On June 18, 2012, the U.S. Supreme Court ruled 5-4 in favor of SmithKline Beecham Corporation in a groundbreaking FLSA overtime compensation case that will most likely affect many small businesses. The case brought by Michael Christopher & Frank Buchanan (Christopher v. SmithKline Beecham Corporation) primarily centered around two pharmaceutical sales representatives who claimed they were owed overtime pay for their work in representing the company.
Each individual worked about 40 hours a week in the field conducting sales calls, attending events and entertaining clients. An estimated additional 10-20 hours were dedicated to general administrative tasks. The court reviewed their complaint and determined that the two were highly compensated and properly classified as exempt outside salespeople. In part, the court noted that both plaintiffs were given freedom regarding their schedules and were not required to report hours. In addition, they were subjected to very little supervision, therefore, the court ruled that the work performed met the exempt status requirements and the plaintiffs were not eligible for overtime pay.
Properly classifying employees can sometimes be confusing and we often see businesses that are improperly placing individuals on “salary” when they should actually be paid hourly or subject to overtime pay. Governmental agencies are placing a higher level of importance on classification and are conducting audits across America. We highly suggest conducting a review of your HR practices including how your current employees are classified. Understanding regulations and maintaining compliance is just one way StaffScapes helps its clients. Consider your time and risk associated with your HR practices and contact StaffScapes today to learn more about its affordable HR and payroll services. 303-466-7864 or info@StaffScapes.com.