Wage & Hour Counsel : Wage & Hour Lawyer & Attorney : Littler Mendelson Law Firm : Employment Law, Labor Relations

By Diane Kimberlin

On January 24, 2012, the California Court of Appeal, Fourth Appellate District, issued an important decision providing new and needed guidance on the commissioned sales exemption. In Muldrow v. Surrex Solutions Corporation, the court concluded that a class of “senior consulting service managers” was exempt from overtime pay requirements.

Although California courts require an employee be “involved principally” in “selling” in order to qualify for the commissioned sales exemption, there has been very little guidance on the meaning of this requirement. Muldrow supplies that guidance. It also addresses another previously unanswered question: must a commission be based solely on the price of goods or services sold, or may it include other factors? 

The plaintiffs were employed by Surrex to locate candidates to fill job orders placed with Surrex by its client companies. They used an internal database, made cold calls, and used other resources to find suitable candidates. They worked to convince the candidate that the job was desirable and convince the client company that the candidate was a good fit for the job. The plaintiffs were required to “nail down” the client’s rate, the candidate’s rate and to make sure that deals held together. Surrex was paid only when a placement was complete.

• Email This
• Print
• Trackbacks
• Share Link

By James Oh, Andrew Voss and Tracy Stott Pyles

After a trial to the court in September 2011, the United States District Court for the Southern District of Ohio entered judgment on January 5, 2012 in favor of Defendant Nationwide Mutual Insurance Company, on all claims alleged against it by a nationwide class of Special Investigators who claimed they were misclassified as exempt from the overtime requirements of the FLSA and New York and California state wage laws.

The case was initially filed in September 2007 in federal court in California, and venue was transferred to the Southern District of Ohio, where Nationwide is headquartered. Notice to opt-in was issued nationwide to current and former Special Investigators, and ninety-one joined the action.

• Email This
• Print
• Trackbacks
• Share Link

By Alison S. Hightower

In a long-awaited decision, the California Supreme Court unanimously gave California employers a holiday present in an opinion that follows the majority of federal courts in finding that insurance claims adjusters are exempt administrative employees.

At issue in Harris v. Superior Court was the exempt status of a certified class of Liberty Mutual insurance claims adjusters who the California Court of Appeal found did not satisfy the requirements of the administrative exemption as a matter of law. Under California law exempt administrative employees must receive a minimum compensation of not less than two times the minimum wage, and also (1) perform office or non-manual work “directly related to management policies or general business operations of his/her employer or his/her employer’s customers,” and (2) “customarily and regularly exercise discretion and independent judgment.”

The administrative exemption has been one of the most hotly-contested and litigated of California’s overtime exemptions. This decision provides more clarity on the application of the exemption, and the role of the “administrative/production worker dichotomy” as an analytical tool in assessing exempt status.

• Email This
• Print
• Trackbacks
• Share Link

By Christopher Kaczmarek and Joseph Lazazzero

The First Circuit Court of Appeals recently held that banquet sales managers qualified for the administrative exemption to the Fair Labor Standards Act (FLSA). The court reached this holding in the case of Hines v. State Room, Inc. even though the banquet sales managers were bound by a price schedule established by their employer and therefore had virtually no authority to make financial decisions.

In this case, the banquet sales managers were responsible for contacting potential clients, assisting clients in selecting the appropriate venue, and designing a function so as to meet the client’s objectives and budgetary constraints. The “vast majority” of their work involved “unscripted conversations” with current and potential customers regarding the details of the event.

• Email This
• Print
• Trackbacks
• Share Link

By Alison Andolena

On November 16, 2011, the New Jersey Appellate Division affirmed a finding that registered nurses who were paid on an hourly basis were exempt from the overtime requirements of the New Jersey Wage and Hour Law (“NJWHL”), even though the regulation applicable at the time only extended the “professional” exemption to employees compensated on a “salary or fee basis.”

In Anderson v. Phoenix Health Care, Inc., the court explained that while the regulation specifically provides that exempt professionals must be paid on a salary or fee basis, for the past 40 years the New Jersey Division of Wage and Hour Compliance’s enforcement policy had been “consistently administered” to extend the exemption to professionals paid on an hourly basis so long as their total weekly compensation exceeded the minimum set forth in the regulation. Deferring to the Division’s longstanding interpretation, the court stated that a change to such a longstanding policy must come from an amendment of the regulation or through the legislative process. In addition, the court found that the good faith exception would have applied even if the exemption was held not to apply to hourly-paid nurses. 

• Email This
• Print
• Trackbacks
• Share Link

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). The Court also will consider whether deference is owed to the Secretary of Labor's own interpretation of the FLSA exemption and related regulations. At stake is not only how an estimated 90,000 PSRs are to be paid under the FLSA, but also the deference to be paid to amicus briefs filed by the Department of Labor (DOL).

