We have a really small setup but for the sake of keeping everything centralized we have a domain.
Occasionally managers will need to send email out as somebody else if they are not in the office, is it possible to add a secondary password or a master password to everyone's account through a group policy? That way if needed we could logon as that user and send out an email. Obviously it seems a little unusual but the password would only really be for one or two mangers. Not everybody.
I was thinking just giving passwords out to everyone and keeping track of them and not allowing them to change them, but seems bad practice.
This is not possible. You can configure Exchange (if you're using that) to allow people to send mail as or on behalf of other users.