In a case of first impression in the Seventh Circuit (which includes Indiana, Illinois and Wisconsin), the Court of Appeals held that pharmaceutical companies Eli Lilly & Co. and Abbott Laboratories properly classified their sales representatives under the administrative exemption to the overtime requirements of the Fair Labor Standards Act ("FLSA"). Susan Schaefer-LaRose v. Eli Lilly & Co., 2012 U.S. App. LEXIS 9300 (7th Cir. May 8, 2012), Jirak v. Abbott Laboratories, Inc., 2012 U.S. App. LEXIS 9300. Current and former sales representatives sued their employers, claiming that they were misclassified as exempt employees and denied overtime compensation in violation of the FLSA. The employers contend that both the administrative exemption and the outside sales exemption, 29 U.S.C. ยง 213(a)(1), remove the sales representatives from the overtime requirements of the FLSA. The Seventh Circuit, observing that the outside sales person exemption issue is before the United States Supreme Court in another case, focused its decision solely on the administrative exemption. The Plaintiffs argued that they were not exempt from the overtime requirements of the FLSA because they did not actually sell the drugs to the physicians, but merely engaged in promotional and sales-like work focused on a limited, select group of physicians. The Plaintiffs argued that the administrative exemption is designed for higher level employees whose work is targeted at sales, promotional and marketing policies of the company overall. In rejecting the Plaintiffs' argument, and holding for the employers, the Court of Appeals held that the sales representatives' work is properly characterized as administrative:
Seventh Circuit Holds That Pharmaceutical Sales Representatives Are Exempt From Overtime Requirements Of FLSA Under Administrative Exemption
Pay-if-Paid Clauses Can Destroy Your Bond Claim Rights
In the construction industry, bonds are typically put in place to ensure that a subcontractor is paid if the general contractor fails to receive payment. Currently, in Indiana, pay-if-paid provisions can eliminate a subcontractor's bond claim rights.
Time Spent Changing Into Protective Safety Gear Non-Compensable Under FLSA
The Seventh Circuit Court of Appeals held that the Fair Labor Standards Act ("FLSA") does not require employers to compensate employees for the time they spend in putting on and taking off their work clothes in a locker room at the plant ("clothes-changing time") and in walking from the locker room to their work stations, and back again at the end of the day ("travel time"). Sandifer v. United States Steel Corp., 2012 U.S. App. LEXIS 9302 (7th Cir. May 8, 2012). The Court of Appeals observed that Congress intended "to allow the determination of what is compensable work in borderline cases ... to be settled by negotiation between labor and management." The Court further observed that the collective bargaining agreement between U.S. Steel and the steelworkers union in this case does not require compensation for "clothes changing time" or "travel time" and that none of the previous collective bargaining agreements between U.S. Steel and the union since 1947, nine years after the FLSA was enacted, required it either. The Court refused to expand the FLSA to require employers to compensate employees for this time. In fact, the Court of Appeals observed that the Plaintiffs' position in this case is "adverse to their union, to the interests of other steelworkers, and to their own long-term interests", reasoning that
EEOC Issues Guidelines on Criminal Background Checks
Many of our clients routinely use criminal background checks when hiring new employees. The EEOC has just issued new guidelines which limit this use.
EEOC Develops New Plan To Focus On "Systemic Litigation"
Complaints ("Charges") of unlawful discrimination based on gender, race, color, national origin, age, religion or disability, are filed with the Equal Employment Opportunity Commission ("EEOC"). Typically, the EEOC investigates a charge and, if appropriate, will issue a Notice of Right to Sue Letter. The complainant has ninety (90) days after his/her receipt of the Letter to file suit. If the 90 days passes, any suit is barred.
