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SECTION 7. Promotions When an employee is promoted to a classification one grade higher than the present classi'fication, the employee will receive an increase equivalent to one step. If the promotion is two or more grades above the former classification, the employee will receive an increase equivalent to two steps; however, in no case will an employee's base salary be less than the minimum nor more than the maximum for the grade to which promoted. The City Manager may authorize variations in the application of this section. SECTION 8. Demotions Employees who are demoted to a lower grade shall receive compensation according to the grade and step in which they are placed by the Department Head, Director of Personnel and approved by the Office of the City Manager. If an employee is demoted to a position one grade below the present classi- fication, the employee will receive a decrease equivalent to one step. If the demotion is two or more grades below the current classification, the employee will receive a decrease equivalent to two steps; however, in no case will an employee retain the same compensation that was received prior to the demotion, or be compensated at a rate less than the minimum for the grade to which demoted. SECTION 9. Transfers "Transfer" shall mean lateral re-assignment of an employee from one position classification to another position clas- sification of the same grade. Such transfer may occur within or between departments. Any employee transferred to another class of employment shall receive compensation at the same grade and step received prior to the transfer. The transfer activity may not be used to increase or decrease the salary of the transferred employee. No employee may be transferred without the prior approval of the Department Nead.(s) involved and the Director of Personnel. SECTION 10. Overtime Eligibility for overtime compensation shall be determined by the Department Head and the Director of Personnel in accordance with the Fair Labor Standards Act of 1938 (FLSA), as amended, including, but not limited to, the 1985 Amend- ments to the FLSA as same is applied.to City employment through the adoption of the City's Administrative Policy Directive pertaining to overtime. Exempt and Non-Exempt classifications are indicated in the Classes of Positions Assigned to Pay Grades Section. The letter E after the Grade designation indicates positions -5-