Pharma Sales Reps: Exempt or Not Exempt from overtime pay
The Wage & Hour Defense Blog recently published a good post that explained why two federal appellate courts reached different conclusions over the exempt status of pharmaceutical sales representatives. David W. Garland, the author of the post, honed in on the one key factor that seemed to make the difference. According to Mr. Garland, the outcome of these cases turns on the amount of discretion that the sales representatives enjoy. If sales representatives are tightly controlled and supervised by management, then they do not exercise sufficient discretion and do not fall within the administrative exemption and must be paid overtime. On the other hand, if the sales representatives are not closely supervised and run their own sales territory on their own, then they are operating independently and do fall within the administrative exemption and are not entitled to overtime pay.
The administrative exemption can be difficult to apply and that is why courts often come out with conflicting decisions. According to the Department of Labor, all of the following tests must be met in order for the administrative exemption to apply:
• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
• The employee’s primary duty must be 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
• The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
This definition is vague and makes it difficult for companies to determine which employees are exempt from overtime pay. This is why pharma sales reps in New Jersey were determined to be exempt from overtime pay, while pharma sales reps across the river in New York are entitled to overtime pay.
