How to Correctly Classify and Pay Managers Who Work on the Floor
The Direct Answer: Can Managers Work on the Floor?
The short answer is yes. You can absolutely have a manager who spends time “on the floor” performing the same tasks as hourly employees. However, their pay structure and legal classification depend entirely on their primary duty.
To remain compliant with the Fair Labor Standards Act (FLSA), you must determine if the employee truly qualifies as “exempt” from overtime. If they do not meet specific federal criteria, you must pay them as non-exempt, hourly employees, regardless of their “manager” title. Classifying managers who work on the floor requires careful analysis of how they spend most of their time and the level of authority they exercise over the business.
Understanding the “Primary Duty” Rule
The Department of Labor (DOL) uses the “primary duty” test to decide if a manager is exempt from overtime. A primary duty is the principal or most important task the employee performs.
For a manager to be exempt, their primary duty must be management. Consequently, this usually means they supervise at least two full-time employees. In addition, they must have the authority to hire or fire staff. Furthermore, they must regularly exercise discretionary power.
If a manager spends 90% of their shift flipping burgers or folding clothes, the DOL may view “the floor” as their primary duty. Therefore, they would be entitled to overtime pay. However, the law does not use a strict clock-watching percentage. Instead, it looks at the character of the job as a whole.
The Three Tests for Exempt Status
To classify a manager as exempt (meaning they do not get overtime), they must pass three specific tests:
- The Salary Basis Test: You must pay them a predetermined, fixed salary that does not change based on the quality or quantity of work.
- The Salary Level Test: They must earn at least the federal (and state) minimum salary threshold. Currently, federal law requires at least $844 per week ($43,888 annually), with the minimum increasing to $1,128 per week ($58,656 annually) on January 1, 2025.
- The Duties Test: Their main job must involve managing the enterprise or a department.
When Managers Perform “Non-Exempt” Work
In the SMB world, “all hands on deck” is a common mantra. Managers often jump in during a rush. This is perfectly legal. Nevertheless, the management aspect must remain the priority.
For example, a restaurant manager might seat guests for two hours. Meanwhile, they are still responsible for the kitchen’s output. They are also monitoring labor costs and handling customer complaints. In this scenario, management remains the primary duty. Consequently, they remain exempt.
Conversely, consider a “Lead Associate” who is given a manager title. They spend 38 hours a week stocking shelves. They spend only 2 hours a week making a schedule. This person is likely non-exempt. Therefore, they must receive overtime pay for any hours worked over 40.
Common Pitfalls for Small Businesses
Many business owners believe that putting someone on a salary automatically makes them exempt. This is a dangerous misconception. Mistakes in classifying managers who work on the floor can lead to back-pay audits and heavy fines.
- The “Title” Trap: A job title does not determine exempt status. Only actual job duties matter.
- The Salary Misconception: Paying someone $50,000 a year does not make them a manager if they have no authority over other staff.
- Record-Keeping Failures: Even for exempt managers, you should track their general “duty mix” to defend their status during an audit.
Actionable Strategies for Compliance
To protect your business, follow these practical steps:
- Update Job Descriptions: Ensure every manager’s job description emphasizes leadership and decision-making.
- Audit Your Payroll: Review any salaried employee who spends significant time on manual tasks.
- Consult Professionals: State laws (like those in California or New York) are often stricter than federal rules.
- Track Everything: Use a robust payroll and time-tracking system to ensure data accuracy.
Ultimately, transparency with your staff is key. If a manager’s role is shifting more toward floor work, it may be safer to convert them to an hourly, non-exempt status. This ensures they are paid fairly for their time and protects you from litigation.
How AccuPay Can Help
Managing the nuances of FLSA compliance is a full-time job. At AccuPay, we specialize in helping SMBs navigate the complexities of payroll and HR. We ensure your team is classified correctly from day one.
Would you like me to draft a custom job description template for your exempt managers to help ensure they meet the “Primary Duty” criteria?