Sarah Mirando  |  June 20, 2012

Category: Labor & Employment

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Supreme Court Rules No Overtime for Pharma Sales Reps

By Matt O’Donnell

 

GlaxoSmithKlineThe U.S. Supreme Court has issued a ruling that pharmaceutical companies do not have to pay their sales representatives overtime for hours spent visiting doctors’ offices to promote products, a dispute that has been playing out in courts for years.

In a split decision, the Supreme Court upheld a lower court’s ruling that GlaxoSmithKline pharmaceutical sales reps are considered “outside sales” personnel who are exempt from overtime pay requirements. The decision conflicted with an earlier ruling by the 2nd U.S. Circuit Court of Appeals in New York that Novartis sales reps qualified for overtime under the federal Fair Labor Standards Act. However, it did fall in line with a U.S. Court of Appeals for the 7th Circuit ruling in separate class action lawsuits against Eli Lilly & Co. and Abbott Laboratories that pharmaceutical sales representatives are exempt from overtime as administrative employees.

Almost every major pharmaceutical manufacturer has been hit by an overtime class action lawsuit, in which sales reps argue they should be paid overtime because they are misclassified as “outside salespeople.”

Glaxo and other companies argued that pharmaceutical sales reps typically get a base salary and performance-based commissions, and that the overtime requirements did not apply.

The Supreme Court ruling in the GlaxoSmithKline overtime case won’t affect the Novartis overtime settlement, which received final court approval [see “Judge Approves $99 Million Novartis Sales Rep Overtime Settlement”]. It will, however, have a broad implications for dozens of pending overtime class action lawsuit cases challenging the exempt status of pharma sales reps.

The Supreme Court case is Christopher v. SmithKline Beecham Corp., Case No. 11-204.

 

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Updated June 20th, 2012

 

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