The FLSA’s outside sales exemption relieves from the Act’s overtime requirements “any employee employed . . . in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary).” Specifically, the regulations explain that an employee who works as an outside salesman is one:

(1) Whose primary duty is: (i) making sales within the meaning of section 3(k) of the Act; or (ii) obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and (2) Who is primarily and regularly engaged away from the employer's place or places of business in performing such primary duty.

• Email This
• Print
• Trackbacks
• Share Link

As previously discussed, in recent amendments to its overtime regulations, New Jersey had inadvertently eliminated the exemption for sales employees paid on commission, which closely tracked an exemption in Section 7(i) of the Fair Labor Standards Act (sometimes known as the "inside sales" exemption).

After Littler assisted in drawing attention to this issue, the New Jersey Department of Labor and Workforce Development published on November 21, 2011, a proposed amendment to its regulations designed to restore the exemption. A public hearing on the proposed amendment is scheduled for Tuesday, December 13, 2011, and written comments are due by January 20, 2012. Final regulations, then, could issue as early as February.

To learn more about the proposed amendment and its implications for employers, please continue reading Littler's ASAP, New Jersey Issues Proposed Regulations to Restore Its Exemption for Commissioned Sales Employees, by Tammy McCutchen.

• Email This
• Print
• Trackbacks
• Share Link

Under the California Labor Code, certain computer software employees, as well as licensed physicians and surgeons, are exempt from state overtime requirements if they receive a minimum hourly, monthly or yearly rate. The rate is determined annually based upon changes to the California Consumer Price Index for Urban Wage Earners and Clerical Workers. Because the Index experienced a 2.5% increase over the past year, the California Division of Labor Standards Enforcement (DLSE) adjusted the rates these individuals must be paid to be considered overtime-exempt.

Computer Software Employee

Effective January 1, 2012, DLSE announced a 95-cent increase in the hourly rate for computer professionals, from $37.94 to $38.89 per hour. The monthly rate increases $164.69, from $6,587.50 to $6,752.19 per month. Finally, the annual salary increases $1,976.25, from $79,050 to $81,026.25 per year.

Licensed Physicians or Surgeons

Effective January 1, 2012, DLSE announced a $1.73 increase in the hourly rate for licensed physicians and surgeons, from $69.13 to $70.86 per hour.

Photo credits: arakonyunus and Inkastudio

• Email This
• Print
• Trackbacks
• Share Link

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. To learn more about the legislation and its potential implications for employers, please continue reading at Littler's Washington D.C. Employment Law Update blog.

Photo credit: PressFoto

• Email This
• Print
• Trackbacks
• Share Link

By Tammy McCutchen*

There has been an important change in New Jersey law which may require employers to take immediate action: In recent amendments to its overtime regulations, New Jersey eliminated the exemption for sales employees paid on commission, which closely tracked an exemption in Section 7(i) of the Fair Labor Standards Act (sometimes known as the “inside sales” exemption). Because New Jersey law is now more protective than the FLSA, at present, it appears likely that employers cannot classify commissioned inside sales employees as exempt from overtime pay.

Like the FLSA, the New Jersey overtime pay statute includes exemptions for executive, administrative, professional and outside sales employees. See New Jersey Statutes § 34:11-56a4. Although the New Jersey statute does not contain an exemption similar to the FLSA Section 7(i), the New Jersey regulations had defined “administrative” employees as including “an employee whose primary duty consists of sales activity and who receives at least 50 percent of his or her total compensation from commissions and a total compensation of not less than $400.00 per week.” N.J.A.C. § 12:56-7.2(b).

New Jersey recently amended 12:56-7.2 of their regulations so that it simply adopts the federal regulations at 29 C.F.R. Part 541; the regulation now states: “Except as set forth in (b) below, the provisions of 29 CFR Part 541 are adopted herein by reference.”

• Email This
• Print
• Trackbacks
• Share Link

By Milton Castro

California Governor Edmund G. Brown recently signed Assembly Bill No. 587 (AB 587) into effect, one of two recent amendments to the California Labor Code. Before AB 587, volunteer workers were exempted from the Code’s requirement that all workers employed on public works projects be paid not less than the general prevailing rate of per diem wages, but only until January 1, 2012. AB 587 extends the exemption by five years, to January 1, 2017.

When the exemption was first introduced in 2004, proponents argued that a public works exemption for volunteers was needed due to the “importance of volunteers in building community support for local projects,” many of which included environmental projects such as restoration of streams and wetlands. AB 587’s proponents claim that the exemption has since proven successful and thus its extension is necessary to allow volunteers, many of whom are students, to continue participating in preservation activities on public lands.

Photo credit: Mangostock

• Email This
• Print
• Trackbacks
• Share Link

By Alison Hightower

A social worker required to hold a bachelor’s degree in social or human services, behavioral science or an allied field does not necessarily qualify as a “learned professional,” properly exempt from overtime under the Fair Labor Standards Act, the Ninth Circuit recently held in Solis v. State of Washington DSHS (No. 10-35590 (Sept. 9, 2011).

