According to the Division of Labor Standards Enforcement Glossary, the Executive Exemption covers employees who work as managers and meet the following requirements:
- They must oversee the work of at least two employees at their workplace.
- They must have control over the hiring, promotion, and termination of these employees.
- They must ordinarily and frequently operate using “discretion and independent judgment”.
- For full-time employment, they must earn at least two times the current minimum wage on a monthly basis.
Ultimately, if an employee does not meet all of these requirements, they should be automatically classified as non-exempt and entitled to overtime pay and other related benefits.
In the United States, there are a lot of national retailers that have misclassified their employees under the Executive Exemption. Recently, one major retailer was accused of misclassifying their “Store Managers” as exempt employees.
These employees have claimed that they mostly complete rudimentary tasks on a day-to-day basis as Store Managers. Some of their non-executive and non-exempt tasks include working as cashiers, addressing customer service complaints, stocking inventory, and cleaning.
Even though these employees are currently considered exempt under the Executive Exemption, they claim that they do not meet all of the necessary requirements. For more information on the Executive Exemption requirements, visit http://www.dir.ca.gov/dlse/glossary.asp.
Why are managers often misclassified?
Even though the Executive Exemption pertains to managerial employees, that does not mean that all managers are automatically eligible under it. Managers are only eligible if their position meets all of the Executive Exemption requirements. Therefore, it is important to note that having the word “manager” in your job title does not determine your status of being either an exempt or a non-exempt employee. Your roles and responsibilities determine your status.
Ultimately, employers need to be extremely diligent when classifying their employees. If they are classifying employees under the Executive Exemption, it is critical for them to make sure that they are precisely following all of the criteria.
Unfortunately, multitudes of companies misclassify their employees both deliberately and undeliberately. As a general rule, the larger the company, the more likely it will contain misclassified employees. This explains why most misclassification cases are class action lawsuits.
As an employee, it is often your responsibility to ensure that you are receiving the pay that you deserve. If you are considered an exempt employee but do not meet all of the requirements, you should contact an employment lawyer to see if you have a case to obtain the necessary back pay.