Archive for the ‘Outside Sales Exemption to FLSA’ Category

As you my recall, I have blogged on occasions about whether employees are entitled to be paid overtime. Under the Federal Law that governs this issue, the Fair Labor Standards Act (FLSA), many employees are considered “exempt” from overtime based upon different Federal regulations. One of the federal exemptions applies to Outside Sales Employees.

According to the U.S. Department of Labor and to be exempt from overtime as an Outside Sales Employee, The employee’s primary duty must be making sales (as defined in the FLSA), or 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 the employee must be customarily and regularly engaged away from the employer’s place or places of business. The U.S. Department of Labor further defines these terms in their Fact Sheet 17F.

Just recently, however, a federal court judge has ruled Abbott Lab reps are not exempt from overtime provisions of the Fair Labor Standards Act and, therefore, should be paid overtime. The ruling, which came in the form of a summary judgment and is now headed to trial to determine damages for about 80 Abbott rep.

Drugmakers argue their sales reps are, indeed, outside salespeople who close sales because the primary customer is the physician. But recently, the US Department of Labor added an unexpected twist to the debate by filing an amicus brief with a federal appeals court contending that a lower court was wrong to toss their lawsuit.
In the latest ruling, US District Court Judge Ruben Castillo of the Northern District Court of Illinois, decided the Labor Department’s “interpretation is both persuasive and consistent with our analysis of the regulations (which) dictate that if an employee does not make any sales or obtain any sales orders or contracts, then the outside sales exemption does not apply.” He also rejected Abbott’s argument that reps are exempt from overtime as administrative employees. To qualify for the exemption, employees must exercise discretion and independent judgment “with respect to matters of significance.” The DOL maintains reps don’t have that kind of independence since they’re given lists of docs to visit and must present scripted messages.

I have attached a copy of the Judge’s recent decision.Decision of Court Against Abbot Labs

So if you are a sales person or pharmaceutical rep who sells outside of the office, but is not paid overtime, consult with an employment lawyer to discuss what you may be entitled to be paid.