Should Pharmacists Receive Overtime Pay?

Issue of the Case

As a general rule, employers arerequired to pay overtime rates for hoursworked by employees in excess of 40hours per week. There is an exception,however, for those employed in a professionalcapacity. A group of pharmacistsraised the issue of how pharmacists areviewed under this federal law.

Facts of the Case

Five pharmacists were employed by apharmacy that specialized in compoundingcustomized pharmaceutical formulations.Their duties were described as analyzingmedication orders, approving themas appropriate in dosage, etc, and preparingthe medications for patient use. Thework flow involved rotating through 3"duty stations"—data entry, compounding,and labeling. They were compensatedon a salary basis because their employerviewed them as falling in the professionalclassification and thus exempt from theovertime pay requirement.

Their case was filed in federal courtbecause it presented issues arisingunder a federal statute. Both sides filedmotions for summary judgment, essentiallyarguing that there were no substantialfacts in dispute and asking thejudge to decide the case by applyingthe law to the undisputed facts. At thetrial court level, the employer won, andthe group of pharmacists appealed tothe appropriate Court of Appeals.

The Court's Ruling

The appellate court noted that thefederal statute, the Fair Labor StandardsAct (FLSA), requires overtime pay butalso provides exceptions for employeesworking in executive, administrative, orprofessional capacities. If an employerviews an employee as falling within oneof those exceptions, the burden falls onthe employer to "make the case," andprior court decisions had indicated thatsuch exceptions are to be "narrowlyconstrued against the employers seekingto assert them."

The parties to the dispute agreed thatthe standard to be applied in making thedetermination was a so-called "shorttest." Under that approach, an employeewill be considered a professional if:

(a) "[the] primary duty consists of theperformance of?work requiringknowledge of an advanced type in afield of science or learning customarilyacquired by a prolongedcourse of specialized intellectualinstruction and study, as distinguishedfrom a general academiceducation and from an apprenticeship,and from training in the performanceof routine mental, manual,or physical processes?, and,

(b) the work requires the consistentexercise of discretion and judgmentin its performance."

The pharmacists argued that they metthe knowledge segment in Section (a) ofthe "short test," but they also argued thatthey should not be classified as professionalsfor purposes of the FLSA becausetheir work did not require the consistentexercise of discretion and judgment as inSection (b).

The Court's Reasoning

The 3 appellate judges deciding thecase focused on several indicators inreaching their decision that the pharmacistswere indeed correctly classified asprofessionals by the employers. First,they emphasized that one of the primaryroles of the pharmacists was to evaluatethe safety and propriety of each prescriptionin the context of what was knownabout the patient. If concerns surface, thepharmacist makes the decision whetherto contact the prescriber, and the contentof the ensuing conversation is controlledto a major degree by the pharmacist.

Second, the pharmacists spent a significantportion of their time at work supervisingother employees (ie, 8-10 pharmacytechnicians). This fact indicated that thepharmacists exercised discretion andjudgment in their employment roles.

Third, although the pharmacists spenta significant portion of their workdaysupervising others, they themselveswere not closely supervised. This wasan additional indicator to the court thatthe pharmacists exercised discretionand judgment at work.

The pharmacists acknowledged allthose points but retorted that they donot consistently exercise discretion andjudgment because they are required tofollow preestablished standard operatingprocedures (SOPs) in discharging theirresponsibilities. That argument was notsuccessful. The judges looked at the factthat the pharmacists acknowledged thatthey did not follow the SOPs if the resultwould endanger the patient's health.They retained discretion over when todeviate from the SOPs. Moreover, thepharmacists were never subject to disciplinefor deviating from SOP. Finally, theSOPs were formulated with input fromthe pharmacists, bringing their collectivewisdom and experience, as well as discretionand judgment, to bear on operationsin the pharmacy.

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

Dr. Fink is professor of pharmacylaw and policy at theUniversity of KentuckyCollege of Pharmacy,Lexington.