The Two Full-Time Employee Requirement for the Managerial Exemption

Shavitz Law Group


Did you know that managers may be non-exempt and entitled to overtime even if they are salaried and even if they are actually performing managerial duties? One common misconception about the FLSA is that any employee in a managerial role is automatically exempt from receiving overtime pay if they are salaried and performing managerial duties. However, this is not always the case, especially when it comes to supervising a limited number of employees.

When a manager carries out essential managerial duties but only supervises a small team, they may not meet the criteria for exemption from overtime pay. The determination of exempt status hinges on factors beyond job titles including the number of employees supervised.  A manager must supervise two full-time employees or the equivalent  to be exempt. That means two full-time employees each working 40 hours per week. It can also mean four part-time employees each working 20 hours per week. The determining factor is whether the manager is supervising 80 hours of labor per week. Thus, if a store is lightly staffed, then the manager may be misclassified as exempt – again, even if the manager is salaried and performing managerial duties..

For example:

Consider a boutique named “Chic Haven,” specializing in unique and handcrafted fashion accessories. This small store operates with a manager and a single sales associate.

The manager, Alex, is responsible for overseeing the day-to-day operations of the boutique. The duties encompass various managerial tasks such as inventory management, hiring and firing, scheduling , and financial reporting.

The “Chic Haven” manager and sales associate exemplify a scenario where the store operates with a small team, consisting of only one manager and one employee. In this case, while Alex is certainly carrying out managerial duties and exercising decision-making authority, the limited number of employees being supervised—only one—means that Alex is actually a non-exempt employee entitled to overtime.


In conclusion, being called a manager does not automatically equate to being exempt from overtime pay. When a manager’s scope of responsibility involves limited employee supervision such that the manager is not supervising two or more full-time employees or the equivalent (that is, 80 hours of labor) per week, they may be entitled to overtime compensation.

If you have questions regarding overtime, please contact Shavitz Law Group at [email protected].

Under the Fair Labor Standards Act (FLSA), the exemption for managerial positions depends on various factors, including the salary test, duties test, and the requirement that the alleged manager must supervise two or more full-time employees “customarily” and “regularly.” This blog will focus on the importance of meeting the “customarily and regularly” criterion and its implications for employees classified at exempt managers.

The “customarily and regularly” requirement means that the supervisory duties must be a regular and frequent part of the job, not just occasional or temporary. If, for example, an alleged manager only supervises two or more full-time employees on rare occasions or for brief periods, they might not meet this criterion and thus not qualify for the manager exemption. Importantly, in instances where an employee does not meet the “customarily and regularly” requirement, the employee likely is entitled to overtime for the hours worked over 40 in a work week.

What exactly is ”customary and regular”? Courts have held that if an alleged manager supervises two or more full-time employees 67% of the time, or even as high as 76% of the time, then that is not sufficient frequent for it to be “customary and regular” and the exemption may not apply. Rather, the law indicates that the percentage of time the alleged manager is supervising must be much higher.

Let’s compare two examples to better understand the significance of meeting this requirement:

1. Assistant Manager Smith is classified as an exempt manager; however, Smith only supervises two or more full-time employees twice a year, specifically when the Store Manager goes on vacation. Smith likely would be found to be non-exempt and entitled to overtime because two weeks of supervising two or more full-time employees is not “customary and regular.” 

2. Assistant Manager Jones is classified as an exempt manager and supervises two or more full-time employees every week, except when Jones is attending company training out of town. Jones would likely be found exempt (assuming all of the other criteria are met) and not be entitled to overtime because supervising two or more full-time employees all but two weeks out of the year is customary and regular.

The distinction between these examples is critical. Assistant Manager Jones qualifies for the manager exemption because Jones consistently perform supervisory duties regularly (every week), meeting the “customarily and regularly” requirement. On the other hand, Assistant Manager Smith’s supervisory responsibilities are infrequent and limited to a few specific occasions, making Smith likely ineligible for the exemption and therefore entitled to overtime.

If you have questions regarding overtime or your employment, please contact Shavitz Law Group at [email protected].

Understanding the “Customarily and Regularly” Requirement for the Managerial Exemption under FLSA

Shavitz Law Group

Under the Fair Labor Standards Act (FLSA), the exemption for managerial positions depends on various factors, including the salary test, duties test, and the requirement that the alleged manager must supervise two or more full-time employees “customarily” and “regularly.” This blog will focus on the importance of meeting the “customarily and regularly” criterion and its implications for employees classified at exempt managers.

