Cengage Advantage Books: Fundamentals of Business Law 9th Edition by Roger LeRoy Miller

تمرين 19

Smith v. Johnson and Johnson
United States Court of Appeals, Third Circuit, 593 F.3d 280 (2010).
www.ca3.uscourts.gov
FACTS Patty Lee Smith was a senior professional sales representative for McNeil Pediatrics, a wholly owned subsidiary of Johnson and Johnson (J J). Smith's position required her to visit prescribing doctors to describe the benefits of J J's pharmaceutical drug Concerta. Smith, however, did not sell Concerta (a controlled substance) directly to the doctors, as such sales are prohibited by law. J J gave Smith a list of target doctors and told her to complete an average of ten visits per day, visiting every doctor on her target list at least once each quarter. To schedule visits with reluctant doctors, Smith had to be inventive and cultivate relationships with the doctor's staff-an endeavor in which she found that coffee and doughnuts were useful tools. J J left the itinerary and order of Smith's visits to her discretion. J J gave her a budget, and she could use the funds to take the doctors to lunch or to sponsor seminars. In Smith's deposition, she stated that she was unsupervised about 95 percent of the time. According to Smith, "It
was really up to me to run the territory the way I wanted to." Smith earned a base salary of $66,000 but was not paid overtime. Smith filed a suit in a federal district court under the Fair Labor Standards Act (FLSA), seeking overtime pay. J J moved for summary judgment in its favor, arguing that Smith was exempt from the FLSA's overtime requirements because she was an administrative employee. The court granted the motion, and Smith appealed.
ISSUE Was Smith an administrative employee and thus exempt from the overtime requirements of the FLSA?
DECISION Yes. The U.S. Court of Appeals for the Third Circuit affirmed the judgment of the district court. Smith qualified as an administrative employee.
REASON To qualify under the administrative employee exemption, the employee must be paid on a salary basis and his or her primary duty must be directly related to the management or general business operations of the employer. In addition, the employee's primary duty must include the exercise of discretion and independent judgment with respect to matters of significance. The court noted that "while testifying at her deposition, Smith elaborated on the independent and managerial qualities that her position required. Her … position required her to form a strategic plan designed to maximize sales in her territory." The court reasoned that this satisfied the "directly related to the management or general business operations of the employer" requirement of the administrative employee exemption. Clearly, Smith had to engage in high-level planning and foresight, and she had to develop her own strategic plan. Furthermore, she exercised nearly all of her duties without direct oversight. The lack of oversight and the freedom to develop her own sales strategy indicated that Smith was an administrative employee who was not entitled to overtime pay.
FOR CRITICAL ANALYSIS-Ethical Consideration Is it unfair to exempt certain employees to deprive them of overtime wages? Why or why not?