As you probably recall, not so long ago, the big allegation in wage and hour class actions was that floor managers were really managers and were tainting the tip pool.
So, you took these folks out of the tip pool, started calling them Assistant Managers, began paying them a salary and beefed up their managerial duties. Now, a major source of litigation is Assistant Managers and Sous Chefs (who are often the “Assistant Managers” of the kitchen) alleging they are misclassified—are not really managers—and are entitled to overtime pay. In this no-win operating environment, restaurateurs would be well served to double check that their Assistant Managers and Sous Chefs actually pass the legal hurdles required to make them exempt managers under the law.
In order for an Assistant Manager to be classified as exempt from overtime, the employer must be able to prove that:
- The Assistant Manager’s primary duty is managerial (exempt work);
- He or she customarily and regularly directs the work of two or more other employees;
- He or she has the authority to hire or fire other employees or his or her suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees is given particular weight.
As explained in the federal regulations, managerial duties include, but are not limited to “activities such as interviewing, selecting, and training of employees; setting and adjusting their rates of pay and hours of work; directing the work of employees; maintaining production or sales records for use in supervision or control; appraising employees’ productivity and efficiency for the purpose of recommending promotions or other changes in status; handling employee complaints and grievances; disciplining employees; planning the work; determining the techniques to be used; apportioning the work among the employees; determining the type of materials, supplies, machinery, equipment or tools to be used or merchandise to be bought, stocked and sold; controlling the flow and distribution of materials or merchandise and supplies; providing for the safety and security of the employees or the property; planning and controlling the budget; and monitoring or implementing legal compliance measures.”
How do courts determine whether exempt work is the primary duty of an Assistant Manager? Factors that come into play in determining whether exempt work is the primary duty of an Assistant Manager include, but are not limited to, the relative importance of the managerial duties; the amount of time the Assistant Manager spends performing exempt work; the Assistant Manager’s relative freedom from direct supervision; and the relationship between the Assistant Manager’s salary and the wages paid to other employees for the kind of nonexempt work sometimes performed by the Assistant Manager.
As for Sous Chefs, the general rule is that a chef’s “primary duty” is not management where the individual’s duties primarily entail cooking. However, pertinent federal regulations and case law governing many locations recognize the concept of “concurrent duties”– that is, an employee who is performing managerial duties (like directing, evaluating, assigning and supervising the work of others) at the same time they are cooking, can be considered exempt. For example, a Sous Chef who supervises other employees while he cooks, exercises discretion on a daily basis, and is paid significantly more than hourly employees who work in the kitchen, should properly be considered exempt from overtime pay so long as that chef also has the authority to hire, discipline and fire.
It is of paramount importance that employers properly classify Assistant Managers depending on the actual authority entrusted to them and their earnings relative to nonexempt employees. Unfortunately, determining whether an Assistant Manager is exempt from overtime is a highly fact-intensive inquiry that is to be made on a case-by-case basis in light of the totality of the circumstances.
Employers should consider, among other things, what types of managerial duties the Assistant Manager is charged with, how frequently a manager is present when the Assistant Manager is performing his or her tasks, the frequency with which an Assistant Manager must consult with a manager or get approval from a manager in carrying out the “managerial” functions of his or her job, and whether the salary of the Assistant Manager is slightly more than, the same, or less than the compensation of the nonexempt employees performing some of the same functions as the Assistant Manager. Most importantly, if you want your Assistant Managers to be exempt, you must entrust them with the authority to hire and fire.
Employers that fail to ensure proper classification of their Assistant Managers increase the risk of costly litigation that could result in not only unpaid overtime, but also statutory penalties and attorney’s fees. For these reasons, it is prudent for employers to take the time to ensure that Assistant Managers, as well as all exempt employees, are properly classified. We are here to help and welcome your questions.