The “customarily and regularly” requirement means that the supervisory duties must be a regular and frequent part of the job, not just occasional or temporary. If, for example, an alleged manager only supervises two or more full-time employees on rare occasions or for brief periods, they might not meet this criterion and thus not qualify for the manager exemption. Importantly, in instances where an employee does not meet the “customarily and regularly” requirement, the employee likely is entitled to overtime for the hours worked over 40 in a work week.

What exactly is ”customary and regular”? Courts have held that if an alleged manager supervises two or more full-time employees 67% of the time, or even as high as 76% of the time, then that is not sufficient frequent for it to be “customary and regular” and the exemption may not apply. Rather, the law indicates that the percentage of time the alleged manager is supervising must be much higher.

Let’s compare two examples to better understand the significance of meeting this requirement:

1. Assistant Manager Smith is classified as an exempt manager; however, Smith only supervises two or more full-time employees twice a year, specifically when the Store Manager goes on vacation. Smith likely would be found to be non-exempt and entitled to overtime because two weeks of supervising two or more full-time employees is not “customary and regular.” 

2. Assistant Manager Jones is classified as an exempt manager and supervises two or more full-time employees every week, except when Jones is attending company training out of town. Jones would likely be found exempt (assuming all of the other criteria are met) and not be entitled to overtime because supervising two or more full-time employees all but two weeks out of the year is customary and regular.

The distinction between these examples is critical. Assistant Manager Jones qualifies for the manager exemption because Jones consistently perform supervisory duties regularly (every week), meeting the “customarily and regularly” requirement. On the other hand, Assistant Manager Smith’s supervisory responsibilities are infrequent and limited to a few specific occasions, making Smith likely ineligible for the exemption and therefore entitled to overtime.

If you have questions regarding overtime or your employment, please contact Shavitz Law Group at [email protected].

Overtime for Drive Time?

Compensable drive time refers to the hours that an employee is entitled to be paid for when traveling between work-related locations, while non-compensable drive time generally encompasses regular commuting and personal errands. The distinction is important because if the drive time causes an employee to work over 40 hours in a work week, then the employee is entitled to overtime if the drive-time is compensable. Thus, an employee’s entitlement to overtime depends on the compensability of the travel, which in turn depends on many factors.

Some specific situations deal with the compensability of pre-shift travel, including:

  1. Employee drives to work in their personal vehicle, load supplies into the company vehicle, and drives to the company worksite:

The time spent loading the company vehicle and driving to the company worksite is compensable, but the drive to the employer’s business is not.

  1. Employee drives to work in their personal vehicle and drives the company vehicle to the worksite:

The drive to the worksite may or may not be compensable, depending on the employer’s requirements and depends on whether the drive is primarily for the employer’s benefit. The drive to the employer’s business in the personal vehicle is not compensable.

  1. Employee drives to work in their personal vehicle, loads supplies in the company vehicle, and is a passenger in the company vehicle while the supplies are driven to the worksite:

The passenger’s time travelling to the worksite would be compensable only if found to be an indispensable part of the job and/or the travel time primarily was for the employer’s benefit. The drive to the employer’s business in the personal vehicle is not compensable.

More generally, drive time is compensable when the travel is directly related to the employee’s job responsibilities and is during their regular work hours. Examples of compensable drive time include: 

  1. Worksite-to-Worksite Travel: When an employer requires an employee to travel from one worksite to another during their regular work hours, such as a technician visiting multiple client locations in a single workday. 
  1. Client Visits: If an employee needs to travel to a client’s location for a meeting, service, or delivery as part of their job responsibilities. 
  1. Off-Site Meetings and Training Sessions: When employees are required to attend conferences, training sessions, or other work-related events held at a location other than their usual workplace. 
  1. Special Assignments: If an employee who normally works at one location is temporarily assigned to work at a different location for a specific project or task. 

Drive time is generally not compensable where the time employees spend traveling between locations does not directly relate to their job responsibilities. Examples of non-compensable drive time include: 

  1. Regular Commuting Time: The time employees spend traveling between their home and their regular workplace is generally not compensable. This includes their daily commute to and from work. 
  1. Personal Errands During Commute: If an employee chooses to run personal errands during their commute, such as stopping at the grocery store or dropping off their children at school, this time is not compensable. 
  1. Personal Travel Outside of Work Hours: Any travel done by employees for personal reasons outside of their scheduled work hours, even if they are away from their regular workplace, is not considered compensable drive time. 
  1. Commuting Between Home and a Temporary Worksite: If an employee’s regular workplace is temporarily relocated to a different location, the time spent commuting between their home and the temporary worksite is usually not compensable. 

