June 23, 2012
NEA Attorney Jobs
The National Education Association has posted for two attorney positions--both of which require six or more years experience. One of the positions focuses on litigation, while the other involves more in house work. You can get the position notices and info on applying here and here.
June 22, 2012
Grad Student Organizing: Bye Bye Brown?
Well, it's now been over a year and a hlaf since the Board ordered a hearing in which it indicated its desire to reconsider Brown University's ruling that grad students aren't employees under the NLRA. Today, the NLRB announced that it will in fact review this issue in two cases and has invited amicus briefs on the issue. The invitation for briefs lists these questions:
1. Should the Board modify or overrule Brown University, 342 NLRB 483 (2004), which held that graduate student assistants who perform services at a university in connection with their studies are not statutory employees within the meaning of Section 2(3) of the National Labor Relations Act, because they “have a primarily educational, not economic, relationship with their university”? 342 NLRB at 487.
2. If the Board modifies or overrules Brown University, supra, should the Board continue to find that graduate student assistants engaged in research funded by external grants are not statutory employees, in part because they do not perform a service for the university? See New York University, 332 NLRB 1205, 1209 fn. 10 (2000) (relying on Leland Stanford Junior University, 214 NLRB 621 (1974).
3. If the Board were to conclude that graduate student assistants may be statutory employees, in what circumstances, if any, would a separate bargaining unit of graduate student assistants be appropriate under the Act?
4. If the Board were to conclude that graduate student assistants may be statutory employees, what standard should the Board apply to determine (a) whether such assistants constitute temporary employees and (b) what the appropriate bargaining unit placement of assistants determined to be temporary employees should be?
The notice also states that "[b]riefs not exceeding 50 pages in length shall be filed with the Board in Washington, D.C. on or before July 23, 2012. The parties may file responsive briefs on or before August 6, 2012, which shall not exceed 25 pages in length. No other responsive briefs will be accepted. The parties and amici shall file briefs electronically at https://mynlrb.nlrb.gov/efile. If assistance is needed in filing through https://mynlrb.nlrb.gov/efile, please contact the undersigned."
Much more to come on this later . . . .
June 21, 2012
Bodie on Knox Decision: Political Spending = Business Spending (by Unions as well as Corporations)
Cross-Posted at PrawfsBlawg by Matt Bodie (St. Louis/Notre Dame):
Earlier this week, the WSJ touted a new Manhattan Institute study showing that political contributions by corporations have a positive effect on the bottom line. The study found that "most firms, like most individuals, behave rationally and strategically in their spending decisions on campaigns and lobbying, devoting resources in ways that, they have reason to expect, will benefit the corporations themselves and their shareholders." And benefits do come, in the form of lower taxes, more favorable regulation, and earmarks that help the business. The authors calculate that these political benefits improve returns for shareholders by 2% to 5% a year.
It should not be a surprise that corporate political spending helps corporations. This recent study follows upon research by Jill Fisch on FedEx's political spending, which found that "FedEx has successfully used its political influence to shape legislation, and FedEx's political success has, in turn, shaped its overall business strategy." The WSJ uses the Manhattan Institute report to beat back critics of Citizens United who are looking to get corporations out of politics. The Journal opines:
Liberals have been trying to persuade CEOs and corporate boards to stop spending money on politics by claiming that it doesn't pay. But according to a new study by the cofounder of the Democratic-leaning Progressive Policy Institute, corporate participation in politics works for the companies and their shareholders. * * *
In a better world, corporations wouldn't have to devote money and time to politics. . . . But politicians have created a gargantuan state that is so intrusive that businesses have no alternative than to spend money to defend themselves and their shareholders from such arbitrary looting as the medical device tax in ObamaCare. Liberals want business to disarm unilaterally.
Oddly, neither the Journal nor the Supreme Court seem to understand these principles when it comes to unions.
In today's Knox v. SEIU, the Court again privileges the rights of represented employees to opt out--or rather, not to have to opt-out in the first place--from union political spending. The Court clings to the trope that the union's political spending is somehow extraneous to the core services provided by the union to the represented employees. But political spending is perhaps even more important to unions than it is to corporations. I have posted before about SEIU's electoral activity, but it bears repeating--SEIU spent an estimated $85 million to help elect Barack Obama in 2008. Although the Obama administration failed to get the Employee Free Choice Act passed, it did pass healthcare reform -- which was arguably more of a SEIU priority. (See Chapter 9 of this book by Steve Early, entitled "How EFCA Died for Obamacare"). Former SEIU President Andy Stern had the highest number of oval office visits of any outsider--22--during the president's first six months in office. Stern was not in there based on his individual perspicacity about the nation's various problems. He was in there as president of the fastest-growing union in the U.S. -- one whose members largely worked in the health care field and would benefit from an expansion of health care benefits.
