The terms "manager" and "executive" are sometimes used interchangeably. Although the two functions have similarities and frequently overlap in the business world, distinct differences exist in the roles that managers and executives play within a company. These differences often have specific legal implications on workplace issues, specifically where work schedules and overtime pay are involved.
Managers oversee specific operations within a company, such as a division or section. Certain projects have managers, called project managers, who are largely if not entirely responsible for the day-to-day workings of that particular project. Managers often have one or more employees that report directly to them, either connected to a particular project, or assigned to a specific division. While managers can be an essential element in making a company work, in many instances, managers do not direct the policy or mission of the company.
Executives guide the general policy and the overall mission of a company and are commonly assigned to the highest levels of the organizational ladder. Executives often have broad latitude and authority to make decisions that affect large segments of a company, if not the entire company. Whereas managers frequently often have a specific division or team they are assigned to direct in a more or less hands-on fashion, executives may or may not be involved in the day-to-day operations of the company.
Exempt and Nonexempt
The Fair Labor Standards Act is federal legislation that dictates hours and wages for so-called nonexempt employees. Exempt employees are paid by salary rather than by hourly wage, and usually don't collect overtime for working longer than their usual assigned hours. On the other hand, nonexempt employees are often, but not always, paid hourly. Whether they are paid hourly or by salary, nonexempt employees must receive overtime pay for any hours they work in excess of their assigned shifts. Many managers are, or should be, considered nonexempt employees. On the other hand, nearly all executives are paid by salary and are considered exempt.
Supervision of employees isn't sufficient to designate a manager as an executive who qualifies as an exempt employee. Instead, the main part of exempt employees' jobs must focus on planning and directing company policy, hiring and firing employees or developing work assignments. In addition, high pay alone is not sufficient to designate employees as exempt. So-called highly compensated workers must perform at least one function that is viewed under FLSA as an executive duty to qualify as executives, and therefore, as exempt employees.
- U.S. Department of Labor: Wage and Hour Division -- Revised July 2008 -- Fact Sheet #17A -- Exemption for Executive, Administrative, Professional, Computer and Outside Sales Employees Under the Fair Labor Standards Act
- Chamberlain, Kaufman and Jones: Coverage Under the FLSA
- Chamberlain, Kaufman and Jones: FLSA Overtime
- HR Hero: Exempt versus Non-exempt Employees
- Reference for Business: Organizational Chart
- Fast Company: Leadership Hall of Fame -- Who Is an Executive?
- Business Dictionary: Manager
- Encyclopaedia Britannica: Business Organization
- U.S. Department of Labor: Wage and Hour Division Compliance Assistance -- Fair Labor Standards Act
- U.S. Department of Labor: Wage and Hour Division -- FairPay -- DOL's FairPay Overtime Initiative
- U.S. Department of Labor: Wage and Hour Division -- Minimum Wage Laws in the States - January 1, 2012
- HR Hero: Overtime Pay Labor Laws
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