PAMELA Ruben-Knudsen and Marnine Casillas were employed as Client Service Managers by Arthur J. Gallagher and Co., a brokerage firm. Client service managers are salaried and considered exempt from overtime. However, their primary task is to coordinate between producers, clients and insurers to process insurance applications and renewals.
Pamela and Marnine do not manage or supervise other employees. They have no authority to exercise their discretion or independent judgment. They regularly perform clerical tasks according to specific instructions.
The employer also had a uniform policy requiring Client service managers to regularly work more than eight hours per day or more than forty hours per week to complete their assigned tasks, which normally could not be completed in a forty-hour work week.
Pamela and Marnine sued Arthur J. Gallagher and Co. in a class action alleging misclassification in violation of California law. The employees also alleged that the employer failed to provide them off-duty meal breaks or accurate wage statements showing the total hours worked and the gross wages earned.
Under California law, employees are entitled to overtime pay for any work in excess of eight hours in one workday, or 40 hours in any one workweek, unless the employee qualifies for a legal exemption. This means if the employee is properly exempt, they are not entitled to overtime pay or meal periods. To be correctly exempt, the employee must fall under one of these exemptions:
Executive Exemption
For executive exemption to apply, an employee must be: (1) paid at least twice the state’s minimum wage for full time employment; (2) assigned as primary function the management of the business; (3) responsible for regularly directing the work of 2 or more subordinates; (4) has the authority to hire, fire, give pay treatment or recommend such actions; (5) regularly and customarily exercises discretionary powers; and (6) devotes less than 50% of work time to non-managerial duties.
Administrative Exemption
To fall under the administrative exemption, an employee must be: (1) paid at least twice the state’s minimum wage for full time employment; (2) charged with the performance of office or non-manual work directly related to management policies or general business operations; (3) regularly exercises discretionary and independent judgment; (4) regularly assists a proprietor or an executive or administrative employee; and (5) works only under general supervision on special or technical assignments and tasks.
Even if the employee performs both managerial and non-managerial tasks, California courts have ruled that employers must classify each task as either exempt or non-exempt. If non-exempt work takes up a large part of a supervisor’s time, the supervisor likely is a “nonexempt” employee, and is entitled to overtime pay.
Tasks may be “exempt” or “nonexempt” based on the purpose they serve within the organization. For example, in a large retail establishment where the replenishing of stocks of merchandise on the sales floor is customarily assigned to a nonexempt employee, the performance of such work by the manager is nonexempt. Similarly, a manager’s participation in making sales to customers is nonexempt, unless the sales are made for supervisory training or demonstration purposes.
To resolve the case, the brokerage firm has agreed to pay $8 million to its client service managers.
Managers, supervisors, and administrators who receive monthly salaries and are not paid overtime should evaluate the nature of their jobs. Being misclassified as exempt results in loss of money to the employee. If employees mostly perform non-executive and non-managerial work, they should be paid overtime, no matter how fancy their titles are.
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The opinions, beliefs and viewpoints expressed by the author do not necessarily reflect the opinions, beliefs and viewpoints of the Asian Journal, its management, editorial board and staff.
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The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no-cost. You can contact the office at (818) 291-0088 or visit www.joesayaslaw.com. [For more than 25 years, C. Joe Sayas, Jr., Esq. successfully recovered wages and other monetary damages for thousands of employees and consumers. He was named Top Labor & Employment Attorney in California by the Daily Journal, consistently selected as Super Lawyer by the Los Angeles Magazine, and is a past Presidential Awardee for Outstanding Filipino Overseas.]
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