Knox v. SEIU concerns a "Political Fight-Back Fund" levied against represented employees, including nonmembers, to fund political activities in California. Two propositions were on the California ballot: Proposition 75, which would have required an opt-in system for charging members fees to be used for political purposes, and Proposition 76, which would have given the Governor the ability to reduce state appropriations for public-employee compensation. In response to the petitioner's objection to the special assessment, an SEIU employee said, "we are in the fight of our lives," and it's easy to see the urgency. If you accede to the principles that (1) employees can choose as a majority whether to have union representation, and (2) all represented employees need to pay for their representation, then political spending should not be excluded. In an era where state governments are reconsidering collective bargaining rights for public sector unions, political spending is critical to the unions' very existence as businesses. Unions need to have collective bargaining rights in order to bargain collectively on behalf of represented employees.
The majority's opinion in Knox v. SEIU assumes the distinction between collective bargaining expenses and political expenses without much discussion, other than an interesting block-quote from a Clyde Summers's book review. (I would argue that all of Summers' examples don't really prove his or the Court's point.) And at this point, not even the dissent questions the Hudson framework. But it makes no sense. Unions and academics should start fighting the framework: unions are businesses, and political spending is business spending.
I did see one glimmer in the Court's opinion, in the following passage:
Public-sector unions have the right under the First Amendment to express their views on political and social issues without government interference. See, e.g., Citizens United v. Federal Election Comm’n, 558 U. S. ___ (2010). But employees who choose not to join a union have the same rights.
The Manhattan Institute report, like the Wall Street Journal, recognizes that corporations are not merely "express[ing] their views on political and social issues" when they make political contributions. They are fighting for their businesses. The Court should not continue to disarm unions unilaterally in a post-Citizens United world.
Supreme Court's Knox Decision
The Supreme Court issued its decision in Knox this morning and went against the union in a 7-2 decision. It appears to mandate an opt-in system for special assessments and possibly dues increases (I haven't had time to more that skim the opinion, but there seem to be several questions left open). Two Justices only concurred, and would limit their decision to the holding that a union can't collect nonchargeable funds from employees who earlier objected to such payments. Here's the official summary:
1. This case is not moot. Although the SEIU offered a full refund toall class members after certiorari was granted, a live controversy re- mains. The voluntary cessation of challenged conduct does not ordi- narily render a case moot because that conduct could be resumed as soon as the case is dismissed. See City of Mesquite v. Aladdin’s Cas- tle, Inc., 455 U. S. 283, 289. Since the SEIU continues to defend the fund’s legality, it would not necessarily refrain from collecting similar fees in the future. Even if concerns about voluntary cessation were inapplicable because petitioners did not seek prospective relief, there would still be a live controversy as to the adequacy of the refund no- tice the SEIU sent pursuant to the District Court’s order. Pp. 6−8.
2. Under the First Amendment, when a union imposes a special as- sessment or dues increase levied to meet expenses that were not dis- closed when the regular assessment was set, it must provide a fresh notice and may not exact any funds from nonmembers without their affirmative consent. Pp. 8−23.
(a) A close connection exists between this Nation’s commitment to self-government and the rights protected by the First Amendment, see, e.g., Brown v. Hartlage, 456 U. S. 45, 52−53, which creates “an open marketplace” in which differing ideas about political, economic, and social issues can compete freely for public acceptance without improper government interference, New York State Bd. of Elections v. Lopez Torres, 552 U. S 196, 202. The government may not prohibit the dissemination of ideas it disfavors, nor compel the endorsement of ideas that it approves. See, e.g., R. A. V. v. St. Paul, 505 U. S. 377, 382. And the ability of like-minded individuals to associate for the purpose of expressing commonly held views may not be curtailed. See, e.g., Roberts v. United States Jaycees, 468 U. S. 609, 623. Close-ly related to compelled speech and compelled association is compelled funding of the speech of private speakers or groups. Compulsory subsidies for private speech are thus subject to exacting First Amendment scrutiny and cannot be sustained unless, first, there is a comprehensive regulatory scheme involving a “mandated association” among those who are required to pay the subsidy, United States v. United Foods, Inc., 533 U. S. 405, and, second, compulsory fees are levied only insofar as they are a “necessary incident” of the “larger regulatory purpose which justified the required association,” ibid. Pp. 8−10.
