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New York Exempt Employee Update

Posted by Tamara

In recent litigation with Novartis Pharmaceutical Corp. the U.S. Department of Labor issued an opinion that pharmaceutical reps do not qualify as outside salespeople under FLSA (Fair Labor Standards Act).

According to the DOL, pharmaceutical reps cannot legally sell their merchandise nor can they take orders for the medications. Despite the fact that they work under little supervision, they do not make independent judgments. Rather they implement detailed company policy in almost every aspect of their job.

Some may argue that the reps qualify as exempt administrators, because they set their own schedules and make their own appointments. That is part of their duties, but it isn’t enough to qualify under FLSA. To be exempt, administrators must be able to exercise independent judgment on important matters. Pharmaceutical reps do not have that capability within their job description.

This recent ruling by the DOL is an example of that department’s increase in strictness when interpreting regulations regarding salaried exempt employees. This increase stringent policy is particularly prevalent regarding outside salespeople and administrators that are classified as exempt.

There is speculation that DOL may become even more stringent in their interpretation of these regulations. Currently, DOL has a backlog of opinions, but once those are signed, they will carry the full force of the law.

Since the courts must defer to U.S. Department of Labor opinions, New York employers and employees would be wise to be aware of these changes. In addition, companies should revisit the duties of their exempt salaried employees to make sure those duties meet with DOL regulations.

DOL opinions, such as with Novartis Pharmaceutical Corp., will have far reaching effects, particularly on U.S. drug companies.

The DOL only handles about ten percent of the wage and hour enforcements in the United States, which doesn’t seem like a lot. Many states, however, use the federal regulations as a blueprint for their state’s salaried exempt regulations.







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