The social workers in question were public employees of the State of Washington’s Department of Social and Health Services (DSHS), tasked with identifying the needs of children and their families and arranging for services to assure the children’s safety and well-being. Their obligations included investigating child abuse and neglect, developing treatment plans and recommending such plans to the courts, evaluating the progress children and families made in following those treatment plans, making placement decisions, and even recommending whether parental rights should be terminated.

• Email This
• Print
• Trackbacks
• Share Link

By Michael Gregg

A federal district court recently issued a decision in Hernandez v. Alpine Logistics, LLC, that requires employers to pay overtime compensation to employees who are otherwise exempt from overtime under the Motor Carrier Act for any workweek that the employee operates a vehicle weighing 10,000 pounds or less.

The primary issue in Alpine Logistics was whether employees who drove both larger vehicles (10,001 pounds or more) and smaller vehicles (10,000 pounds or less) were exempt from overtime under the Motor Carrier Exemption. The court pointed to Department of Labor Wage and Hour Division Fact Sheet # 19 in support of its holding that employees who drove both larger and smaller vehicles during the same workweek were entitled to overtime compensation. The court held that the Motor Carrier Exemption does not apply to an employee during workweeks in which the employee operates a smaller vehicle even if the employee also operates a larger vehicle during the same week.

Employers with a mixed fleet of vehicles should review their classification decisions and/or vehicle assignments to assess any potential exposure the Alpine Logistics decision may present.

To learn more about the decision and its implications for employers, please continue reading Littler's ASAP, Employers that Operate a Mixed Fleet of Vehicles May Lose the Motor Carrier Overtime Exemption.

• Email This
• Print
• Trackbacks
• Share Link

In Zelasko-Barrett v. Brayton Purcell, LLP, No. A130540 (Aug. 17, 2011), California's First District Court of Appeal affirmed the trial court's order granting summary judgment in favor of the employer, Brayton Purcell. The appellate court held that California's professional overtime exemption applied to the plaintiff during the period of time he was employed as a law clerk at Brayton Purcell and had not yet passed the California Bar Examination. To learn more about the decision and its implications for employers, please continue reading Littler's ASAP, California Court Finds Professional Overtime Exemption Applies to Law Clerks, by Alan Levins, Kurt Bockes and Rachelle Wills.

• Email This
• Print
• Trackbacks
• Share Link

By Diane Kimberlin

In Kuzinski v. Schering Corp, the U.S. District Court for Connecticut has dealt another blow to Schering Corporation’s efforts to prove that its pharmaceutical representatives are not entitled to overtime pay under the federal Fair Labor Standards Act. In ongoing litigation, the court had already rejected Schering’s argument that its pharmaceutical representatives were exempt outside sales employees. Schering tried another tactic, arguing that its sales representatives qualified as exempt from overtime under the administrative exemption. The plaintiffs filed their own motion for summary judgment. Acting on these cross motions for summary judgment, the court issued a decision on August 5, 2011, finding that the sales representatives are not exempt administrative employees.

Employers seeking to apply the FLSA’s administrative exemption must prove that: (1) the employees are paid a salary of at least $455 a week; (2) their “primary duty” is “the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers;” and (3) the employees’ “primary duty” includes the “exercise of discretion and independent judgment with respect to matters of significance.” According to the district court, Schering’s sales representatives did not meet the second or third parts of this test.

• Email This
• Print
• Trackbacks
• Share Link

By Mary Walsh

In Campbell v. PricewaterhouseCoopers, LLP, the Ninth Circuit Court of Appeals held that unlicensed accountants in California were not ineligible, as a matter of law, from being exempt from overtime under either the professional or administrative exemptions.

Two former unlicensed accountants in a subdivision of PricewaterhouseCoopers (PwC) filed a class action lawsuit alleging that PwC violated California wage and hour laws by improperly classifying them as exempt from overtime. Plaintiffs claimed they performed predominately routine and menial work and that strict instructions, computer software, and a work review-system precluded them from exercising any significant degree of discretionary judgment or analytical thinking. PwC argued that plaintiffs performed work integral to PwC’s services and to the extent that they did not exercise discretion and independent judgment, they were failing to meet the firm’s expectations. Both parties filed motions for partial summary judgment on whether plaintiffs were exempt under the professional, executive, and administrative exemptions. The district court granted plaintiffs’ motion for partial summary judgment, finding that as a matter of law, PwC could not classify plaintiffs as exempt from overtime under the applicable IWC Wage Order on the grounds that: (1) unlicensed accountants categorically are ineligible for the professional exemption; and (2) PwC had not established an issue of triable fact on whether plaintiffs’ work was performed “under only general supervision,” an essential element of the administrative exemption.