(b) When a State establishes an “agency shop” that exacts com- pulsory union fees as a condition of public employment, “[t]he dis- senting employee is forced to support financially an organization with whose principles and demands he may disagree.” Ellis v. Railway Clerks, 466 U. S. 435, 455. This form of compelled speech and associ- ation imposes a “significant impingement on First Amendment rights.” Ibid. The justification for permitting a union to collect fees from nonmembers—to prevent them from free-riding on the union’s efforts—is an anomaly. Similarly, requiring objecting nonmembers to opt out of paying the nonchargeable portion of union dues―rather than exempting them unless they opt in―represents a remarkable boon for unions, creating a risk that the fees nonmembers pay will be used to further political and ideological ends with which they do not agree. Thus, Hudson, far from calling for a balancing of rights or in- terests, made it clear that any procedure for exacting fees from un- willing contributors must be “carefully tailored to minimize the in- fringement” of free speech rights, 475 U. S. 302−303, and it cited cases holding that measures burdening the freedom of speech or as- sociation must serve a compelling interest and must not be signifi- cantly broader than necessary to serve that interest. Pp. 10−13.
(c) There is no justification for the SEIU’s failure to provide a fresh Hudson notice. Hudson rests on the principle that nonmembers should not be required to fund a union’s political and ideological pro- jects unless they choose to do so after having “a fair opportunity” to assess the impact of paying for nonchargeable union activities. 475 U. S., at 303. The SEIU’s procedure cannot be considered to have met Hudson’s requirement that fee-collection procedures be carefully tailored to minimize impingement on First Amendment rights. The SEIU argues that nonmembers who objected to the special assess- ment but were not given the opportunity to opt out would have been given the chance to recover the funds by opting out when the next annual notice was sent, and that the amount of dues payable the fol- lowing year by objecting nonmembers would decrease if the special assessment were found to be for nonchargeable purposes. But this decrease would not fully recompense nonmembers, who would not have paid to support the special assessment if given the choice. In any event, even a full refund would not undo the First Amendment violations, since the First Amendment does not permit a union to ex- tract a loan from unwilling nonmembers even if the money is later paid back in full. Pp. 14−17.
(d) The SEIU’s treatment of nonmembers who opted out when the initial Hudson notice was sent also ran afoul of the First Amendment. They were required to pay 56.35% of the special as- sessment even though all the money was slated for nonchargeable, electoral uses. And the SEIU’s claim that the assessment was a windfall because chargeable expenses turned out to be 66.26% is un- persuasive. First, the SEIU’s understanding of the breadth of chargeable expenses is so expansive that it is hard to place much re- liance on its statistics. “Lobbying the electorate,” which the SEIU claims is chargeable, is nothing more than another term for support- ing political causes and candidates. Second, even if the SEIU’s sta- tistics are accurate, it does not follow that it was proper to charge ob- jecting nonmembers any particular percentage of the special assessment. If, as the SEIU argues, it is not possible to accurately determine in advance the percentage of union funds that will be used for an upcoming year’s chargeable purposes, there is a risk that un- consenting nonmembers will have paid too much or too little. That risk should be borne by the side whose constitutional rights are not at stake. If the nonmembers pay too much, their First Amendment rights are infringed. But, if they pay too little, no constitutional right of the union is violated because it has no constitutional right to re- ceive any payment from those employees.
June 20, 2012
Recently Published Scholarship: Lewis & Clark L. Rev.
Business Law Forum: The Protected-Class Approach to Antidiscrimination Law: Logic, Effects, Reform
- Michael J. Zimmer, Wal-Mart v Dukes: Taking the Protection Out of Protected Classes, p. 409.
- Nancy Levit, Changing Workforce Demographics and the Future of the Protected Class Approach, p. 463.
- Marcia L. McCormick, Decoupling Employment, p. 499.
- Michelle A. Travis, Toward Positive Equality: Taking the Disparate Impact out of Disparate Impact Theory, p. 527.
- Lino A. Graglia, Ricci v. DeStefano: Even Whites Are a Protected Class in the Roberts Court, p 573.
