FAQs

These are intended to provide general information, and are not intended to constitute legal advice or to create an attorney-client relationship.  No attorney-client relationship will be formed until we have a signed retainer agreement.

I am a salaried employee. Am I entitled to overtime compensation?

The default rule is that everyone is entitled to overtime pay for hours more than 40 per week. There are many exceptions called “exemptions.” It is the employers’ burden to prove the exemption. It is a common misconception that salaried employees cannot collect overtime—with one exception. In August 2004 the federal law was changed, so that for many purposes, persons making 100k per year or more (including non-discretionary bonuses) are exempt, and therefore are not entitled to overtime compensation. However, California and most other states with state overtime laws have not adopted this rule, and the full effect of the 2004 federal amendments won’t be felt until 8/07.

Are there any reasons that I may not be able to get overtime compensation?

Yes. There is a possibility that a court may rule that the class is “exempt,” meaning that reps cannot obtain payment for overtime worked. In the pharma rep cases, defendants have argued several exemptions, but two are the most common – the “outside salesperson” exemption and the “administrative exemption.”

The “outside sales exemption”, other than for instance, certain oncology or vaccine reps that actually sell products that doctors stock, does not in our opinion apply to most pharmaceutical representatives. For the outside sales exemption to apply, there must be an actual sale made by the employee, not merely promotional or marketing activity resulting indirectly in a sale to someone other than the person or business upon whom the employee called. However, most doctors do not buy pharmaceuticals directly from typical pharma representatives.

The “administrative exemption” involves a pharmaceutical sales representative whose primary duty includes the exercise of “independent discretion or judgment as to matters of significance.” This exemption might have been applied twenty five years ago, when reps had more freedom in their conversation with doctors. However, it is less likely to apply to today’s pharmaceutical representatives. We have learned that the representatives’ calls to doctors are now largely scripted, or representatives are given strict guidelines as to how close they must stick to the detail pieces, how they are to answer objections, upon which doctors they should call and how frequently.

Moreover, we believe that the defendants may not be able to prove that the reps meet the other prong of the administrative exemption, i.e., that the reps are performing work directly related to management or business operations. The burden is on the employer to prove the exemption, and to win on the administrative exemption, the defendants have to prove both that the work (i) directly related to management or business operations and (ii) that the reps had sufficient discretion as to matters of significance.

It is also possible that the court will not “certify” the class. To win certification, it is neither necessary nor sufficient to prove the violation. Rather, courts focus on issues such as whether the policies were uniform and set from the top. To date, one class is fully certified and another preliminarily.

The theory of our cases is that defendants have misclassified employees as exempt, because they do not qualify under any exemption.

Have salaried employees ever sued to recover their overtime compensation before?

Yes. The great bulk of successful class overtime actions involve salaried employees. These are known as “mis-classification cases.” This means that these employees have been mis-classified as exempt from the overtime laws, when in fact they are not. Cases have been settled or won in the nine figures (we make no prediction here).

I am certain that I have not been paid for overtime worked, but I do not have a record of all hours that I worked. Can I participate in a lawsuit when I did not keep track of my hours worked?

Yes. It is the employers’ burden to keep records of hours worked. Since in mis-classification cases, employers and employees rarely do keep records of hours worked, employees can in good faith estimate the time worked, and the employer bears the burden of disproving the estimate. Records are not needed. In most mis-classification cases that are won at trial or settled, statistical analysis rather than individual inquiry is used to determine overtime pay owed, which is then a function of averaging and accounting for pay rates and the amount of time the employee worked within the statute of limitation (which, under federal law, only begins once an employee has affirmatively consented in writing to join the suit.) At the conclusion of a successful case, the parties usually agree on an average number of hours per workweek.

What type of work is included for calculation of total hours worked?

All time that you work is included. This includes paperwork, dinner programs, voice and emails, picking up samples, POA’s; meetings and conference calls. The law requires overtime to be paid for time an employer “suffered or permitted” an employee to work. Thus, voluntary overtime must be compensated.

How can I find out more about my rights?

If you have further questions, you may contact us: Joseph, Herzfeld, Hester & Kirschenbaum, 757 Third Avenue, 25th Floor, New York, New York 10017, (866) 348-7394, or Kingsley & Kingsley, City National Bank Building, Suite 1200, 16133 Ventura Boulevard, Encino, California 91436, (888) 500-8469.