Restaurant owners, general managers, and human resource employees can use the following criteria to help determine whether certain manager and assistant manager employees are exempt from the minimum wage and overtime pay requirements of the Fair Labor Standards Act (FLSA).
The FLSA, enforced by the U.S. Department of Labor’s Wage and Hour Division (WHD), requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at time and one-half times the regular rate of pay for all hours worked over 40 hours in a workweek.
Section 13(a)(1) of the FLSA, however, provides an exemption from both minimum wage and overtime pay requirements for employees employed as bona fide executive, administrative, professional, and outside sales employees. Job titles do not determine exemption status. In order for an exemption to apply, the employer must ensure that the employee’s specific job duties and salary meet the requirements of the Department’s regulations. The standard salary level can be found in 29 CFR 541.600 and listed at https://www.dol.gov/agencies/whd/overtime/salary-levels
Exemptions that may be applicable to managers and assistant managers in the restaurant industry are the executive and the administrative employee exemptions.
Executive Exemption
To qualify for the executive employee exemption, the employer must ensure all of the following requirements are met:
- The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than the standard salary level required by 29 CFR 541.600 and listed at https://www.dol.gov/agencies/whd/overtime/salary-levels
- The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
- The employee must customarily and regularly direct the work of two or more other full-time employees or their equivalent; and
- The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
For example, a kitchen manager supervising a staff of 25 full-time employees, and earning a salary of $1,800/week would likely be an exempt executive employee under the FLSA.
However, a beverage manager, supervising no one and earning a salary of $750/week, would not be exempt because the manager would not pass the salary level test or the duties test (which in part requires supervising two or more other employees).
Administrative Exemption
To qualify for the administrative employee exemption, the employer must ensure all of the following requirements are met:
- The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than the standard salary level required by 29 CFR 541.600 and listed at https://www.dol.gov/agencies/whd/overtime/salary-levels
- The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
- The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
For example, a comptroller charged with the financial management of the company’s five restaurants, who is able to bind the firm in financial matters and earns a salary of $2,000/week would likely be an exempt administrative employee. A restaurant’s human resources manager, who establishes and implements personnel policies, and is responsible for employee benefits, labor relations, government relations, and regulatory compliance, and earns a salary of $1,500/week, would also likely be an exempt administrative employee.
However, a restaurant’s only maintenance employee, earning a salary of $800 week, would not be exempt even if the employee’s title is maintenance manager, as the employee would not pass the salary level or duties tests.
Paying an employee the minimum salary does not itself make that employee an exempt executive or exempt administrative employee. The exemption requires that the salary and the duties tests be met.
When state or local laws differ from the federal FLSA, an employer must comply with the standard most protective to employees. Links to state labor departments can be found at https://www.dol.gov/agencies/whd/state/contacts
Exemptions are applied on a case-by-case basis. This guidance is for general information and is not to be considered in the same light as official statements of position contained in the regulations. For additional information, please visit the Wage and Hour Division’s website at https://www.dol.gov/agencies/whd