- Natasha T. Martin, Diversity and the Virtual Workplace: Performance Identity and Shifting Boundaries of Workplace Engagement, p. 605.
- Lawrence Blum, Moral Asymmetry: A Problem for the Protected Categories Approach, p. 647.
- Jeffrey D. Jones, The Public's Interest in "Private" Employment Relations, p. 657.
Recently Published Scholarship: BJELL
Berkeley Journal of Employment and Labor Law, vol. 33 (2012)
- Charles J. Morris, How The National Labor Relations Act Was Stolen and How It Can Be Recovered: Taft-Hartley Revisionism And The National Labor Relations Board's Appointment Process, pg. 1.
- Kati L. Griffith and Tamara L. Lee, Immigration Advocacy As Labor Advocacy, p. 73.
- Arianne Renan Barzilay, Labor Regulation As Family Regulation: Decent Work and Decent Families, p. 119.
- Lauren Gilbert, Immigrant Laws, Obstacle Preemption And The Lost Legacy of McCulloch, p. 153.
- Alana Edelstein-Kopke, When Is Discrimination Wrong? Deborah Hellman. Harvard University Press, 2008, p. 209.
- Caleb Webster, Bargaining With Baseball: Labor Relations In An Age of Prosperous Turmoil. William B. Gould IV. McFarland, 2011., P. 215.
- Lisa Damm, Encountering Religion In The Workplace: The Legal Rights And Responsibilities Of Workers and Employers. Raymond F. Gregory. Cornell University Press, 2011., p. 219.
- Sara Stephens, No Man's Land: Jamaican Guestworkers In America And The History of Deportable Labor. Cindy Hahamovitch. Princeton University Press, 2011., p. 223.
June 19, 2012
ERISA Conference Announcement and Call for Papers (U Michigan-March 2013)
Regulation of Benefit Plans: The Most Consequential Subject to Which No One Pays Enough Attention
Announcing a one-day national conference for leading scholars and policy makers.
When: We’re still deciding and want your input if you have a preference. Friday, March 15, 2013 or Friday, March 22, 2013. Please send Andrew or Dana your preference by Friday, June 22.
Where: University of Michigan, Stephen M. Ross School of Business
Co-organized by: Dana Muir, Arthur F. Thurnau Professor of Business Law, Michigan Ross School of Business,email@example.com and Andrew Stumpff, Lecturer, University of Michigan Law School,firstname.lastname@example.org
Tentative panels and topics include:
“Meta” Analysis of ERISA
· The development of the field
· The field’s regulatory style
· What the statute says about U.S. politics & society
· Major implications of U.S. employee benefits law for other areas of law, policy, & academic research, & vice-versa
The Economics of U.S. Employee Benefit Plans
The conference organizers welcome your ideas and paper proposals as well.
Call for Papers: Details will follow soon when the conference organizers have decided on a firm date. They expect to ask for proposals by mid-August so please start thinking about topics.
Accommodations and Expenses: The conference organizers expect to be able to block hotel rooms for conference participants at the Michigan Ross Executive Education Center, which is connected to the business school building where we plan to hold the conference. They also will provide information on shuttle service from Detroit Metropolitan Airport (DTW), which is about a half hour away from Ann Arbor. Details concerning individual reservations will follow. Conference participants should plan to pay for transportation and lodging; the conference organizers hope to be able to provide meals without charge.
For further information contact either Andrew (email@example.com) or Dana (firstname.lastname@example.org)
Not So "Customarily"?
At the recent ALI meeting in Washington, where the Institute approved the current version of the Restatement of Employment Law's chapter on Privacy, I criticized one of the proposal's formulations of when an employee has a reasonable expecation of privacy. To no effect, I might add. But not being one to forebear from giving a dead horse another lick or two, let me explain my argument.
The structure of the proposed blackletter requires an employee to have a reasonable expectation of privacy before there can be a violation --although such an expectation does not necessarily mean that the employer's intrusion is actionable since the intrusion must also be "wrongful." § 701
In other words, a REP is necessary but not sufficient, and the Restatement deals with such expectations in a variety of ways. The one I was concerned about had to do with when there was a REP in a physical or electronic location provided by the employer Section 703(b) allows an employer to expressly create such an expectation in subparagraph (1) but also provides in § 703(b) that a REP may be created by conduct when
the employer has acted in a manner that treated the workspace as private for employees, the type of location is customarily treated as private for employees, and the employee made reasonable efforts to keep the location private.
