Earlier this week, GlaxoSmithKline PLC, formerly known as SmithKline Beecham Corporation, filed its brief in the U.S. Supreme Court in Christopher v. SmithKline Beecham Corporation, one of the only Supreme Court cases to address the overtime exemptions under the Fair Labor Standards Act, and the first to address the criteria for the outside sales exemption. At issue is whether pharmaceutical sales representatives qualify for the outside sales exemption because pharmaceuticals are generally purchased by end-users at pharmacies, which purchase from wholesale distributors. The Court's decision may have far-reaching implications, not only for the pharmaceutical industry, but also for other industries that depend on representatives to call on customers at their place of business to generate sales, although the actual sales orders are placed by customers through a centralized order and distribution center or similar process. The case is also significant because it may determine the extent to which courts are required to defer to U.S. Department of Labor's changing interpretations of federal employment statutes and regulations. To learn more about the case and its potential implications for employers, please continue reading Littler's ASAP, Supreme Court to Decide Significant Case on the Outside Sales Overtime Exemption, by Richard Black and Bradley Strawn. To learn more about how the case progressed through the courts, please see our previous posts on the trial court decision, the appellate court decision, and the Supreme Court agreeing to review and resolve the matter.
As we reported earlier, the New Jersey Department of Labor and Workforce Development (DLWD)amended its wage and hour regulations in September 2011 to eliminate inconsistencies between state and federal overtime law. In so doing, the DLWD inadvertently omitted the exemption for commissioned sales employees, commonly referred to as the “inside sales” exemption, from the amendment. The DLWD’s mistake, which it acknowledged was inadvertent, potentially put employers at risk for misclassification lawsuits.
Now, however, the DLWD has corrected its error, and on February 21, 2012, the exemption was fully restored. The regulation now defines “administrative” employee to include an employee whose: (1) primary duty is sales; (2) total compensation is comprised of at least 50% commissions; and (3) total compensation is $400 or more per week.
Notably, the restored New Jersey “inside sales” exemption differs from the exemptions available under federal law. As a result, employers should carefully analyze whether their commissioned sales employees qualify as exempt under both state and federal law.
According to a recently-released Field Assistance Bulletin, the Department of Labor’s Wage and Hour Division (WHD) has advised its staff to uniformly enforce a rule that became effective on May 5, 2011 governing ownership of employee tips under the Fair Labor Standards Act (FLSA). In many states employers are permitted to take a “tip credit,” or pay employees less than the minimum wage so long as the employees receive sufficient tip income to make up the difference. The new WHD tip rule stipulates, among other things, that tips are the property of the employee regardless of whether the employer has taken a tip credit under section 3(m) of the FLSA, and that an employer is prohibited from using an employee’s tips for any reason other than as a tip credit or in furtherance of a legitimate tip pool. The bulletin sent to WHD regional administrators and district directors emphasizes that this rule will be enforced in all states, even the nine states under the jurisdiction of the Ninth Circuit. To learn more about the bulletin and its potential implications for employers, please continue reading at Littler's Washington D.C. Employment Law Update.