Total Articles: 28
Are Pharmaceutical Sales Reps Exempt or Non-Exempt? U.S. Supreme Court Will Decide.
An important employment issue which could impact many businesses has made its way to the U.S. Supreme Court. In Christopher v. SmithKline Beecham Corp., the Court will consider whether pharmaceutical sales representatives are exempt under the Fair Labor Standards Act.1 Several class actions filed throughout the country by sales representatives have challenged the propriety of paying representatives by salary instead of hourly wages. The circuit courts have split. For example, the Christopher case, a Ninth Circuit Court of Appeals' decision, determined sales representatives were exempt under the outside sales exemption.2 The Third Circuit held the representatives were exempt under the administrative exemption as have several district courts:
Supreme Court to Decide Whether Pharmaceutical Sales Representatives are Exempt From FLSA Overtime Requirements
The U.S. Supreme Court has agreed to resolve in Christopher v. SmithKline Beecham Corp. (11-204) whether the Fair Labor Standards Act’s (FLSA) outside sales exemption applies to pharmaceutical sales representatives (PSRs).
Bill Would Broaden FLSA Computer Exemption
A bill introduced in the U.S. Senate (S. 1747) would significantly expand the scope of the current exemption for certain computer employees that is found at Section 13(a)(17) of the federal Fair Labor Standards Act. The proposed "Computer Professional Update" Act (or "CPU" Act) was submitted by North Carolina Senator Kay Hagan and three co-sponsors. It is now pending in the Senate's Committee on Health, Education, Labor, and Pensions.
Are Pharmaceutical Sales Reps Exempt As "Outside Salesmen?" Diagnosis Unclear
Just last August, the U.S. Court of Appeals for the 2nd Circuit issued a ruling that sent shock waves through segments of the healthcare industry. Then, as affected employers began responding to that decision, the 9th Circuit reached an apparently contradictory decision that may have raised more questions than it answered.
Bill Would Update Computer Employee Exemption Under FLSA
Bipartisan legislation introduced in the Senate last week would update the Fair Labor Standards Act’s (FLSA) computer employee exemption. Section 13(a)(17) of the FLSA establishes minimum wage and overtime exemptions for computer systems analysts, computer programmers, software engineers, or other similarly skilled workers provided that these employees’ specific job duties and compensation meet certain requirements. Specifically, to qualify for a computer employee exemption under current law the employee’s “primary duty” must consist of:
What Do You Mean the Job May No Longer Be Considered Exempt?
My last blog entry on travel time only touched on one issue that may arise as we see more employees being asked to take on additional responsibilities and assignments in lieu of hiring new personnel. Indeed, consolidation of jobs or responsibilities can lead to a number of other potential wage and hour issues that can have a significant impact on employers. One such issue arises when an exempt employee takes on additional jobs or duties that are non-exempt. How should an employee be treated for overtime purposes if working both exempt and non-exempt positions?
Court: Cable Installers Employees, Not Independent Contractors
A couple of weeks ago, I wrote about an initiative by the U.S. Department of Labor, IRS and various state agencies to launch a coordinated crack-down on employers who misclassify employees as independent contractors. Recently, a U.S. District Court in Ohio issued a ruling that nicely illustrates the problem of misclassifcation and the potential liabilities that employers can face as a result.
The FLSA Overtime Exemption For Service Writers
Last week, the U.S. Department of Labor published a Final Rule concerning changes to its regulations and interpretations. One portion of the Final Rule's commentary appears to say that the DOL is now taking the position that employees doing the typical work of service writers/service advisors/service salespeople (we'll refer to them all as "service writers") are NOT exempt from overtime under the federal Fair Labor Standards Act.
Michigan Jury Finds Mortgage Loan Officers Exempt, Disregarding the Department of Labor’s Interpretive Guidance
On March 17, 2011, a Michigan jury returned a verdict in favor of loan company, Quicken Loans Inc., in a federal class action wage and hour lawsuit. The jury found that the company’s loan officers were properly classified as exempt employees under the Fair Labor Standards Act (FLSA), and as a result, the company did not owe the plaintiffs any overtime.
Pharmaceutical Sales Reps Not Entitled to Overtime, Ninth Circuit Rules
Pharmaceutical sales representatives are not entitled to overtime pay because they fall within the Fair Labor Standards Act’s “outside salesmen” exemption, the federal appeals court in San Francisco has ruled. Christopher v. SmithKline Beecham Corp. DBA GlaxoSmithKline, No. 10-15257 (9th Cir. Feb. 14, 2011). In so ruling, the Court rejected the Department of Labor’s interpretation of the outside sales exemption, which was accepted by the Second Circuit Court of Appeals in a case also involving pharmaceutical sales representatives in 2010 (see our article, Second Circuit Narrowly Circumscribes FLSA’s Outside Sales and Administrative Exemptions). This split in the circuit courts should significantly increase the likelihood that the U.S. Supreme Court will review the issue.