I understood the reciprocal requirements of employer and employee treating the location as private, but was confused by what it meant for "the type of location" to be "customarily treated as private." The word "customarily" suggested looking to other employers' conduct, which seemed to me to put a major crimp in the protection that would otherwise be accorded.
I'm probably saying this more coherently here than I did at the Institute, but suppose an employer treats worker e-mails as private and workers zealously guard that privacy through passwords and other conduct. Should the fact that most employers act otherwise foreclose privacy protection in this setting? As I said in DC, perhaps not very elegantly, doesn't this push towards the lowest common denominator for privacy, maybe only regarding bathrooms?
At the time, I hadn't done much spadework in the cases, but more research since the ALI's Meeting has not alleviated my concerns, nor has it clarified where "customarily" comes from. None of the four cases cited by the Restatement for this section speaks of "custom," although one (Hernandez v. Hillsides, 211 P.3d 1063 (Cal. 2009)), does mention "social norms." I don't have any problem with recognizing privacy expectations when social norms push in that direction (we're back to bathrooms), but I'm not so sure why it would matter to the implied agreement concept that seems to underlay the Restatement's position.
Plus, of course, recognizing a reasonable expectation of privacy in this situation would not open any floodgates since, to be actionable, any intrusion would have to be "wrongful," which requires that the intrusion be "highly offensive to a reasonable person" and that in turn takes into account the "employer's legitimate business and public interests" for the intrusion.
Now I do understand that the expectations of both parties might be shaped by social context, and in that sense broader norms may come into play, but the current phrasing seems ill-adapted to protecting actual privacy expecations in the workplace. I also understand there's only so far in advance of the law that a Restatement can go, but it doesn't seem to me that extirpating "customarily treated as private" from the blackletter would contravene any of the cases cited.
Thanks to Nicole Zito for her terrific work in helping me on this.
SCOTUS: Pharmaceutical Reps Exempt from FLSA
The Supreme Court issued its opinion in Christopher v. SmithKline Beecham yesterday, holding that pharmaceutical representatives are exempt from the Fair Labor Standards Act's overtime provisions as outside salespeople. Justice Alito wrote the opinion of the majority (Roberts, Kennedy, Scalia, and Thomas joined). Here is the syllabus (warning, it's long):
The Fair Labor Standards Act (FLSA) requires employers to pay employees overtime wages, see 29 U. S. C. §207(a), but this requirement does not apply with respect to workers employed “in the capacity of outside salesman,” §213(a)(1). Congress did not elaborate on the meaning of “outside salesman,” but it delegated authority to the Department of Labor (DOL) to issue regulations to define the term. Three of the DOL’s regulations are relevant to this case. First, 29 CFR §541.500 defines “outside salesman” to mean “any employee . . . [w]hose primary duty is . . . making sales within the meaning of [29 U. S. C. §203(k)].” §§541.500(a)(1)–(2). Section 203(k), in turn, states that “ ‘[s]ale’ or ‘sell’ includes any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.” Second, §541.501 clarifies that “[s]ales within the meaning of [§203(k)] include the transfer of title to tangible property.” §541.501(b). Third, §541.503 provides that promotion work that is “performed incidental to and in conjunction with an employee’s own outside sales or solicitations is exempt work,” whereas promotion work that is “incidental to sales made, or to be made, by someone else is not.” §541.503(a). The DOL provided additional guidance in connection with its promulgation of these regulations, stressing that an employee is an “outside salesman” when the employee “in some sense, has made sales.” 69 Fed. Reg. 22162.
The prescription drug industry is subject to extensive federal regulation, including the requirement that prescription drugs be dispensed only upon a physician’s prescription. In light of this requirement, pharmaceutical companies have long focused their direct marketing efforts on physicians. Pharmaceutical companies promote their products to physicians through a process called “detailing,” whereby employees known as “detailers” or “pharmaceutical sales representatives” try to persuade physicians to write prescriptions for the products in appropriate cases.
Petitioners were employed by respondent as pharmaceutical sales representatives for roughly four years, and during that time their primary objective was to obtain a nonbinding commitment from physicians to prescribe respondent’s products in appropriate cases. Each week, petitioners spent about 40 hours in the field calling on physicians during normal business hours and an additional 10 to 20 hours attending events and performing other miscellaneous tasks. Petitioners were not required to punch a clock or report their hours, and they were subject to only minimal supervision. Petitioners were well compensated for their efforts, and their gross pay included both a base salary and incentive pay. The amount of incentive pay was determined based on the performance of petitioners’ assigned portfolio of drugs in their assigned sales territories. It is undisputed that petitioners were not paid time-and-a-half wages when they worked more than 40 hours per week.
