The FLSA requires employers to pay many employees one-and-one-half times their rate of compensation for time worked over 40 hours a week. However, some occupations are excluded from this requirement. As the Novartis case demonstrates, whether the FLSA requires overtime depends on job duties and salary, not the labels an employer gives a job position.

     Novartis did not pay its sales people overtime, claiming they were exempt either as outside sales representatives, or as administrative employees. The Second Circuit found their jobs did not meet either classification, thus the representatives should have been paid overtime. Last week we explained the Court found the sales people were not exempt as sales representatives because they encouraged physicians to prescribe Novartis drugs, but no sale was involved between the sales representative and the physician.

     The Court also found Novartis salesmen were not administrative employees. An employee must meet three criteria to be exempt under that category. First, the employee must earn at least $455 a week. Also, his or her primary duty must be performance of office or non-manual work directly related to management or general business operations of the employer or its customers, and include exercise of discretion and independent judgment in matters of significance.

     These requirements mean more than just being skillful in applying techniques or procedures prescribed by the employer. The employee must have authority to evaluate possible courses of conduct and have a great deal of discretion in making decisions on matters of importance or consequence. The Court found no evidence the sales representatives had authority to formulate, affect, interpret, or implement policies or practices, or were involved in planning long- or short-term objectives, nor did they have any authority to commit Novartis in matters that have significant financial impact. They were thus entitled to overtime compensation.

     You can find the Court’s opinion at http://caselaw.findlaw.com/us-2nd-circuit/1530375.html.