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: Northwest Business Litigation BlogNinth Circuit holds that pharmaceutical sales reps aren't entitled to overtime pay
By Shemia Fagan
Last month, in Christopher v. SmithKline, the Ninth Circuit held that pharmaceutical sales representatives are exempt from the Fair Labor Standard Act's overtime requirements.
Two pharmaceutical sales representatives filed a lawsuit challenging defendant's practice of requiring overtime work without paying additional compensation, as a violation of the FLSA. The FLSA requires overtime payment for employees for hours worked in excess of forty per week. However, there are numerous exceptions to this rule, including an exemption for persons employed "in the capacity of outside salesman." The trial court did not allow the plaintiff's case to proceed to trial, finding that pharmaceutical sales representatives "unmistakably fit within the terms and spirit of the [FLSA's outside sales] exemption." The plaintiffs appealed to the Ninth Circuit.
The Ninth Circuit affirmed the trial court's ruling. Despite the fact that PSRs do not technically sell pharmaceuticals to doctors, a doctor's commitment to a PSR to prescribe his assigned product when medically appropriate is a "meaningful exchange." This meaningful exchange, the Court held, fits within the FLSA's definition of a "sale," which includes "other dispositions." In addition, PSRs are "rewarded with commissions when their efforts generate new sales. They receive commissions in lieu of overtime and enjoy largely autonomous work-life outside of an office." For these reasons, the Ninth Circuit Court held that PSRs are exempt from the overtime-pay requirement of the FLSA.
This result creates a split with the Second Circuit, and raises the possibility that the U.S. Supreme Court will take up the issue.
Full post as published by Northwest Business Litigation Blog on March 14, 2011 (boomark / email).
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The issue of whether Pharmaceutical Sales Representatives ("Drug Reps" as they are sometimes called) are entitled to overtime has been bouncing around and dividing the Federal Courts for several years...
Second Circuit issues ruling in In re Novartis Wage and Hour Litigation
Second Circuit issues ruling in In re Novartis Wage and Hour Litigation: Are pharmaceutical sales reps entitled to overtime pay under the Fair Labor Standards Act if they work more than 40 hours per week? That's the question that a three-judge panel of the U...
Collective Wage and Hour Claims for Pharma Sales Reps
A number of pharmaceutical companies, including Roache Laboratories, Inc., Abbot Laboratories, Inc., Eli Lilly & Co., Pfizer, Inc., Merck & Co. Inc. and GlaxoSmithKline Plc, are facing wage-and-hour suits filed on behalf of their sales representatives...
Further Confusion --- The Split in Authority Regarding the Exempt Status of Pharmaceutical Sales Representatives
In early January, I posted an entry regarding the exempt status of pharmaceutical sales representatives. In the past several months, there have been several significant developments with respect to this issue...
A Tough Pill Spill to Swallow - Drug Company Hit With Lawsuit Challenging Exempt Status of Pharmaceutical Sales Representatives
On December 21, 2010, a former employee of drug company, Daiichi Sankyo, Inc. filed a lawsuit alleging that Daiichi misclassified pharmaceutical sales representatives ('Sales Reps') as exempt employees thereby improperly denying them overtime under the Fair Labor Standards Act ('FLSA')...
Federal Court Determines Pharmaceutical Sales Representatives Are Not "Outside Salesmen"
On March 30th, a Connecticut Federal court found that the FLSA's 'Outside Salesman' exemption did not apply to Pharmaceutical Sales Representatives. In issuing its ruling the court resisted the temptation to concede to legal fictions created by other courts in order to justify withholding overtime compensation...
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