The issue centers on the Fair Labor Standards Act (FLSA) exemption from overtime rules for those employees who are engaged in outside sales.

Pharma reps and their attorneys argue that what the representatives do in the field is not selling but conducting public relations meetings and handing out samples of drugs. Big Pharma, obviously, rejects this costly argument, so the two sides have met in court on various occasions.

The most recent decision came this past Monday (Feb. 14, 2011) when the U.S. Court of Appeals for the 9th Circuit ruled that pharmaceutical representatives are indeed exempt from overtime rules, arguing that:

"The pharmaceutical industry's representatives—detail men and women—share many more similarities than differences with their colleagues in other sales fields, and we hold that they are exempt from the [FLSA] overtime-pay requirement."

Earlier, the 2nd Circuit Court had ruled that the reps are not exempt and are due overtime pay. 

In both decisions, the Department of Labor (DOL), overseer of the FLSA, submitted amicus briefs contending that pharmaceutical representatives are indeed eligible for overtime pay.

The issue would now appear to be moving for a SCOTUS review.

Typically, back wages represent overtime pay that was withheld either knowingly or unknowingly. Since taking over, the Obama administration and DOL Secretary Hilda Solis have beefed up their inspection force by hiring some 300 additional Wage and Hour (WHD) Division agents. The DOL has also launched an outreach program called "We Can Help," which provides a hotline for workers to report wage abuse.

"Protecting worker rights is my top priority," Solis said upon announcing the monetary coup.

Overtime is codified in the landmark Fair Labor Standards Act of 1938 and has been further defined by Congress throughout the decades.

Get a copy today of Personnel Concepts’ FLSA Overtime Rules Compliance Kit and stay in tune with all federal wage laws.

Reason? It doesn’t take employees long to figure out that, if they’re doing the same jobs as exempt as when they were non-exempt, then they were probably cheated out of overtime prior to the reclassification.

Voila–Wlotkowski et al. v. Michigan Bell Telephone Company, filed in the Eastern District of Michigan.

Now, Michigan Bell probably did the right thing in realizing the class-action-lawsuit workers were non-exempt, but when it did so, it should also have dealt with the back-overtime-pay issue. Since the company decided to brush that under the rug, it ended up being sued.

There are a couple of lessons here. One is that it’s important to do workforce classification audits, especially with the Department of Labor breathing down employers’ throats to classify (and pay) properly. The other is that, when you do reclassify employees as non-exempt, you must right away square the back-pay issue with them.

Classifying workers is often difficult, but Personnel Concepts offers an FLSA Overtime Rules Compliance Kit, which will explain the criteria for exempt and non-exempt classifications and even provide handy checklist forms.

The New Jersey Department of Labor and Workforce Development disagrees with the DOL and forbids the practice in the Garden State.

Now a class action lawsuit filed in Seattle accuses Amazon of cheating in its rounding and thus avoiding paying workers what’s properly owed them–to the tune of 15 minutes of overtime for every day worked. That’s a lot of unpaid wages that Amazon could face if found liable–the suit represents some 21,000 warehouse workers.

Let’s see, 21,000 X 15 = 315,000 minutes of lost overtime per day. Say each worker averages $10 an hour, that works out to $3,150,000 per day.

Worse, employees claim Amazon’s practice of rounding off to the nearest 15 minutes has been going on for years.

Ouch!

Amazon is not the only company being accused of nefarious timekeeping. Station Casinos in Nevada is accused of rounding off starting and ending times and thus cheating workers out of pay. Workers at Michigan Bell, the telecom, claim rounding off robs them of accrued overtime pay.

With the "new sheriff in town," Labor Secretary Hilda Solis, cracking down on wage and hour violations with an added posse of 250 new field investigators, businesses are advised to keep accurate overtime records and pay accordingly.

Get a copy of Personnel Concepts’ Fair Pay Overtime Rules Kit and keep the DOL at bay by maintaining proper records and compensating accordingly.