Exempt and Non-Exempt Employment in the Food Service Industry

California state laws require that all non-exempt employees be compensated at time-and-a-half for all hours worked over 8 hours per day and 40 hours in a week. See California Labor Code section 510(a) and Industrial Welfare Commission (“IWC”) Wage Order, Order No. 5-2001 section 3(A). The law also requires employers to maintain accurate time records for all of the hours worked by its employees, provide accurate itemized wage statements, authorize, permit and provide meal and rest periods, and pay all wages earned to an employee immediately upon their termination. 

The IWC wage orders specify three exemptions for (1) executive, (2) administrative, and (3) professional employees…. The exemptions are strictly defined and narrowly construed, and the employer bears the burden of proving the applicability of an exemption as an affirmative defense. Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 794.

According to the applicable regulations interpreting the Wage Order, in order to qualify for the exemption, an employee must have spent more than fifty percent of their time performing exempt (that is, supervisory or managerial) tasks which require the exercise of discretion and independent judgment. 

Under California law, if a manager was performing exempt tasks concurrently with non-exempt tasks, the work must either be classified as exempt or non-exempt work — not both, based on the purpose of the activity serves at the facility. Heyen v. Safeway (2013) 216 Cal.App.4^th 795. For example, if an employee was performing managerial tasks such as observing subordinates and general supervision while cooking or otherwise serving customers, the entirety of that time must be classified as non-exempt because the general purpose of the work is serving food to customers.

C.F.R. title 29, section 541.108 permits classification of some supervisory and managerial tasks as exempt when they are “different from the work performed by subordinates and are commonly performed by supervisors because they are helpful in supervising the employees or contribute to the smooth functioning of the department for which they are responsible.” 29 C.F.R. § 541.108(a). The regulation provides examples of such tasks including timekeeping, distributing supplies, and “setup work” as potentially exempt work if it is performed only by the manager and not also performed by non-exempt subordinates.

Even a foreman on a production line is responsible for ensuring that his subordinates and his part of the production line are running “smoothly,” even as the foreman is constantly examining and observing subordinates, yet there is no doubt that a foreman on a production line is not exempt.

Furthermore, § 541.108 cannot be construed to characterize cooking, waiting tables, bartending, or other customer service activities as exempt because that section can only be applied to tasks “different from the work performed by subordinates.”

A recent unpublished appellate case construed § 541.108 and Heyen, in the context of a manager of a small restaurant. Ramirez v. ISB Mehta Corp. (2017) 2017 WL 750565. In that case, the plaintiff, who managed restaurants for the defendant, claimed that he was misclassified as exempt. Applying Heyen, the Court determined that the plaintiff had spent less than 50% of his time engaged in non-exempt tasks. The Court found that tasks like bookkeeping, ordering supplies, maintaining inventory, and marketing were exempt, because such tasks were only handled by the manager and not also “handled by nonexempt employees.” Ramirez, at *6-7. There was no question that helping customers during the lunch shift, manning the cash register, making sandwiches, helping with food preparation were non-exempt activities, as nonexempt employees also handled such tasks. Id. At *7-8. Cooking and serving customers in a restaurant simply cannot be classified as exempt tasks under applicable law.