Petitioners filed suit, alleging that respondent violated the FLSA by failing to compensate them for overtime. Respondent moved for summary judgment, arguing that petitioners were “employed in the capacity of outside salesman,” §213(a)(1), and therefore were exempt from the FLSA’s overtime compensation requirement. The District Court agreed and granted summary judgment to respondent. Petitioners filed a motion to alter or amend the judgment, contending that the District Court had erred in failing to accord controlling deference to the DOL’s interpretation of the pertinent regulations, which the DOL had announced in an amicus brief filed in a similar action. The District Court rejected this argument and denied the motion The Ninth Circuit, agreeing that the DOL’s interpretation was not entitled to controlling deference, affirmed.
Held: Petitioners qualify as outside salesmen under the most reasonable interpretation of the DOL’s regulations. Pp. 8–25.
(a) The DOL filed amicus briefs in the Second Circuit and the Ninth Circuit in which it took the view that “a ‘sale’ for the purposes of the outside sales exemption requires a consummated transaction directly involving the employee for whom the exemption is sought.” Brief for Secretary of Labor as Amicus Curiae in In re Novartis Wage and Hour Litigation, No. 09–0437 (CA2), p. 11. The DOL changed course after the Court granted certiorari in this case, however, and now maintains that “[a]n employee does not make a ‘sale’ . . . unless he actually transfers title to the property at issue.” Brief for United States as Amicus Curiae 12–13. The DOL’s current interpretation of its regulations is not entitled to deference under Auer v. Robbins, 519 U. S. 452. Although Auer ordinarily calls for deference to an agency’s interpretation of its own ambiguous regulation, even when that interpretation is advanced in a legal brief, see, id., at 461–462, this general rule does not apply in all cases. Deference is inappropriate, for example, when the agency’s interpretation is “ ‘plainly erroneous or inconsistent with the regulation,’ ” id., at 461, or when there is reason to suspect that the interpretation “does not reflect the agency’s fair and considered judgment on the matter,” id., at 462. There are strong reasons for withholding Auer deference in this case. Petitioners invoke the DOL’s interpretation to impose potentially massive liability on respondent for conduct that occurred well before the interpretation was announced. To defer to the DOL’s interpretation would result in precisely the kind of “unfair surprise” against which this Court has long warned. See, e.g., Long Island Care at Home, Ltd. v. Coke, 551 U. S. 158, 170–171. Until 2009, the pharmaceutical industry had little reason to suspect that its longstanding practice of treating detailers as exempt outside salesmen transgressed the FLSA. The statute and regulations do not provide clear notice. Even more important, despite the industry’s decades-long practice, the DOL never initiated any enforcement actions with respect to detailers or otherwise suggested that it thought the industry was acting unlawfully. The only plausible explanation for the DOL’s inaction is acquiescence. Whatever the general merits of Auer deference, it is unwarranted here. The DOL’s interpretation should instead be given a measure of deference proportional to its power to persuade. See United States v. Mead Corp., 533 U. S. 218, 228. Pp. 8–14.
(b) The DOL’s current interpretation—that a sale demands a transfer of title—is quite unpersuasive. It plainly lacks the hallmarks of thorough consideration. Because the DOL first announced its view that pharmaceutical sales representatives are not outside salesmen in a series of amicus briefs, there was no opportunity for public comment, and the interpretation that initially emerged from the DOL’s internal decisionmaking process proved to be untenable. The interpretation is also flatly inconsistent with the FLSA. The statute defines “sale” to mean, inter alia, a “consignment for sale,” and a “consignment for sale” does not involve the transfer of title. The DOL relies heavily on 29 CFR §541.501, which provides that “[s]ales . . . include the transfer of title to tangible property,” §541.501(b), but it is apparent that this regulation does not mean that a sale must include a transfer of title, only that transactions involving a transfer of title are included within the term “sale.” The DOL’s “explanation that obtaining a non-binding commitment to prescribe a drug constitutes promotion, and not sales,” Reply Brief for Petitioners 17, is alsounconvincing. Since promotion work that is performed incidental to an employee’s own sales is exempt, the DOL’s conclusion that detailers perform only nonexempt promotion work is only as strong as the reasoning underlying its conclusion that those employees do not make sales. Pp. 14–16.
