Tag Archives: overtime

Overtime, Independent Contractor Status on Regulatory Agenda for Department of Labor

A couple of weeks ago, the federal Department of Labor announced its regulatory agenda for the immediate future. The DOL does this twice a year, and the announcement indicates what its rulemaking and enforcement priorities will be.

The Wage and Hour Division will be busy in the coming months. According to the agenda, the DOL is looking at amending the Family and Medical Leave Act regulations to explicitly include same-sex spouses (following the Supreme Court’s decision in U.S. v. Windsor), and possible changes to child labor rules to clarify how old an employee must be to operate patient lifting equipment.

Two entries on the list follow directly from President Obama’s efforts to work outside of Congress to move his agenda forward: The DOL plans to propose rules raising the minimum wage for certain federal contractors to $10.10 an hour, and to consider revising the overtime exemptions for professional, administrative, and executive employees (the so-called “white collar” exemptions).

Finally, the DOL is continuing to look at problems of employee misclassification as independent contractors. in 2011, the DOL launched its “misclassification initiative,” intended to reduce misclassification and step up enforcement against employers whose “independent contractors” really should be classified as employees. As the DOL points out, this problem leads directly to reduced tax revenue to the state and federal governments. It also denies a range of benefits and protections (from minimum wage and overtime to family and medical leave and protections from discrimination) to the employees who are misclassified.

The DOL has already stepped up enforcement; check out the long list of press releases announcing these actions at its Employee Misclassification as Independent Contractors page. The DOL has also surveyed employees, to find out what they know about their rights and their status. In the regulatory agenda, the DOL proposes regulatory action to its record keeping rules, requiring employers to tell employees what their job status is (employee or independent contractor) and how their pay is calculated. There’s no timeframe or proposed “next steps” for this action, however. (In fact, the regulatory agenda says “next action undetermined.”) But it’s clearly a continuing enforcement priority for the DOL.

Working for Lady Gaga: It’s a Full-Time Job

towelsLast week, Lady Gaga settled an overtime lawsuit brought against her by a former assistant. The settlement is confidential (so far), but the complaint took an interesting approach. In most overtime cases, the employee claims to have worked a certain number of extra hours, such as two hours per day or ten hours per week. Or, the employee claims to have had to work through lunch, which adds up to half an hour per day for the length of the employee’s tenure.

According to the lawsuit, Gaga kept her assistant quite a bit busier than that. Her assistant, Jennifer O’Neill, requested overtime for every single hour of every single day she worked for Gaga. According to the complaint, O’Neill had to be available from “the earliest waking hour,” be “responsive to the slightest need throughout the day,” and address “spontaneous random matters in the middle of the night.”

How random and slight? Among O’Neill’s tasks were reconciling Gaga’s credit card statements, ensuring that she had a fresh towel immediately upon finishing her shower, and according to the Hollywood Reporter, sleeping in Gaga’s bed and being awakened throughout the night to change the CD.

The case settled after a judge refused to dismiss the lawsuit, finding that a jury would have to decide how many of those alleged “on call” hours were work for which O’Neill should have been compensated. According to CNN, the case was set to go to trial next week.

Wage and Hour Violations at Restaurants

A couple of days ago, the New York Times published an article about wage and hour violations at Urasawa, a very trendy — and expensive — sushi restaurant in Beverly Hills. According to the article, workers were not paid overtime and not allowed to take legally required breaks. An employee interviewed for the article also noted that he was required to buy his own $700 set of knives, at a time when he was earning between $9 and $11 an hour. (Although the article didn’t mention it, this is a separate violation of California law, which requires employers to bear the cost of uniforms, tools, and other items necessary for employees to do their jobs.)

Restaurants are too frequently in violation of wage and hour laws, from overtime and break rules to minimum wage, uniform, and tip requirements. If the violator is extremely upscale, like the restaurant cited in the Times article, employees are often willing to put up with substandard conditions in exchange for the opportunity to gain the experience and cachet that stem from working at a trendy spot. (Apparently, diners are also willing to put up with a lot to eat there, from a $1,000 price tag for dinner for two to rules about how the food must be treated that would make Sienfeld’s Soup Nazi blush.) At the other end of the spectrum, employees working at fast-food franchises and low-budget eateries often don’t know their rights and work for an owner who is operating on a financial shoestring.

In recent years, the Department of Labor has taken steps to remedy this situation, from revising the regulations on tip credits to partnering with the Subway restaurant chain to make sure that employees know their rights. Let’s hope it works! Because I don’t know about you, but for my own selfish reasons, I’d prefer to have my food prepared by workers who are allowed to go to the bathroom when they need to.

Supreme Court: Pharmaceutical Reps Not Entitled to Overtime

In a 5-4 split, the Supreme Court decided yesterday that pharmaceutical detailers qualify as outside salespeople and are therefore not entitled to overtime pay. This case was closely watched in the pharmaceutical industry, which estimated that a change in industry practice to require overtime to these employees would cost billions of dollars.

The job of a detailer is to visit doctors in a particular sales territory and explain the uses, benefits, and risks of a particular set of the company’s prescription drugs. In the heavily regulated field of pharmaceuticals, the detailer’s goal is to obtain a “nonbinding commitment” from the doctor to prescribe the company’s drugs when appropriate. A portion of the detailer’s pay is incentive-based, determined by sales of the featured drugs in the detailer’s territory.

In this case, everyone agreed that the detailers routinely worked more than 40 hours a week and did not receive overtime pay. Their employer, GlaxoSmithKline, classified them as “outside salespeople,” a job category that is exempt from the overtime requirements. The issue before the court is whether what they do can really be called selling.

For the majority, Justice Alito found that it could. He determined that the regulations interpreting the outside salesperson exemption were intended to be broad enough to cover various industry practices, including the use of detailers. Although there is no sales contract (other than that oxymoronic “nonbinding commitment”), no money changes hands, and no orders are placed, the detailers were doing all that’s legally allowed in this heavily regulated field to sell the company’s products. Ultimately, doctors must be free to prescribe the medications appropriate to a patient’s condition, and patients may ultimately decide not to follow that advice, or to purchase a generic equivalent. The company can’t control this part of the transaction, but it can promote its products to those who write the prescriptions.

For the dissent, Justice Breyer pointed out that, unlike representatives who sell drugs to doctors for their own use (such as vaccines and medications to be administered in the doctor’s office), the detailers do not make any sales. Rather, their work looks more like promotional work, a category which the regulations treat as separate when the person performing it does not also make sales. The only sale is made at the pharmacy counter, not in the doctor’s office.

Interestingly, all of the Justices agreed that the Department of Labor’s recent efforts to interpret the outside salesperson exception more strictly (to entitle more employees to overtime) had failed. In opinion letters and in amicus briefs, the DOL stated that detailers didn’t qualify as outside salespeople because they did not transfer title to the property in question. (This is the most recent interpretation; the DOL had previously said that the employee would have to be involved in a “consummated transaction” in order to have made a sale.) Both the majority opinion and the dissent disregarded this recent reinterpretation and focused on the language of the statute and regulations, finding that the DOL’s opinion had been too much of a moving target to warrant deference to the agency.