If you have questions regarding the compensability of drive time or any other overtime questions, please contact Shavitz Law Group at [email protected].

Overtime Applies to Hours Worked During Training

If an employer requires you to attend training for your new job or a new position, you must be paid overtime for all of the hours you work over 40 in a work week during your training period. 

Training claims can be broken down into two categories:

(1) employees who will be exempt once they complete training and start working in the position they trained for (these are salaried employees); and 

(2) employees who will be non-exempt once they complete training and start working in the position they trained for (these are usually hourly employees). 

For exempt employees (category #1 above), if you are paid a salary and train for more than 40 hours in a workweek, you are entitled to be paid for the overtime hours worked during each week of training.

Example

  • Company ABC hires you as an Outside Sales Representative with a salary of $1,000/week or commission based. Company ABC requires that you complete its three-week training course before you start working as an Outside Sales Representative. During the first week of training, you work 45 hours attending classes, reviewing modules, and studying for the tests the Company requires you to pass. You are entitled to five (5) hours of overtime, even though you will be an exempt employee once you start working as an Outside Sales Representative following training. 

For non-exempt employees (category # 2 above), if you are paid by the hour during training but are not paid for allof the hours you trained, you are entitled to be paid overtime for the hours over 40 you worked during each week of training.

Example:

  • Company XYZ hires you as an hourly Customer Service Representative at $15/hour. Company XYZ requires that you complete its three-week training course before you start working as a Customer Service Representative. During the first week of training, you work 45 hours attending classes, reviewing modules, and studying for the tests the Company requires you to pass. However, the company only pays you for 40 hours. You are entitled to five (5) hours of overtime, even if you performed some of the overtime work — such as reviewing materials and studying —  after work hours or at home.

In both examples, the employee is entitled to overtime because employees are generally entitled to be paid for all overtime they worked while in training, even if that work occurs after business hours or away from the office. 

Bottom line:

If you worked more than 40 hours per week while in training for your job, then you are entitled to overtime for all hours worked over 40 each week of training, regardless of whether you ultimately will be overtime-eligible once you complete training and start working in the position for which you trained. If you would like to learn whether you have a claim for unpaid overtime, contact Shavitz Law Group at [email protected].

Were you Misclassified by Nike as a Temporary Office Workers?

Shavitz Law Group

As recently reported by The Guardian, the iconic sneaker brand Nike may be liable for over $530 million dollars in taxes and fines for misclassifying its temporary office workers as independent contractors. Nike’s purported misclassification of temporary office workers includes – but is not limited to — people hired by Nike to do business consulting, T-shirt graphics, photography and event planning.

In addition to avoiding taxes, companies like Nike may classify workers as independent contractors to evade billions in overtime, paid time off, restricted stock options, retirement plan contributions and healthcare. Thus, a finding that temporary office workers are actually employees and not independent contractors raises a separate and equally important issue: did Nike pay these temporary office workers overtime wages for the hours they worked over 40 in a work week? The answer to the question undoubtedly is “no.” Because it classified these temporary office workers as independent contractors, then Nike could use that independent contractor classification to wrongfully withhold overtime wages and benefits.

According to The Guardian, a report on Nike’s classification of temporary office workers warns “Employers who are found to have misclassified workers as freelancers are also potentially liable for other potential costs,” including unpaid overtime, among other things. In addition, the report also notes that Nike could be subject to class-action lawsuits for unpaid overtime and other benefits.

Shavitz Law Group handles lawsuits where companies misclassify workers as independent contractors. If Nike – or another company – misclassified you or someone you know as an independent contractor contact Shavitz Law Group to learn more about your legal rights.

Equal Pay for Equal Work? Know Your Rights.

It may be hard to believe, but in 2022, women in the United States made only 78 cents, on average, for every dollar paid to their male counterparts. That actually is a drop from 80 cents, which was the average for a number of preceding years. This gender pay gap is even worse when comparing Black and Hispanic female workers to their white male colleagues (69.5 cents and 64.1 cents, respectively).

