diff --git a/app/models/category.rb b/app/models/category.rb
index 17c4d68..4f860ce 100644
--- a/app/models/category.rb
+++ b/app/models/category.rb
@@ -24,9 +24,31 @@ class Category < ActiveRecord::Base
 
   def name=(value)
     self[:name] = value
-    unless self.name.empty?
+    unless self.name.blank?
       self.slug = self.name.transliterate.downcase.gsub( /[^-a-z0-9~\s\.:;+=_]/, '').gsub(/[\s\.:;=_+]+/, '-').gsub(/[\-]{2,}/, '-').to_s
     end
   end
 
+  def slug=(value)
+    self[:slug] = value
+    unless self.slug.blank?
+      self.path = self.calculate_path
+    end
+  end
+
+  # calculates the full path to this category using parent's path.
+  def calculate_path
+    if self.top_level?
+      self.slug
+    else
+      self.parent.calculate_path + "/" + self.slug
+    end
+  end
+
+  before_create do |cat|
+    if cat.path == cat.slug && (! cat.top_level?)
+      cat.path = cat.calculate_path
+    end
+  end
+
 end
diff --git a/test/unit/category_test.rb b/test/unit/category_test.rb
index 40ae55d..1cb9503 100644
--- a/test/unit/category_test.rb
+++ b/test/unit/category_test.rb
@@ -105,13 +105,25 @@ class CategoryTest < Test::Unit::TestCase
 
   def test_path_for_toplevel
     c = Category.new(:name => 'top_level')
-    assert_equal 'top_level', c.path
+    assert_equal 'top-level', c.path
   end
 
   def test_path_for_subcategory
     c1 = Category.new(:name => 'parent')
-    c2 = Category.new(:name => 'child')
+
+    c2 = Category.new
+    c2.parent = c1
+    c2.name = 'child'
+
+    assert_equal 'parent/child', c2.path
+  end
+
+  def test_save_
+    c1 = Category.create!(:name => 'parent', :environment_id => @env.id)
+
+    c2 = Category.new(:name => 'child', :environment_id => @env.id)
     c2.parent = c1
+    c2.save!
 
     assert_equal 'parent/child', c2.path
   end
--
libgit2 0.21.2