Overtime lawyers and attorneys in Pennsylvania, New Jersey, and Delaware should be aware of two recent Third Circuit holdings that pharmaceutical sales representatives fell within the FLSA’s administrative exemption to overtime coverage. In the first decision, Smith v. Johnson and Johnson, 593 F.3d 280 (3d Cir. 2010), the court emphasized that it was not adopting a per se rule that pharmaceutical sales representatives can never fall outside of the exemption. See 593 F.3d at 293 n.1. The court then concluded, based on the underlying factual record, that the plaintiff was exempt based on her own admissions during deposition that she exercised significant discretion and independent judgment. After reading the opinion, one is left puzzled as to why this plaintiff thought she could win an appeal. In the second case, Baum v. Astrazeneca, 2010 U.S. App. LEXIS 6047 (3d Cir. Mar. 24. 2010), the court affirmed the grant of summary judgment against another pharmaceutical sales rep after observing that her duties “were very similar to the palintiff’s duties in Smith.” As usual, bad facts make bad law.

On November 20, 2009, the Second Circuit decided Davis v. J.P. Morgan Chase & Co., 2009 U.S. App. LEXIS 25481 (2d Cir.  Nov. 20, 2009), wherein it reversed a summary judgment finding against a loan underwriters who allege that they are entitled overtime pay under the FLSA.  The Court flatly rejected the district court’s holding that such employees are covered by the FLSA’s administrative exemption.  This is an important victory for loan underwriters, loan officers, staff accountants, non-licenced accountants, bank tellers, and other financial service employees who are frequently misclassified as FLSA exempt.  The Court emphasized that, to fall within the administrative exemption, employees perform work that is related to the management policies or general business operations.  In other words, true administrative employees are “at the heart of the company’s business operations,” and those “functional” employees who perform day-to-tasks of the business – even if those tasks are comples — are not covered by the exemption.  In sum, this is a big victory for the plaintiffs and their New York overtime lawyers.    

I recently re-read a terrific DOL Wage and Hour Division Opinion Letter explaining that salaried case managers are not covered by the FLSA’s administratrive exemption to the overtime pay if their activities ”are more related to provifing the Company’s ongoing, day-to-day case management services for its customers, which involve duties such as assessing costs of care, preparing a plan of care, and identifying and services to meet the customers’ needs.”  See Opinion Letter FLSA 2007-7 (Feb 8, 2007).  This is true regardless of whether the case manager has a bachelor’s degree or exercises significant discretion in recommending the type of care and services to be provided to the customer/client.  This opinion letter serves as an important reminder that case managers, case workers, and social workers frequently are misclassified as exempt from the FLSA’s overtime pay mandate.  Indeed, in the last year, WLF has successfully recovered overtime wages for case managers, caseworkers, and social workers throughout Southeastern Pennsylvania, including Bucks County, Montgomery County, and Philadelphia County.