Home > Property & Casualty > Exempt or non-exempt, that is the question…

Exempt or non-exempt, that is the question…

An increase in court cases regarding employee exemption misclassifications has created a topic of discussion among Employment Law attorneys and experts. Earlier this month, Novartis Pharmaceuticals Corp. (“Novartis”) settled an overtime case with its current and former outside sales representatives for $99 million, forcing several circuit courts and now the Supreme Court to further examine conditions of the Fair Labor Standards Act.

In the case, Novartis Wage & Hour Litigation, the plaintiffs (current and former sales representatives) alleged that they had been misclassified as exempt from the FLSA’s overtime requirements, and should have therefore been paid for those overtime hours accordingly (full description of the case). However, there have been other court cases relating to exemption status for outside sales representatives who work for other pharmaceutical and/or biotechnology companies that resulted in different rulings. In some of these cases, the circuit courts ruled that the plaintiffs’ exemption status did apply, and therefore those outside representatives were not entitled to overtime payments.

The overall rise in the number of these types of cases, especially the significance of the $99 million Novartis settlement, should serve as a reminder to employers of how important it is to continually review all positions classified as exempt and to ensure that those classifications are supported by the FLSA. Furthermore, they should check that the positions adhere to the Department of Labor guidance regulations. Given the possibility of collective actions, multiple damages and other financial consequences, this is clearly an area upon which employers and organizations must stay up to date, and cannot afford to ignore.



About the Author

Ann Mizner McKay is the General Counsel and Senior Vice President at WGA. Aside from managing the legal affairs of the company and also manages the Claims Department.She regularly advises WGA clients on various insurance matters, analysis of contracts, arbitrations and mediations.
617.646. 0238   AMiznermckay@wgains.com   Connect with Ann on LinkedIn

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