On May 23, 2013, the California Court of Appeal ruled in Heyen v. Safeway that a store manager lost her exempt status by simultaneously performing exempt and nonexempt duties.
The plaintiff in this case, Linda Heyen, worked for Safeway as an Assistant Store Manager. Safeway classified Ms. Heyen as an “exempt” executive employee, which made her ineligible for overtime pay. After Safeway terminated her employment, Ms. Heyen sued and claimed that she had been improperly classified as exempt because she regularly spent more than 50 percent of her work hours doing nonexempt tasks such as bagging groceries and stocking shelves. An advisory jury and the trial court agreed with Ms. Heyen and awarded her overtime pay of $26,184.60, plus interest.
Safeway appealed and argued that the trial court failed to properly account for hours Ms. Heyen spent simultaneously performing exempt and nonexempt tasks—i.e., “actively manag[ing] the store while also concurrently performing some checking and bagging of customer grocery purchases.” Safeway argued that, consistent with federal law, the trial court should have classified as “exempt” all hours during which Ms. Heyen simultaneously performed exempt and nonexempt tasks.
The Court rejected Safeway’s argument. The Court first cited the California Wage Order’s requirement that an employee must be “primarily engaged” in exempt duties in order to qualify for the executive exemption. Then, after performing a detailed review of the federal regulations that are incorporated into the Wage Order, the Court ruled that work performed cannot be simultaneously exempt and non-exempt — it must be one or the other. To determine which it is, the trier of fact must look to the “primary purpose” of the work being performed. If the purpose of the work was “to supervis[e] the employees or contribute to the smooth functioning of the department,” then the work was exempt. Conversely, if the work was being done “for some other reason,” then the work was nonexempt.
In Ms. Heyen’s case, the Court found that the “other reason” was because Safeway consistently failed to schedule enough employee to do all the non-exempt work. In an effort to save on labor costs, Safeway regularly under-staffed its stores and then expected their managers to pick up the slack (by doing work that ordinarily would and should have been done by a nonexempt employee). In situations like this, the Court ruled, an exempt manager like Ms. Heyen will be considered nonexempt — and thus eligible for overtime — because her primary purpose in performing the nonexempt duties was trying to meet Safeway’s “unrealistic” expectations about budgeting and labor costs, not providing high-level executive direction and supervision to her subordinates.
This case sounds a warning bell to California employers who ask exempt managers to occasionally “pitch in” and help nonexempt employees during busy periods. Employers should: (1) have written job descriptions that describe the exempt duties and responsibilities of the position, (2) consider adding language to job descriptions, performance reviews, and employee handbooks emphasizing that an exempt manager’s primary duty is at all times to supervise employees and manage the business, and (3) set budgets and staffing schedules to proactively limit the amount of nonexempt work performed by exempt managers and other employees. An employer who tries to save money by intentionally under-staffing its business and then expecting exempt mangers to “pick up the slack” is almost certainly violating California law after the Heyen v. Safeway decision.
This opinion in Heyen v. Safeway can be found here.