These stark discrepancies produce staggering financial inequalities over time. Moreover, these differences in pay persist at all levels of education and economic background. That is, women are earning less than men in every sector of the job market, from hourly fast-food workers to high-powered financial analysts.

Female employees have the law on their side. The Equal Pay Act (EPA) is designed to address pay disparities between men and women who performed similar work. The EPA requires “equal pay for equal work.” The EPA covers all elements of an employee’s compensation, including base salary, overtime, bonuses, stock options, profit sharing, and benefits.

The first step to bringing EPA claims is demonstrating the discrepancy between the pay for women and men performing the same work. Fortunately, many state laws and local ordinances require pay transparency. As of early 2023, these states have enacted legislation addressing salary range disclosures: California, Connecticut, Maryland, Nevada, New York, Rhode Island, and Washington. In addition, some Ohio, New York, and New Jersey localities have also enacted similar legislation. While these laws may vary in their details, they generally all require employers to disclose wage rates and salary ranges upon request by a job candidate or employee. If you are not in an area that requires pay transparency and believe that you are earning less than your male co-workers performing the same work, then you might simply ask the male colleagues who you trust to share this information with you. And, if you cannot confirm but have a well-founded belief that your pay is unequal, an attorney can help investigate potential EPA claims.

Once the discrepancy in pay can be established, much of EPA litigation focuses on the equal work element: how does an employee establish that she performed the same job as a man? Under the EPA, “equal work” means jobs that require equal skill, effort, and responsibility and that are performed under similar working conditions (and in the same type of work location). The jobs do not have to be identical, but they must be substantially equal. It is the content and duties of the job, not the job title or the employer’s job description, that controls.

An employee who succeeds on an EPA claim is entitled to her lost wages (meaning the difference between her pay and that of her male co-workers) for the two- or three-year statute of limitations period. If her employer cannot establish that it acted in good faith (meaning that it had reasonable grounds for believing that it was not violating the law), she will receive liquidated (i.e., double) damages in an amount equal to the lost wages. The EPA also requires the employer to pay the successful employee’s attorney’s fees, which drives many of these cases. Importantly, the EPA allows female workers to bring a suit collectively in a class action.

At Shavitz Law Group, we stand up for the rights of our clients by ensuring that their voices are heard. If you believe you may be a victim of pay discrimination, call us today at (800) 616-4000.

Engineers: Don’t Let the Title Fool You

Engineers: Don’t Let the Title Fool You

Don’t assume because your title includes “engineer” — or even if you have a degree in engineering – that you are not entitled to overtime for all of those long hours you work.  Engineering is a vast field and encompasses many positions, some of which are overtime-eligible. 

If you are a “level one” or “entry level” engineer, your job may not require you to use the type of specialized engineering skills which would exempt you from overtime.  For example, if your job entails primarily assisting a lead engineer on a project, or fielding questions from in-house or from clients or customers, or if you are usually doing CAD, then you may be entitled to overtime regardless of your engineering title. 

Similarly, if you have a degree in engineering but your job duties do not require you to use the advanced knowledge associated with that degree, then you also may be entitled to overtime.  By way of illustration, if you are a Professional Engineer but your job does not require you to use that skill set or your PE license, then you may be overtime eligible. 

And, if you are an engineer who happens to be classified as non-exempt (eligible for overtime), then you are entitled to overtime for all of your hours worked – including those hours worked “off-the-clock” (i.e., unreported), whether at the office, in the field, or at home.

As you can see, there are a variety of scenarios where engineers may be entitled to overtime.  If you are uncertain of your status, give us a call so we can evaluate your situation based upon your duties and job requirements. 

Employers Rethink Mandatory Arbitration

Mandatory Arbitration

Mandatory Arbitration

Recently, there has been an important trend in employment law: some employers are no longer requiring there employees to agree to mandatory arbitration. This change has several important benefits for employees. One, employees get to bring their cases in court, where they have the right to a jury (this is not the case in arbitration). Two, most arbitration agreements contain a class waiver, which means that employees have to bring their claims in arbitration individually and cannot sue their employer in a class or collective action. In court, employees can pool their resources and seek relief as a group in a class or collective action.

There are a few takeaways here:

• If employees already have signed arbitration agreements, they should check with their employer to see if the agreements are still in effect.
• If an employer is still using and enforcing arbitration agreements, employees can still challenge their validity and enforceability.
• If the employer’s arbitration agreement is valid and enforceable, employees can still pursue their claims in arbitration. Even if there is a class waiver, employers sometimes will not enforce it if faced with multiple individual claims which it must defend.