• Email This
• Print
• Trackbacks
• Share Link

By Gregory Iskander

Making new law on what qualifies as a “commission” for purposes of the overtime exemption for salespeople, a California Court of Appeal upheld a pay plan that compensates sales employees at a fixed rate for each product sold as opposed to relying on a percentage of the sales price.

In Areso v. CarMax, Inc.¹ a former sales consultant of CarMax filed a class action against the company alleging that CarMax violated the California Labor Code by classifying her and other sales consultants in California as exempt and failing to pay her overtime. CarMax utilized a compensation plan for its sales consultants, who sold used vehicles, warranty plans, and vehicle accessories, with a uniform dollar payment for each sale of a vehicle or service plan. Concerned with the applicability of the California salesperson overtime exemption, CarMax modified its pay plan for California employees and used a formula which took into account the number of vehicles sold and the average price of the vehicles – such that a sales consultant would earn approximately the same uniform payment per vehicle sold. CarMax used this uniform payment based on the number of vehicles sold instead of a percentage of the sales price so that its salespeople did not push higher priced cars.

• Email This
• Print
• Trackbacks
• Share Link

By Whitney Ferrer

In Verkuilen v. MediaBank LLC, the U.S. Court of Appeals for the Seventh Circuit held that an account manager for a company that provides computer software to advertising agencies qualified for the administrative exemption to the Fair Labor Standards Act and was therefore exempt from overtime.

The plaintiff in this case worked as an account manager for MediaBank LLC. In this position, she acted as a “bridge” between the software developers at MediaBank and its customers. As account manager, the plaintiff was responsible for determining the customer’s needs, relaying those needs to the software developers in order to facilitate the customization of the software, and helping the customer use the customized software.

• Email This
• Print
• Trackbacks
• Share Link

By Milton Castro

In a collective and putative class action under New York’s overtime and minimum wage laws, the U.S. District Court for the Southern District of New York recently held that the act of being a registered representative pursuant to the Financial Industry Regulatory Authority (FINRA) does not in itself absolve an insurance agent from the “outside salesman” exemption under the Fair Labor Standards Act (FLSA). Gold v. New York Life Insurance Co.  In Gold, the plaintiff worked for New York Life Insurance Co. as an insurance agent. During his employment, the plaintiff was compensated on a purely commission basis and received no remuneration based on the number of hours he worked. In addition to selling traditional “fixed” insurance policies and annuities, the plaintiff also obtained “Series 6” and “Series 63” licenses, which permitted him to sell “registered” products, including variable life insurance policies and other products regulated by FINRA. With these licenses, Gold became a “registered representative” – a title which requires enhanced duties to clients under FINRA, such as the “Know Your Customer Rule” and the “Suitability Rule.” It was based on these enhanced duties that Gold, in an attempt to escape summary judgment, argued that he should not be considered an “outside salesman” under the FLSA, but rather a financial advisor. The court disagreed.

• Email This
• Print
• Trackbacks
• Share Link

By Sarah Green

On April 13, 2011, a federal district court judge in Illinois held, in Mullins v. Target Corp., that “investigators” employed by Target Corporation qualified for the administrative exemption to the FLSA. Accordingly, the court dismissed a putative class action filed against Target by those investigators.

Plaintiff previously worked for Target as an investigator. Her job duties included conducting investigations of fraud and theft occurring at Target’s retail stores in Chicago and Indiana. The employee brought an action individually, and on behalf of all other Target investigators, alleging that she and her fellow investigators were misclassified as exempt and therefore should have been paid overtime.

• Email This
• Print
• Trackbacks
• Share Link

Ten years ago, in Bell v. Farmers Insurance Exchange, 87 Cal. App. 4th 805 (2001), the California Court of Appeal held that insurance claims adjusters in that case were nonexempt administrative employees and, consequently, were entitled to overtime pay. That decision lead to a $90 million dollar judgment against the defendant and a slew of copycat lawsuits. Since then, a number of federal courts have gone in the opposite direction and held that claims adjusters are exempt from overtime. See e.g., Palacio v. Progressive Insurance Company, 244 F. Supp. 2d 1040 (C.D. Cal. 2002); McAllister v. Transamerica Occidental Life Insurance Company, 325 F.3d 997 (8th Cir. 2003); Cheatham v. Allstate Insurance Company, 465 F.3d 578 (5th Cir. 2006); In re Farmers Ins. Exch., Claims Representatives’ Overtime Pay Litig., 466 F.3d 853 (9th Cir. 2006); Roe-Midgett v. CC Services, Inc., 512 F.3d 865 (7th Cir. 2008); Robinson-Smith v. Gov’t Employees Ins. Co., 590 F.3d 886 (D.C. Cir. 2010). In Hodge v. Aon Insurance Services, the California Court of Appeal followed this trend and held that Aon’s claims adjusters were properly classified as exempt administrative employees. In doing so, the court in Hodge limited the holding issued 10 years ago in Bell.

