Courts Reject Overtime Claims For Outside Salespeople

Two men working for SmithKline Beecham Corp, a pharmaceutical company, sued SmithKline claiming they were not paid overtime appropriately, according to the Fair Labor Standards Act (FLSA). Outside salespeople are exempt from the overtime payment requirements afforded in the FLSA, according to Allen Smith. Per the interpretation of the courts, the two men suing SmithKline were considered outside salespersons because they did not have to clock in and out, did not have to report their hours worked, had minimal supervision, worked 10-20 hours each week on sales activities (i.e. attending events, responding to calls and e-mails, reviewing product information, and soliciting customers – doctors – for the intended sale of the drugs), and they earned well above minimum wage ($70k and higher). While they did not receive overtime pay, they were sufficiently compensated for their time and efforts.

Companies must be careful in how they create job descriptions, how they classify employees, and how and what information they provide to their employees. While SmithKline won this lawsuit, other companies may not be so lucky when it comes to employment law. Make sure you are fully aware of the laws and the interpretations of those laws as they apply to your employees.

Do you have outside salespeople? How to do you classify them?

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