The U.S. government is divided into three branches: the legislative branch, the executive branch, and the judicial branch. The first enacts the law; the second enforces the law; and the third interprets the law. Ideally, each branch interrelates as a check and balance on each other. The second branch—the executive—is more than just the President, but also includes federal agencies. For example, the U.S. Department of Labor is a federal agency, empowered by Congress, to enforce certain federal labor laws, and one way it does so is to issue regulations. Sometimes, those regulations may be unclear on their own or when applied to unanticipated situations. So, the agency may need to interpret its own regulations. In a lawsuit, should a court defer (or, give respect to) the agency’s interpretation of its own regulation (commonly known as Auer deference)? Should the court use its own tools in determining what the regulation means? Or something in-between?
Take, for example, the “outside salesman” exemption and pharmaceutical sales reps. In brief, employers do not need to pay overtime to “outside salesman” under the Fair Labor Standards Act. The Act does not define “outside salesman,” but Congress gave authority to the Department of Labor to issue regulations to define terms within the Act. So, the Department of Labor did that and defined “outside salesman” in part as “any employee whose primary duty is making any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.”
A pharmaceutical sales rep typically promotes prescription drugs to physicians, who then make orders from retail pharmacies, not from the sales rep. Does the pharmaceutical sales rep count as an “outside salesman”? Until 2009, the Department of Labor took the position that where there is a “consummated transaction” directly involving the employee, then the outside salesman exemption applies. In 2009, the Department of Labor shifted its position to say that what matters for the exemption is that the employee “transfer title of property.” If the pharmaceutical sales reps brought an overtime lawsuit (which they did in Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (2012)), should a court defer to the Department of Labor’s interpretation of its own regulation defining “outside salesman”? Should the court use its own tools of interpretation? Or should the court do something in-between? This decision—the amount of deference a court should apply to an agency’s interpretation of its own regulations—matters because it impacts the relationship among the three branches of government, and in the case of the pharmaceutical sales reps, can impact substantive rights.
This past summer, the U.S. Supreme Court decided a much-anticipated case called Kisor v. Wilkie, which clarified the steps a court should take in applying Auer deference. Associate Attorney Caroline E. Bressman wrote an article explaining the decision and subsequent caselaw for the Federal Bar Association Labor and Employment Law Section’s The Labouring Oar, found here.