Ninth Circuit: Pharmaceutical Sales Representatives are Exempt under FLSA
The plaintiffs in Christopher v. SmithKline Beecham Corp. were pharmaceutical sales representatives. They visit doctors on behalf of the company and attempt to persuade the doctors to prescribe their particular drugs to patients. The company argued that these employees were exempt as "outside sales." The employees argued they were not sales persons, primarily because the patients themselves were the buyers, not the doctors.
USWHD Memo Addresses FLSA "Motor Carrier" Exemption.
The federal Fair Labor Standards Act's Section 13(b)(1) provides an overtime exemption for "any employee with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service pursuant to" a specific section in Title 49 of the U.S. Code dealing with federal motor-carrier law. Employers who have relied upon or followed this so-called "motor-carrier" exemption will remember that an inconspicuous 2005 amendment to Title 49 substantially narrowed its scope. A further revision in 2008 introduced yet other questions and uncertainties.
Court Holds Motor Carrier Act Exemption Applies to Van Drivers Who Do Not Cross State Lines
Even though airport shuttle drivers did not transport passengers to or from locations outside the state of Florida, their activity was sufficiently tied to interstate commerce to qualify them for the motor carrier exemption and make them ineligible for overtime pay under the Fair Labor Standards Act, the federal appeals court in Atlanta has ruled. Abel v. Southern Shuttle Services, Inc., No. 10-10659 (11th Cir. Sept. 21, 2010). The Eleventh Circuit has jurisdiction over Alabama, Florida, and Georgia.
Federal Appeals Court Finds Newspaper Reporters Not Exempt as FLSA Creative Professionals
In a case of first impression for the circuit, the federal appeals court in San Francisco has held that a newspapers reporters were non-exempt employees and entitled to overtime pay. Wang v. Chinese Daily News, Inc., No. 08-55483 (9th Cir. Sept. 27, 2010). The Court rejected the newspapers contention that its reporters were exempt creative professionals under the Fair Labor Standards Act because the newspapers articles lacked the sophistication of the national level papers. Furthermore, the Court found the reporters daily workload prevented them from conducting detailed news analysis or investigative journalism tasks that were essential for the exemption to apply. The Ninth Circuit has jurisdiction over Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington.
Pharmaceutical Sales Reps Join White-Collar Quest for Overtime Pay (pdf).
Pharmaceutical sales representatives, historically viewed as exempt from federal wage
and hour law requiring overtime compensation, are joining the ranks of highly compensated
white-collar workers seeking overtime pay, attorneys Staci Ketay Rotman and Mark
S. Wilkinson write in this BNA Insights article. A number of large companies are targets of
sales reps overtime class actions, the attorneys, of Franczek Radelet in Chicago, write.
Motor Carrier Exemption Applies to Staffing Company and Its Truck Drivers, Fifth Circuit Holds
A staff leasing company stands in the shoes of its trucking-company clients for application of the Motor Carrier Act (MCA) exemption from Fair Labor Standards Act (FLSA) overtime, the federal appeals court in New Orleans has ruled. Songer v. Dillon Resources, Inc., No. 09-10803 (5th Cir. Sept. 3, 2010). The Court also held that the exemption applies to truck drivers who have not yet driven across state lines, but may be assigned to do so. Accordingly, the Court affirmed summary judgment for the employers.
Second Circuit Strips Pharmaceutical Sales Reps Of Their Exempt Status.
A federal appellate court recently held that pharmaceutical sales representatives did not fall under either the "outside sales" or "administrative" exemptions to the Fair Labor Standards Act (FLSA), and that, accordingly, they had been misclassified and are entitled to unpaid overtime. The overtime to which the workers could be entitled is significant, because they typically work 12-hour days, travel for their jobs, and attend after-hours events as part of their marketing efforts. In re Novartis Wage and Hour Litigation, 09-0437-cv, Second Circuit Court of Appeals (July 6, 2010
Pharmaceutical Company Outside Sales Representatives Deemed Nonexempt Employees.
