Kansas City Employment Lawyer Blog

In a strong victory for Plaintiffs' rights, on July 6, 2010, the Second Circuit Court of Appeals overturned the District Court's ruling that Pharmaceutical Sales Representatives were exempt pursuant to the outside sales exemption and/or the administrative exemption. In overruling the District Court, the Second Circuit Court of Appeals held that the act of promoting sales, rather than obtaining commitments to buy, did not constitute sales activity within the meaning of the Fair Labor Standards Act (FLSA).

In this instance pharmaceutical sales representatives were actually prohibited from making sales, because the sale required a valid prescription, which the sales representatives could not issue. Rather, the Court found that sales representatives' duties revolved around increasing physicians' awareness of Novartis' products, conducted during meetings generally lasting less than five minutes, and that act could not be construed as obtaining a commitment to buy.

Further, the Court found that because sales representatives performed low-level, discretionless marketing work, Novartis could not rely on the administrative exemption to avoid paying its sales representatives overtime compensation. Because sales representatives did not have the authority to formulate, affect, interpret or implement Novartis's management policies or operating practices, nor could they commit Novartis in matters that have a significant financial impact, the sales representatives were eligible for overtime compensation for weeks in which they work more than 40 hours.

To be properly classified as exempt under the outside sales exemption, an employee's primary duty must be that of making sales within the meaning of Section 3(k) of 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 consumer. Such outside salespersons must be customarily and regularly engaged away from the employer's place or places of business in performing their sales activities. Salespersons who remain at the company's office will generally not be considered exempt from the right to receive overtime, regardless of how they are paid (salary, commission, hourly, etc...).

Further, to be administratively exempt, employees must 1) earn a salary of at least $455.00 per week; and 2) his or her 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 3) his or her "primary duty" must "include the exercise of discretion and independent judgment with respect to matters of significance."

Continue reading "2nd Circuit Court of Appeals Finds Drug Representatives Not Exempt from Overtime" »

Glaxo has announced it will record a charge of 2.4 billion in the second quarter of 2010 to cover the cost of settling lawsuits. This is in addition to the 3.5 billion plus previously booked.

Also known as rosiglitazone, Avandia is an oral medication used to control blood sugar by making the body more sensitive to insulin. People with Type 2 diabetes continue to produce insulin but their bodies do not use it effectively.

Avandia has become a controversial treatment for Type 2 diabetes because its use appears to increase heart attack risk. Thousands of patients have filed lawsuits against GlaxoSmithKline PLC (formerly SmithKline Beecham), alleging that Avandia caused them to suffer heart attacks and other health problems.

The F.D.A. has split on whether to withdraw Avandia from the market or not. Some officials argue that the drug is useful despite its risks and others insist that it must be removed from the market. A 33-member FDA advisory panel voted July 14, 2010 to recommend that the drug remain on the market, but with tighter supervision and warnings about the danger of heart attacks.

The issue with Avandia is whether it raises the risk of heart attacks and cardiovascular problems more than other diabetes treatments. Avandia was linked to a 43% increase in heart attack risk in a 2007 study that was published in the New England Journal of Medicine. The advisory panel voted overwhelmingly that Avandia posed a higher heart attack risk than Actos, its nearest competitor.

The drug's manufacturer, GlaxoSmithKline PLC (formerly SmithKline Beecham), has been coming under fire for spending 11 years covering up their own study results (completed in the fall of 1999) that provided clear signs that Avandia was no better than Actos but was also riskier to the heart than Actos. The company did not submit the results to federal drug regulators, as is required in most cases by law.

Prior to 2007, hiding the results of negative clinical trials was widespread in the drug industry. In 2007 Congress mandated disclosures. But the disclosures are often little more than cryptic references. The issue of disclosure of negative drug studies is still not resolved.

Now, with tighter supervision and warnings about the danger of heart attacks Avandia will remain on the market.

Sources:

Diabetes Drug Maker Hid Test Data, Files Indicate

Glaxo to Take a Major Charge

FDA Panel Says Keep Avandia on Market

Avandia Wins Market Reprieve

Continue reading "Drug Lawsuits Continue Against Makers of Avandia" »

In a strong victory for Plaintiffs' rights, on July 6, 2010, the Second Circuit Court of Appeals overturned the District Court's ruling that Pharmaceutical Sales Representatives were exempt pursuant to the outside sales exemption and/or the administrative exemption. In overruling the District Court, the Second Circuit Court of Appeals held that the act of promoting sales, rather than obtaining commitments to buy, did not constitute sales activity within the meaning of the Fair Labor Standards Act.

In this instance pharmaceutical sales representatives were actually prohibited from making sales, because the sale required a valid prescription, which the sales representatives could not issue. Rather, the Court found that sales representatives' duties revolved around increasing physicians' awareness of Novartis' products, conducted during meetings generally lasting less than five minutes, and that act could not be construed as obtaining a commitment to buy.

