Should Pharmacists Receive Overtime Pay?

APRIL 01, 2006
Joseph L. Fink III, BSPharm, JD

Issue of the Case

As a general rule, employers are required to pay overtime rates for hours worked by employees in excess of 40 hours per week. There is an exception, however, for those employed in a professional capacity. A group of pharmacists raised the issue of how pharmacists are viewed under this federal law.

Facts of the Case

Five pharmacists were employed by a pharmacy that specialized in compounding customized pharmaceutical formulations. Their duties were described as analyzing medication orders, approving them as appropriate in dosage, etc, and preparing the medications for patient use. The work flow involved rotating through 3 "duty stations"—data entry, compounding, and labeling. They were compensated on a salary basis because their employer viewed them as falling in the professional classification and thus exempt from the overtime pay requirement.

Their case was filed in federal court because it presented issues arising under a federal statute. Both sides filed motions for summary judgment, essentially arguing that there were no substantial facts in dispute and asking the judge to decide the case by applying the law to the undisputed facts. At the trial court level, the employer won, and the group of pharmacists appealed to the appropriate Court of Appeals.

The Court's Ruling

The appellate court noted that the federal statute, the Fair Labor Standards Act (FLSA), requires overtime pay but also provides exceptions for employees working in executive, administrative, or professional capacities. If an employer views an employee as falling within one of those exceptions, the burden falls on the employer to "make the case," and prior court decisions had indicated that such exceptions are to be "narrowly construed against the employers seeking to assert them."

The parties to the dispute agreed that the standard to be applied in making the determination was a so-called "short test." Under that approach, an employee will be considered a professional if:

(a) "[the] primary duty consists of the performance of?work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education and from an apprenticeship, and from training in the performance of routine mental, manual, or physical processes?, and,

(b) the work requires the consistent exercise of discretion and judgment in its performance."

The pharmacists argued that they met the knowledge segment in Section (a) of the "short test," but they also argued that they should not be classified as professionals for purposes of the FLSA because their work did not require the consistent exercise of discretion and judgment as in Section (b).

The Court's Reasoning

The 3 appellate judges deciding the case focused on several indicators in reaching their decision that the pharmacists were indeed correctly classified as professionals by the employers. First, they emphasized that one of the primary roles of the pharmacists was to evaluate the safety and propriety of each prescription in the context of what was known about the patient. If concerns surface, the pharmacist makes the decision whether to contact the prescriber, and the content of the ensuing conversation is controlled to a major degree by the pharmacist.

Second, the pharmacists spent a significant portion of their time at work supervising other employees (ie, 8-10 pharmacy technicians). This fact indicated that the pharmacists exercised discretion and judgment in their employment roles.

Third, although the pharmacists spent a significant portion of their workday supervising others, they themselves were not closely supervised. This was an additional indicator to the court that the pharmacists exercised discretion and judgment at work.

The pharmacists acknowledged all those points but retorted that they do not consistently exercise discretion and judgment because they are required to follow preestablished standard operating procedures (SOPs) in discharging their responsibilities. That argument was not successful. The judges looked at the fact that the pharmacists acknowledged that they did not follow the SOPs if the result would endanger the patient's health. They retained discretion over when to deviate from the SOPs. Moreover, the pharmacists were never subject to discipline for deviating from SOP. Finally, the SOPs were formulated with input from the pharmacists, bringing their collective wisdom and experience, as well as discretion and judgment, to bear on operations in the pharmacy.

For all those reasons, the court ruled that the employer's classification of the pharmacists as professionals for purposes of the FLSA was appropriate and that the pharmacists were not due time-and-a-half pay for overtime hours.

Dr. Fink is professor of pharmacy law and policy at the University of Kentucky College of Pharmacy, Lexington.

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