In a recent decision, the federal Second Circuit Court of Appeals decided that outside pharmaceutical sales representatives were nonexempt employees, and therefore were entitled to overtime and subject to other nonexempt requirements. The court found that: (a) these sales representatives did not qualify under the outside salesperson exemption to the overtime laws because they did not actually "sell" pharmaceutical products to anyone, including the physicians they called on, and (b) they did not qualify under the administrative exemption to the overtime laws because they did not exercise the requisite level of discretion and independent judgment. This decision is especially important for pharmaceutical companies, and other employers in regulated industries that do not allow their outside representatives to actually sell products to customers. It suggests that such employers should evaluate their exempt classifications for all employees in positions similar to pharmaceutical sales representatives.
DOL Wage & Hour Division Changes Course: Mortgage Loan Officers are Typically Not Exempt.
In its first piece of written guidance since President Obama took office, the U.S. Department of Labor's Wage and Hour Division released a new form of guidance document on March 24, which it refers to as an "Administrator's Interpretation." According to the Wage and Hour Division, it will no longer issue familiar "Opinion Letter" guidance documents, addressing specific facts related to specific questions and situations. Instead, the Division has indicated that it will offer an "Administrator's Interpretation" when it deems further clarification is needed on an issue that has general application to a broad group of affected parties. If the first release of this new type of guidance document is any indication of what is to come, employers may have reason for concern.
Computer Employees - The Next Wage and Hour Thorn for Employers?
Does your Company classify all
its Information Technology (IT)
employees as exempt under the
Fair Labor Standards Acts
computer employee exemption?
If the answer is yes, then your
organization likely operates
under what a federal appellate
court judge called the common
misperception that all jobs
involving computers are
necessarily highly complex and
require exceptional expertise.
Congress Amends Motor Carrier Exemption: Both Helps and Hurts Employers.
Recent legislation appears to have narrowed the scope of the federal Fair Labor Standards Act's "motor carrier" overtime exemption yet again. The "SAFETEA-LU Technical Corrections Act of 2008" (TCA) further restricts the classes of employees who might qualify for that exemption. A moderate positive is that TCA also limits liability with respect to certain overtime violations occurring before August 10, 2006 that resulted from exemption changes caused by the earlier "Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users" (SAFETEA-LU).
Misclassifying A Chef Can Cook Up Trouble.
The number of wage-hour claims has skyrocketed in recent years. As a result, a hospitality employers are more likely than ever before to be the target of a wage-hour lawsuit or a government compliance audit. One thing this means is that industry employers should be sure they have correctly classified everyone they treat as being exempt from the federal Fair Labor Standards Acts minimum-wage, overtime, and timekeeping requirements.
Update: DOL To Begin Enforcing Narrowed Motor-Carrier Exemption.
We previously reported that under-the-radar Congressional action in 2005 substantially limited the federal Fair Labor Standards Act's Section 13(b)(1) "motor carrier" overtime exemption. This exemption applies to drivers, driver's helpers, loaders, and mechanics for whom the U.S. Transportation Secretary can set qualifications and maximum service hours.
FLSA Status of "Financial Services Industry" Employees Still Issue Despite Helpful DOL Opinion Ltrs (pdf).
Are financial advisors, stock brokers and mortgage loan officers fall FLSA exempt employees? or non-exempt inside-sales employees? The difference can cost employers big bucks.
Opinion Letter Finds IT Support Specialist Not Exempt from FLSA's Requirements.
The Department of Labor (DOL) has issued an opinion letter addressing an issue that many employers have faced - whether an employee who provides computer help desk support is exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA). In this opinion letter (FLSA 2006-42, dated October 26, 2006), the DOL stated that, based upon the information submitted by the employer requesting the opinion, the position does not qualify for the administrative or computer employee exemption.
Delivery Person Driving Small Vehicle Not Covered by Motor Carrier Exemption.
In an example of what can be described as an "unintended consequence" of the revisions made to the federal Motor Carrier Act in 2005, a federal court in Georgia recently held that an employee whose primary duties involve picking up and delivering documents for his employer in a personal vehicle is not exempt from the Fair Labor Standard Act's (FLSA) overtime requirements because he does not qualify for the motor carrier exemption. See Dell'Orfano v. IKON (August 29, 2006).
Things Dont Always Go Better With Coke! (pdf).
On August 31, 2006, the Second Circuit Court of Appeals in New York stunned the home care
industry once again, by affirming its 2004 decision in Coke v. Long Island Care at Home. The
court's earlier decision had been vacated by the Supreme Court and remanded for further review
in light of a Department of Labor (DOL) Memorandum on the companionship exemptions
coverage of agency-employed home care workers under the Fair Labor Standards Act ("FLSA").
Computer Support Specialist Entitled to Overtime and Liquidated Damages (pdf).
Many employers continue to struggle with the proper
classification of computer support personnel under the
FLSA. One recent case highlights common mistakes
employers make and the consequences that arise from
misclassification.