• Email This
• Print
• Trackbacks
• Share Link

In Christopher v. SmithKline Beecham, the Ninth Circuit issued a strong rebuke to the Department of Labor (and cemented a circuit split) in a remarkable decision upholding the “outside sales” exemption for Pharmaceutical Sales Representatives (PSRs).

The plaintiffs were employed as PSRs for SmithKline Beecham Corporation. The PSRs were classified by their employer as exempt “outside salesmen” under the FLSA and were not paid overtime compensation. The district court granted the employer’s motion for summary judgment, and the PSRs appealed.

• Email This
• Print
• Trackbacks
• Share Link

In a significant victory for Massachusetts healthcare employers, on December 20, 2010, the Massachusetts federal court applied the state overtime exemption available to hospitals, nursing homes, and certain other healthcare employers, and dismissed all 13 state wage-law claims in Cavallaro v.UMass Memorial Health Care. Plaintiffs in the case, a class action filed on behalf of 13,000 current and former employees of UMass Healthcare and its subsidiaries, claimed the hospital did not compensate them for time worked: (1) during meal breaks that were automatically deducted from wages; (2) before and after scheduled shifts; and (3) time spent in training sessions. To learn more about the Cavallaro decision and its implications for employers, please continue reading at Littler's Healthcare Employment Counsel blog.

Photo credit: MSRPhoto

• Email This
• Print
• Trackbacks
• Share Link

In Songer v. Dillon Resources, Inc., No. 09-10803 (Sept. 3, 2010), a unanimous panel of the Fifth Circuit issued two holdings, both favorable to employers attempting to establish the Motor Carrier Act exemption to the Fair Labor Standards Act (FLSA). The first issue was whether an employee staff-leasing company may assert the Motor Carrier Act exemption embodied in the FLSA. In Songer, one of the defendants was an employee staff-leasing company that hired drivers and assigned them to various interstate trucking companies. In that case, the plaintiffs were assigned to two different trucking companies that hauled aggregate used in the cement and concrete industries. Sometimes the aggregate was hauled across state lines, but in some instances the aggregate was only hauled within the state of Texas. The Fifth Circuit held that a staff-leasing company was entitled to the Motor Carrier Act exemption because it provided drivers to interstate trucking companies. The Fifth Circuit also held that all of the truck drivers were subject to the Motor Carrier Act exemption, even if some of them drove primarily intrastate. The court held that each truck driver did not have to personally participate in interstate commerce but, rather, only had to have a reasonable expectation that he/she could be called upon to drive across state lines. In Songer, all of the truck drivers could reasonably be expected to engage in interstate commerce because the dispatcher randomly assigned trips, some of which crossed state lines; no truck driver had a dedicated route; and all of the drivers had to meet DOL requirements, such as completing DOT logs and drug tests.

This entry was written by Shawn Oller.

Photo credit: MobiusDaXter

• Email This
• Print
• Share Link

Following a Connecticut district court’s denial of summary judgment to the employer in Ruggeri v. Boehringer Ingelheim Pharmaceuticals, Inc., a collective action brought by pharmaceutical sales representatives who claimed the were improperly classified as exempt employees, the pharmaceutical company has been hit with another putative collective action by sales representatives seeking overtime wages. But in this new case, Lopez-Lima v. Boehringer Ingelheim Pharmaceuticals, filed on July 21, 2010 in the federal District Court for the Southern District of Florida, plaintiffs allege that Boehringer hired them as “non-exempt commission-paid pharmaceuticals sales representative[s].” To learn more about the case, please continue reading at Littler's Healthcare Employment Counsel blog.

• Email This
• Print
• Trackbacks
• Share Link

On July 19, 2010, in Jackson v. Alpharma Inc., the United States District Court for the District of New Jersey held that Alpharma, Inc.’s pharmaceutical sales representatives qualify as exempt administrative employees under the Fair Labor Standards Act (“FLSA”). The court’s unpublished opinion relies in part on the Third Circuit’s holding in Smith v. Johnson & Johnson, 593 F.3d 280 (3d Cir. 2010).

• Email This
• Print
• Trackbacks
• Share Link

The Federal Motor Carrier Safety Administration (“FMSCA”) recently announced its intent to grant a limited, two-year exemption from federal hours of service rules for certain drivers engaged in the transportation of ammonia. The FMSCA, a division of the U.S. Department of Transportation, is currently seeking public comments regarding this proposal.

The FMSCA administers the regulations governing the maximum driving and on-duty time for drivers utilized by motor carriers. On March 22, 2010, FMSCA announced a 90-day waiver of these regulations for drivers involved in the transportation of certain ammonia products.