Shavitz Law Group is here to help. If you have questions about whether your employer is violating federal requirements, or if you have any other employment concerns, please do not hesitate to call us for a free consultation at (800) 616-4000, or visit us at www.shavitzlaw.com for a free, no obligation review of your circumstances and consultation regarding your rights.

YOU EARNED IT, NOW LETS GO GET IT.

Gregg Shavitz, Shavitz Law Group, 951 Yamato Rd Ste 285, Boca Raton, FL and 800 3rd Ave, Suite 2800, New York, NY. Lawyers licensed in states including FL, NY, NJ, and TX. The choice of a lawyer is an important decision and should not be based on advertisements alone.

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More Salaried “Managers” Are Eligible for Overtime

The common misconception that all salaried employees are not eligible for overtime is a hard one to overcome. Two factors determine whether a salaried manager is entitled to overtime: (1) the amount of the salary; and (2) the primary duties. Focusing on the first requirement – called the salary-basis test — several states raised the minimum threshold for a salaried employee to be eligible for overtime, effective 2021. Currently the federal minimum salary level is $35,568 annually. That means that “managers” making less than this amount satisfy the salary-basis test threshold and may be eligible for overtime, depending on their duties.

The Biden administration is seeking to raise this minimum threshold, which would affect workers nationwide. However, several states have raised the minimum threshold on their own, including Alaska, California, Colorado, Maine, New York, Pennsylvania, and Washington – all effective in 2021.
By increasing the salary for overtime-eligible employees, more workers are entitled to overtime. If you are a salaried employee making less than $35,568, or if you live in one of the states enumerated above, and believe that your duties are similar to those of the overtime-eligible, hourly employees with whom you work, please contact SLG.

Shavitz Law Group is here to help. If you have questions about whether your employer is violating federal requirements, or if you have any other employment concerns, please do not hesitate to call us for a free consultation at (800) 616-4000, or visit us at www.shavitzlaw.com for a free, no obligation review of your circumstances and consultation regarding your rights.

YOU EARNED IT, NOW LETS GO GET IT.

Gregg Shavitz, Shavitz Law Group, 951 Yamato Rd Ste 285, Boca Raton, FL and 800 3rd Ave, Suite 2800, New York, NY. Lawyers licensed in states including FL, NY, NJ, and TX. The choice of a lawyer is an important decision and should not be based on advertisements alone.

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“Sidework” by Tipped Employees = Full Minimum Wage!

Employers typically are permitted to take a “tip-credit” for tipped employees. This allows employers to pay employees who receive tips to pay less than the federal or state mandated minimum wage. However, employers cannot take advantage of the tip credit for all work performed by tipped employees.

Employers frequently require restaurant servers to spend significant time performing “sidework” instead of waiting on customers. Examples of “sidework” include: rolling silverware; washing dishes, cooking and preparing food, cutting fruit, restocking condiments, and cleaning the restaurant. Federal courts have regularly held that when servers spend more than 20% of their time performing these tasks, they should be paid the full minimum wage of $7.25/hr. for this time and not the “tipped minimum wage” of $2.13/hr. As one court explained, “an employee who spends more than twenty percent of their hours performing non-tipped, related work, can be found to have ceased to be a tipped employee and become a dual-jobs employee such that they must be paid full minimum wage for hours spent performing those duties.” Williams v. Bob Evans Rests., LLC, 2020 U.S. Dist. LEXIS 145852, at *33-34 (W.D. Pa. Aug. 13, 2020).

If you are a tipped employee who performs “sidework” 20% or more of your working time, contact SLG.

Shavitz Law Group is here to help. If you have questions about whether your employer is violating federal requirements, or if you have any other employment concerns, please do not hesitate to call us for a free consultation at (800) 616-4000, or visit us at www.shavitzlaw.com for a free, no obligation review of your circumstances and consultation regarding your rights.

YOU EARNED IT, NOW LETS GO GET IT.

Gregg Shavitz, Shavitz Law Group, 951 Yamato Rd Ste 285, Boca Raton, FL and 800 3rd Ave, Suite 2800, New York, NY. Lawyers licensed in states including FL, NY, NJ, and TX. The choice of a lawyer is an important decision and should not be based on advertisements alone.

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