 2 people. Even if an employee supervised two people, it is highly unlikely that they would supervise them over 50% of the time and would therefore, likely be entitled to overtime pay. Also, many employees misclassified under the executive exemption actually are not in charge of a real department or subdivision of an enterprise. The DLSE clearly states that the “employee must be in charge of the unit, not simply participate in the management of the unit.” This is why most low and mid managers and team leads are entitled to overtime pay.
To meet the final requirement for an employee to be exempt, he or she must be able to do the following: hire or fire, AND review the performance of others. It is not necessary to actually perform the hiring or firing, but an opinion must be given strong preference. If a voting system is used, and the purported exempt employee only gets one vote like everyone else, then that opinion is not being given strong preference and that employee may not be exempt. To be exempt, an employee does not need to both hire and fire, participating in either one will be sufficient. However, that employee must take part in performance reviews or other activities which relate to the advancement of employees.
If you feel you may be improperly classified as executive exempt, and could be entitled to overtime compensation, it is wise to have a California labor law attorney review your situation.