• Email This
• Print
• Trackbacks
• Share Link

On July 6, 2010 the Second Circuit Court of Appeals ruled in In re Novartis Wage and Hour Litigation (“In re Novartis”)¹ that Novartis Pharmaceuticals Corporation’s pharmaceutical sales representatives (“Reps”) did not meet the requirements of the administrative or outside sales exemptions under the Fair Labor Standards Act (FLSA) and therefore were incorrectly classified as exempt employees. In so doing, the Second Circuit reversed a decision by the district court for the Southern District of New York and reached a conclusion contrary to that reached by the Third Circuit in the recent Smith v. Johnson & Johnson case.

In support of its decision, the Second Circuit found the following facts: In visits typically lasting no more than five minutes, the Reps provide physicians with information about the benefits of Novartis pharmaceuticals and encourage them to prescribe the products to their patients. Reps may give physicians reprints of clinical studies about the pharmaceuticals, identify the Novartis products for which insurers will pay, organize meals and programs to promote particular products, give physicians samples of drugs, and in many instances get physicians to say they will prescribe Novartis products in the future. Although physicians cannot purchase drugs directly from the manufacturer, the Reps seek verbal commitments from physicians to prescribe Novartis’s drugs to their patients.

• Email This
• Print
• Trackbacks
• Share Link

The Oregon Bureau of Labor and Industries (BOLI) has amended its administrative rules pertaining to minimum wage, overtime, and working conditions effective June 1, 2010. Generally speaking, the amendments (pdf) conform Oregon’s minimum wage and overtime exemptions to federal law and clarify the rules for meals and rest periods.

First, the amended rules provide that individuals employed in domestic service positions who provide companionship services for individuals who are elderly or infirm (and therefore unable to care for themselves), are not required to be employed by the individual for whom they provide such services in order to be exempt from minimum wage.

Second, under the amendments, Oregon law is consistent with federal law by providing that certain computer system analysts, computer programmers, software engineers, or other similar skilled workers must be paid the equivalent of $27.63 per hour for each hour worked (although not necessarily on an hourly basis).

Third, the amendments state that, except as otherwise provided in the administrative rules, employees who are not relieved of all duties for 30 continuous minutes during their meal period must be paid for the entire 30-minute meal period.

These rules became effective as of June 1, 2010.

This entry was written by Janice Kim.

• Email This
• Print
• Trackbacks
• Share Link

On March 25, 2010, the central district court of California denied class certification in two consolidated cases, Spainhower v U.S. Bank and Williams v. U.S. Bank, a decision that could impact plaintiffs’ attempts to certify future misclassification cases in federal court. In their motion, the plaintiffs sought certification of all in-store branch managers whom they claim were misclassified as exempt under the executive, administrative, and outside sales exemptions. Although the plaintiffs’ motion sought class certification under Rule 23(b)(2) or (b)(3), their supporting points and authorities only argued for certification under Rule 23(b)(3). The court found that the plaintiffs failed to meet their burden under Rule 23(b)(3) because individualized factual inquiries would inevitably consume the majority of a trial and overwhelm the adjudication of common issues.

• Email This
• Print
• Trackbacks
• Share Link

In a development that may have significant implications for mortgage lenders and other financial services employers, the Department of Labor has issued a new Administrator's Interpretation finding that mortgage loan officers do not qualify as exempt administrative employees under the FLSA, reversing its prior position and withdrawing previous opinion letters concluding to the contrary. To continue reading about this development, see Littler's ASAP Department of Labor Reverses Course: Mortgage Loan Officers Do Not Meet the Administrative Exemption's Requirements by Robert W. Pritchard, R. Brian Dixon and Andrew J. Voss.

• Email This
• Print
• Trackbacks
• Share Link

In Schmidt v. Eagle Waste & Recycling Inc., the Seventh Circuit Court of Appeals affirmed the district court’s grant of summary judgment to a Wisconsin waste removal company and agreed that the defendant properly classified its former “account representative” as exempt under the Fair Labor Standards Act (FLSA). The plaintiff had been hired as a “sales representative,” but had adopted the title “account representative,” with the defendant’s permission. Several months after the plaintiff’s employment ended, she sued the defendant under the FLSA for failing to pay her for overtime. The district court granted the defendant’s motion for summary judgment, concluding that the plaintiff’s sales and marketing duties rendered her exempt under both the outside sales and “combination” exemptions to the FLSA. On appeal, the Seventh Circuit agreed.

• Email This
• Print
• Trackbacks
• Share Link

In its first Administrator Interpretation Letter, the Wage and Hour Division of the U.S. Department of Labor (DOL) announced today that mortgage loan officers do not qualify as bona fide administrative employees under section 13(a)(1) of the Fair Labor Standards Act (FLSA). In reversing its prior stance on the issue, the DOL withdrew two opinion letters issued on September 8, 2006 and February 16, 2001, in which it previously had found that loan officers were exempt administrative employees.

• Email This
• Print
• Trackbacks
• Share Link

The U.S. Court of Appeals for the Ninth Circuit applied the First Amendment’s “ministerial exception” to the claim of a Catholic seminarian, affirming the district court’s Rule 12(c) dismissal of the plaintiff’s claim for overtime pay under the Washington Minimum Wage Act (WMWA). In Rosas v. Corp. of the Catholic Archbishop of Seattle, the Ninth Circuit adopted a new test for determining whether a person is a “minister” for purposes of the ministerial exception.