Further, the Court found that because sales representatives performed low-level, discretionless marketing work, Novartis could not rely on the administrative exemption to avoid paying its sales representatives overtime compensation. Because sales representatives did not have the authority to formulate, affect, interpret or implement Novartis' management policies or operating practices, nor could they commit Novartis in matters that have a significant financial impact, the sales representatives were eligible for overtime compensation for weeks in which they work more than 40 hours.

To be properly classified as exempt under the outside sales exemption, an employee's primary duty must be that of making sales within the meaning of Section 3(k) of the Fair Labor Standards Act (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 consumer. Such outside salespersons must be customarily and regularly engaged away from the employer's place or places of business in performing their sales activities. Salespersons who remain at the company's office will generally not be considered exempt from the right to receive overtime, regardless of how they are paid (salary, commission, hourly, etc...).

Further, to be administratively exempt, employees must 1) earn a salary of at least $455.00 per week; and 2) his or her 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 3) his or her "primary duty" must "include the exercise of discretion and independent judgment with respect to matters of significance."

On June 16, 2010 the U.S. Department of Labor (DOL) issued Administrator's Interpretation No. 2010-2, Section 3(o) of the Fair Labor Standards Act, 29 U.S.C. § 203(o), reversing two prior DOL opinions relating to under what circumstances employees should be paid for time spent donning and doffing uniforms, and the Supreme Court's ruling in IBP v. Alvarez. The Department of Labor concluded that Personal Protective Equipment such, but not limited to, arm guards, protective aprons and hard hats, which are required by the employer to be worn or as a result of some regulation, generally do not constitute clothing within the meaning of Section 3(o).

23 U.S.C. 203(o) allows employers to avoid paying its employees for time spent donning and doffing clothing, if the employees are subject to a collective bargaining agreement, and the Union has acquiesced to such time being non-compensable either by agreement or by custom and practice. Section 203(o) generally does not apply to non-union employees, and non-union employees generally must be paid for time spent changing clothes.

The result is that an employee does not get paid for the time spent putting on or removing required safety equipment at the beginning and end of a work shift if an employee's union agreed with the employer that workers would not be paid for that time. Also, an employee does not get paid for this time if custom or practice in an industry was or has been to exclude this activity from an employee's compensation.

The DOL further concluded that even if clothes changing activities are considered non-compensable within the meaning of Section 203(o), any time spent walking to and from employees' workstations generally should be compensated, because "...clothes changing covered by section 203(o) may be a principal activity. Where that is the case, subsequent activities, including walking and waiting, are compensable."

In some instances, the process of donning and doffing materials, equipment and garb, and traveling to and from one's workstation can amount to thirty minutes a workday or more, resulting in two and a half hours or unpaid work time per week. Such uncompensated time can result in a windfall to the employer, saving the company vast sums of money which it would otherwise be obligated to pay to its employees.

Frequently, the employer provides a changing room for employees to put on and take off safety equipment. The employee walks to a time clock very close to his or her work station and clocks in to start the workday. This deprives the employee of the time putting on safety gear and walking to the workstation.

In her February 2010 presentation of the 2011 budget request for the U.S. Department of Labor, Secretary Hilda L. Solis included funding to hire 90 new investigators for the department's Wage and Hour Division. These increases will allow the Labor Department's worker protection agencies to "vigorously protect wages and working conditions of 135 million workers in more than 7.3 million workplaces."

Secretary Solis' presentation also includes plans for budget increases for a Misclassification Initiative to address misclassification with 100 additional enforcement personnel and grants to increase states' incentives to address the problem. Misclassification of employees as "independent contractors" deprives the employee of benefits and protections such as overtime and unemployment benefits.

Continuing the message on April 1, 2010, Secretary Solis unveiled the U.S. Department of Labor's "We Can Help" campaign. This campaign is to be led by the department's Wage and Hour Division and will focus on employees in industries such as construction, janitorial work, hotel/motel services, food services and home health care.

Courts have used what is called the Economic Realities Test to determine whether individuals are properly classified as independent contractors under the Fair Labor Standards Act. Under this test, the Court considers the following factors: (1) the degree of control which the alleged employer exerts over the worker; (2) the worker's opportunity for profit or loss; (3) the worker's investment in the business; (4) the permanence of the working relationship; (5) the degree of skill required to perform the work; and (6) the extent to which the work is an integral part of the alleged employer's business. None of the factors alone is dispositive; the Court assesses the totality of the circumstances. See, Lewis v. ASAP Land Express, 554 F. Supp. 2d 1217 (D. Kan., 2008).

Source:
Secretary Hilda L. Solis presents US Department of Labor budget request for fiscal year 2011

US Labor Secretary sends message to America's under-paid and under-protected: 'We Can Help'