(c) Because the DOL’s interpretation is neither entitled to Auer deference nor persuasive in its own right, traditional tools of interpretation must be employed to determine whether petitioners are exempt outside salesmen. Pp. 16–24.
(1) The FLSA does not furnish a clear answer to this question, but it provides at least one interpretive clue by exempting anyone “employed . . . in the capacity of [an] outside salesman.” 29 U. S. C. §213(a)(1). The statute’s emphasis on “capacity” counsels in favor of a functional, rather than a formal, inquiry, one that views an employee’s responsibilities in the context of the particular industry in which the employee works. The DOL’s regulations provide additional guidance. Section 541.500 defines an outside salesman as an employee whose primary duty is “making sales” and adopts the statutory definition of “sale.” This statutory definition contains at least three important textual clues. First, the definition is introduced with the verb “includes,” which indicates that the examples enumerated in the text are illustrative, not exhaustive. See Burgess v. United States, 553 U. S. 124, 131, n. 3. Second, the list of transactions included in the statutory definition is modified by “any,” which, in the context of §203(k), is best read to mean “ ‘one or some indiscriminately of whatever kind,’ ” United States v. Gonzales, 520 U. S. 1, 5. Third, the definition includes the broad catchall phrase “other disposition.” Under the rule of ejusdem generis, the catchall phrase is most reasonably interpreted as including those arrangements that are tantamount, in a particular industry, to a paradigmatic sale of a commodity. Nothing in the remaining regulations requires a narrower construction. Pp. 16–20.
(2) Given this interpretation of “other disposition,” it follows that petitioners made sales under the FLSA and thus are exempt outside salesmen within the meaning of the DOL’s regulations. Petitioners obtain nonbinding commitments from physicians to prescribe respondent’s drugs. This kind of arrangement, in the unique regulatory environment within which pharmaceutical companies operate, comfortably falls within the catchall category of “other disposition.” That petitioners bear all of the external indicia of salesmen provides further support for this conclusion. And this holding also comports with the apparent purpose of the FLSA’s exemption. The exemption is premised on the belief that exempt employees normally earn salaries well above the minimum wage and perform a kind of work that is difficult to standardize to a particular time frame and that cannot easily be spread to other workers. Petitioners—each of whom earned an average of more than $70,000 per year and spent 10 to 20 hours outside normal business hours each week performing work related to his assigned portfolio of drugs in his assigned sales territory—are hardly the kind of employees that the FLSA was intended to protect. Pp. 20–22.
(3) Petitioners’ remaining arguments are also unavailing. Pp. 22–24.
Justice Breyer dissented (joined by Justices Ginsburg, Sotomayor, and Kagan). He agreed that the Solicitor General's recent change in position was not entitled to any particular difference, but he would have analyzed the relevant regulations differently. The operative language in his reading required that the employee’s “primary duty” be “making sales within the meaning of section 3(k) of the Act.” That section of the Act provides that “‘Sale’ or ‘sell’ includes any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.” 29 U. S. C. §203(k). Because the reps don't get any kind of contract or commitment from doctors to prescribe the drugs, Justice Breyer would have found them not to be outside salespeople. There's a bit more there, too, but I'll let you read it.
In my opinion, the dissent has the stronger reasoning and more classical plain meaning analysis. And I'm a little troubled that inaction alone could estop an agency from enforcing its statute or regulations when agencies have to make choices about where to spend limited resources--and especially where those agencies might depend on private complaints to initiate enforcement. At the same time, I'm sympathetic to the notice issues if this really is a change in interpretation, i.e. there had been an official statement that this was outside selling, and now the agency changed its mind. But that doesn't seem the case.
June 18, 2012
Recently Published Scholarship
- Donald C. Carroll, At-Will Employment: The Arc of Justice Bends Towards The Doctrine's Rejection, 46 U. San Francisco L. Rev. 655 (2012).
- Juliana Garcia, Invisible Behind a Bandana: U-Visa Solution for Sexual Harasment of Female Farmworkers, 46 U. San Francisco L. Rev. 855 (2012).
- David Hausman, How Congress Could Reduce Job Discrimination by Promoting Anonymous Hiring, 64 Stanford L. Rev. 1343 (2012).