• Email This
• Print
• Trackbacks
• Share Link

In Collins v. Heritage Wine Cellars Ltd. (7th Cir., No. 09-1181, Dec. 21, 2009), the Seventh Circuit Court of Appeals analyzed the extent to which drivers who delivered wine exclusively within the State of Illinois were engaged in interstate commerce and, therefore, not entitled to overtime under the Motor Carrier Act exemption to the Fair Labor Standards Act. Specifically, this exemption from overtime applies to employees of a motor carrier if “property ... [is] transported by [the] motor carrier between a place in a State and a place in another State,” provided the employees “engage in activities of a character directly affecting the safety of operation of motor vehicles in the transportation on the public highways of passengers or property in interstate or foreign commerce within the meaning of the Motor Carrier Act.” As the court noted, “[t]he shipment itself must be in some sense interstate commerce (transportation between a place in a state and a place in another state).”

• Email This
• Print
• Trackbacks
• Share Link

In Christopher v. SmithKline Beecham,¹ 2009 U.S. Dist. LEXIS 108992 (D. Ariz. Nov. 20, 2009), a federal district court in Arizona held that pharmaceutical sales representatives (PSRs) were “outside salespeople” and therefore exempt from the overtime provisions of the Fair Labor Standards Act (FLSA).

• Email This
• Print
• Trackbacks
• Share Link

On October 14, 2009, the U.S. Department of Labor (“DOL”) filed an amicus brief in a case pending before the Second Circuit Court of Appeals, In Re Novartis Wage and Hour Litigation, arguing for a stricter interpretation of “outside salesperson” and “administrative employee” exemptions under the federal Fair Labor Standards Act, as applied to pharmaceutical sales representatives. In its brief, the DOL maintains that pharmaceutical sales representatives neither “make sales” nor exercise sufficient discretion to qualify for the exemptions from overtime compensation, urging the Court of Appeals to reverse the district court’s defense judgment below. See In Re Novartis Wage and Hour Litig., 593 F. Supp. 2d 637, 640 (S.D.N.Y. 2009).

• Email This
• Print
• Trackbacks
• Share Link

On September 30, 2009, the United States District Court for the Eastern District of Michigan, in Henry v. Quicken Loans, Inc., 2009 WL 3199788, held that a mortgage lender-employer acted in good faith when it demonstrated that it had reasonably relied upon the September 2006 U.S. Department of Labor Opinion Letter when determining whether its loan officers qualified for the “administrative exemption” to the Fair Labor Standard Act and were therefore ineligible for overtime.

As discussed previously, the issue was initially determined in July by a federal magistrate judge who ruled that an employer’s reasonable reliance on the September 2006 DOL Opinion Letter, as established through affidavit testimony of corporate executives, constituted good faith as a matter of law.  This ruling, contained in the magistrate’s report and recommendation, was adopted and confirmed by the district court and, therefore, the employer faces no liability for potentially misclassifying its loan officers from the date of the DOL letter, September 8, 2006, onward. The court also adopted the magistrate’s decision denying the parties’ cross-motions for summary judgment on the merits of the employer’s affirmative defense, based upon the exemption.

This entry was written by Andrew Voss.

• Email This
• Print
• Trackbacks
• Share Link

On July 23, 2009, the Eleventh Circuit Court of Appeals affirmed a district court’s grant of summary judgment in favor of American Coach Lines of Miami, Inc. (ACLM). The court held that the plaintiffs, current and former bus drivers of ACLM, qualified for the motor carrier exemption to the federal Fair Labor Standard Act (FLSA) and were therefore not entitled to overtime compensation. Walters, et al. v. American Coach Lines of Miami, Inc., No. 08-15636, 2009 WL 2182419 (11th Cir. July 23, 2009). ACLM’s business operations included, among other things, shuttling cruise ship passengers via bus between the Miami and Fort Lauderdale airports and local hotels and cruise ship ports under contract with cruise lines.

In reaching its conclusion, the court first determined that ACLM was subject to the Secretary of Transportation’s jurisdiction under the Motor Carrier Act (MCA) because ACLM was licensed by the Department of Transportation (DOT), held all of the required authorizations from the Federal Motor Carrier Safety Administration, and had been audited in the past by the DOT. Additionally, ACLM provided bus services that crossed state lines, derived approximately four percent (4%) of its revenue from interstate trips, and held itself out as an interstate motor carrier. Notably, the court rejected the plaintiffs’ de minimis argument – i.e. that ACLM did not fall under the Secretary of Transportation’s jurisdiction because it did not engage in a sufficient number of interstate trips – noting that analysis of the de minimis question requires consideration of both the number of interstate trips made and the percentage of revenue generated by those trips, and suggesting that the de minimis requirement may be altogether inapplicable in situations where a company holds the appropriate federal licensing and there is undisputed proof of some travel across state lines.

