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Illinois Exempt Employee Status Update

Posted by Tamara

In recent litigation between the U.S. Department of Labor and Novartis Pharmaceutical Corp., DOL’s increase in strictness regarding interpreting federal regulations came to light. The specific regulations involved were the federal guidelines governing salaried exempt employees. Of particular interest were the occupations of outside salespeople and exempt administrators.

DOL issued an opinion during this litigation that pharmaceutical representatives did not qualify under FLSA as outside people, or as exempt administrators. This opinion was a direct result of the more stringent interpretation by DOL. The opinion continued to explain that pharmaceutical reps do not qualify, because they are not legally allowed to sell or to take orders for the medications they represent.

These representatives do not qualify as exempt administrators, either, because they do not exercise independent judgment in matters of significance. Pharmaceutical reps make their own schedules and appointments and work with little to no supervision. They do not act independently, however. Instead they implement detailed company policy in nearly every aspect of their position.

Along with the increased strictness in interpreting the regulations, DOL is also taking action against employers who do not adhere to the rules. The department is operating under a backlog of opinions on these issues, but once the backlog is cleared and the opinions signed, they will carry the force of the law. Courts must defer to DOL opinions.

As a result, Illinois employees would be wise to pay attention to DOL opinions. Illinois employers would be wise to do the same, and to examine the duties of their salaried exempt employees. An employee whose duties do not comply with the strictest interpretation of the regulations should probably be reclassified as non-exempt.

Gregory Jacob, a Washington, D.C. attorney commented that this recent DOL ruling will make it much harder for an employee to qualify as an exempt administrator. In addition, there is speculation that DOL may narrow this definition even further in the future.








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