In order to be exempt from overtime, your managers need to do more than have "Manager" in their job title. In fact, the act of managing alone is not even enough. When classifying a manager as an exempt employee, you're usually using what's called the White Collar Executive Exemption under the Fair Labor Standards Act.
To use this classification correctly, you must ensure that your employee passes all three parts of the following duties test:
If an employee does not pass all three parts of the test above, they may not be classified as exempt from overtime-at least not under the White Collar Executive Exemption. If they do pass the duties test, you must also ensure that they are paid at least $455 per week on a salary basis.
Being paid on a salary basis means they will not have their pay reduced because they worked fewer hours in a week or produced subpar work. (Note: some states, including California and New York, require that employees be paid more than $455 per week to be exempt or pass a slightly different duties test.)
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