• Email This
• Print
• Trackbacks
• Share Link

The Eleventh Circuit Court of Appeals rules that the “outside sales” exemption to the FLSA overtime requirements was properly applied to an executive for a title insurance company whose primary duty was conducting “promotional work” with the company’s clients, even though the employee did not finalize sales herself. According to the court, the executive, who was credited with sales through commission-based compensation, was conducting “sales in some sense.”

For more information about this development, see Littler's ASAP "Eleventh Circuit Holds Title Insurance Executive Who Conducts 'Promotional Work' Exempt Under the FLSA 'Outside Sales' Exemption" by Angelo Spinola and Matthew Laflin.

• Email This
• Print
• Trackbacks
• Share Link

The Wage and Hour Division of the Department of Labor (DOL) recently released to the public three December 2008 opinion letters that addressed inquiries regarding FLSA exemption issues.

The first letter (FLSA2008-11) concluded that Assistant Athletic Instructors at an institution of higher education are exempt from the minimum wage and overtime requirements of the Act as bona fide professionals, since their primary responsibility (occupying more than 50% of their time) is teaching student-athletes.

• Email This
• Print
• Trackbacks
• Share Link

Many employers do not know that paying a non-discretionary bonus to non-exempt employees will require the payment of additional overtime. The California Court of Appeal’s decision in Marin v. Costco Wholesale Corporation is a good reminder of the need to pay overtime on such bonuses and of the fact that the method for calculating overtime on a bonus depends upon whether it qualifies as a “production bonus” or a “flat rate bonus.”

As a general matter, the payment of a non-discretionary bonus (one that is not discretionary in either the fact that it will be paid or in the formula for calculating it) to non-exempt employees triggers an additional overtime obligation because it retroactively increases the regular rate of pay for the employee receiving the bonus for the time period covered by the bonus. A non-exempt employee is entitled to be paid overtime at 1.5 times (or double, in some cases) the regular rate of pay for each overtime hour worked. With some specific exceptions not relevant here, the regular rate of pay for overtime purposes includes all compensation earned during the workweek. Thus, an employee who is paid a quarterly bonus has received additional compensation that was not included in the regular rate of pay when he or she was paid overtime for hours worked during the quarter at issue. An employer is required to resolve this issue by calculating a “regular rate” of pay on the bonus itself and then paying some portion of that regular bonus rate for each overtime hour worked during the period in which the bonus was earned. The precise method for calculating the overtime due on a bonus depends upon whether the amount of an employee’s bonus increases with each hour worked (in which case it is a “production bonus”) or whether the amount of the bonus is fixed independent of the hours worked (in which case it is a “flat rate bonus”).

• Email This
• Print
• Trackbacks
• Share Link

California Labor Code section 515.5 exempts certain employees in the computer software field from the state overtime requirements provided certain criteria are met. Historically, this exemption was only available for employees whose compensation exceeded a minimum hourly rate, which was set annual by the Division of Labor Statistics and Research (DLSR). Effective September 10, 2008, Assembly Bill 10 took effect, which expanded the exemption to include employees who are paid on a salary basis, as long as the salary exceeds certain monthly and annual amounts.

The DLSR has announced the applicable minimum rates for employees to qualify for California’s computer professional exemption. Effective January 1, 2009, the new hourly rate for computer software employees is $37.94 and the minimum annual salary exemption is $79,050.00, which must be paid in amounts no less than $6,587.50 per month. To qualify for the exemption, an employee’s compensation must equal or exceed these amounts and the employee must satisfy each of the elements set forth in section 515.5 of the Labor Code. The employee must be:

• Primarily engaged in duties that consist of at least one of the following: (1) application of system analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications; (2) the design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications; and (3) the documentation, testing creation, or modification of computer programs related to the design of software or hardware for computer systems; and
• Highly skilled and proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, and software engineering.

This blog entry was authored by Stacey James.
 

• Email This
• Print
• Trackbacks
• Share Link

The Court of Appeals for the Ninth Circuit recently held that California’s Labor Code applies to work performed in California by non-residents of California. Sullivan v. Oracle Corporation (08 Cal. Op. Serv. 13,881) (Nov. 6, 2008).

The three Oracle plaintiffs were Colorado and Arizona residents who traveled to California to work for periods ranging from several weeks to several months.  The plaintiffs brought a wage and hour class action against their employer, a Delaware corporation headquartered in California, seeking unpaid overtime on behalf of all out-of-state employees who worked complete days in California. The plaintiffs also brought a claim under California’s Unfair Competition Law (aka/ Business and Professions Code § 17200 et seq.), both for violations that occurred in California and throughout the United States.

• Email This
• Print
• Trackbacks
• Share Link