Employment Litigation in Review #6 (The Summer 2012 Edition)


U.S. Supreme Court Holds Pharmaceutical Sales Representatives are Exempt from Overtime Pay 

Christopher v. Smithkline Beecham Corp., 567 U. S. ____ (2012).

On June 18, 2012, the Supreme Court in a 5-4 decision resolved a conflict between the Second and Ninth Circuit Courts of Appeal where the two Circuits differed as to whether pharmaceutical sales representatives (“PSR”) are exempt from federal overtime pay requirements under the “outside sales exemption” of the Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (“FLSA”).

In general, the FLSA, and its implementing regulations, 29 C.F.R. §§ 510 et seq., mandate that most employees be paid overtime compensation at 1½ times their regular rate of pay for all hours worked in excess of 40 hours in a workweek. The FLSA, however, sets forth an exemption from overtime pay for employees “employed . . . in the capacity of outside salesman.”  FLSA § 13(a)(1), 29 U.S.C. § 213(a)(1).

In determining whether the two plaintiff PSRs were owed overtime wages or if they should be classified as “outside salesmen,” the U.S. Supreme Court agreed with the Ninth Circuit holding that pharmaceutical sales representatives are overtime-exempt outside salesmen.  In doing so, Justice Alito noted that the FLSA broadly defines “sale” to include “… any sale, exchange, contract to sell, consignment for sale, shipment for sale or other disposition,” where the “catchall phrase ‘other disposition’ is most reasonably interpreted as including those arrangements that are tantamount, in a particular industry, to a paradigmatic sale of a commodity.” Therefore, even though the physicians do not actually purchase prescription drugs from the PSRs, their efforts to persuade physicians to prescribe their company’s drugs met this standard.

USCIS Announces Employers Must Continue to Use the Current Form I-9 for Employment Eligibility Verification

On Aug. 13, 2012, the U.S. Citizenship and Immigration Services (USCIS) announced that until further notice, employers should continue using the Form I-9 currently available on the forms section of http://www.uscis.gov, despite the OMB expiration date of Aug. 31, 2012, which is located in the upper right hand corner on the form. In March 2012, the USCIS published a proposed new form and requested public comments, but has not published the revisions yet. In general, employers must complete Form I-9 no later than the first day of employment for all newly-hired employees to verify their identity and authorization to work in theUnited States.

Department of Labor Wants Every Employee to know their FMLA Rights

On June 21, 2012, the U.S. Department of Labor (“DOL”) issued a 16-page Family and Medical Leave Act (“FMLA”) guide entitled, “Need Time? The Employee’s Guide to the Family and Medical Leave Act.” According the press release, the guide is “designed to answer questions such as who can take qualifying leave and what protections the law provides.”

As stated by the DOL, the “FMLA currently provides eligible employees of covered employers 12 workweeks of unpaid, job-protected leave in a 12-month period: for the birth and care of a newborn child of the employee; for the placement with the employee of a son or daughter for adoption or foster care; to care for a spouse, son, daughter or parent with a serious health condition; for a serious health condition that makes the employee unable to perform the essential functions of his or her job; and for qualifying exigencies arising out of the fact that the employee’s spouse, son, daughter or parent is a covered military member on ‘active duty.’ Up to 26 workweeks of leave may be taken during a single 12-month period to care for a covered service member with a serious injury or illness if the eligible employee is the service member’s spouse, son, daughter, parent or next of kin (military caregiver leave).”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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