Managerial Purpose Determines Whether A Tasks Is Exempt from Overtime -- Heyen v. Safeway, Inc.

Despite the view of many employers, the legal duty to pay overtime cannot be avoided by simply giving an employee a managerial title and paying him a salary. Rather, employees working in "white collar" positions must still receive overtime pay unless they are "primarily engaged" in executive, professional, or administrative activities.

This generally involves a three-part analysis: (1) The activities of the job are identified; (2) The activities are defined as either "exempt" or "non-exempt" based on the standards set forth in the Wage Orders and incorporated regulations; and (3) The hours actually spent by the employee on each activity are counted up and compared.  If the number of hours spent on "exempt" tasks is less than 50% of the total, the employee is entitled to overtime pay.

Performing this analysis is a lot harder than describing it.  But in Heyen  v. Safeway, Inc., the California Court of Appeal has provided some potentially useful guidance for performing step #2, above -- i.e., sorting particular activities between the "exempt" and "non-exempt" sides of the ledger.

One point of clarification is that there is no such thing as "hybrid" or "multi-tasking" activities during which an employee can be "managing" at the same time he is also performing non-exempt production work.  For example, in the context of a retail business, the employer cannot claim that a supervisor who is stocking the shelves or running a cash register is simultaneously "managing" because he is "keeping an eye" on his subordinates at the same time.

Rather, the Heyen Court held that the test for categorizing each activity is not what work is being performed but rather the reason it is being performed.    As the Court explained:

As we have said, the federal regulations cited in Wage Order 7 expressly recognize that managers sometimes engage in tasks that do not involve the “actual management of the department [or] the supervision of the employees therein.” (§ 541.108(a).) In those circumstances, the regulations do not say, as Safeway would have us hold, that those tasks should be considered “exempt” so long as the manager continues to supervise while performing them. Instead, the regulations look to the supervisor's reason or purpose for undertaking the task. If a task is performed because it is “helpful in supervising the employees or contribute[s] to the smooth functioning of the department for which [the supervisors] are responsible” (§ 541.108(a), (c)), the work is exempt; if not, it is nonexempt.

Thus, if a supervisor operates a cash register to show a trainee how it is done he is performing an exempt activity.  If he performs the identical task because the store is short staffed and he is the only one available to do the job he is performing a non-exempt activity.    

This clarification should tend to favor employees in most cases, as the occasions when a manager needs to perform "grunt work" for a truly managerial purpose are going to be few and far between in practice. 



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