Pharma Happy With Supreme Court Rx: "No Overtime Pay For Pharma Sales Reps"

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In an important wage-hour decision with potential relevance beyond the pharmaceutical industry, the Supreme Court held on June 18, 2012, that pharmaceutical sales reps at GlaxoSmithKline (GSK) were exempt from overtime pay under the Fair Labor Standards Act's exemption for "outside salesmen," resolving a split among the courts.

Significantly, in reaching that decision, the Court also held that deference was not owed to a U.S. Labor Department (DOL) interpretation of the exemption (an interpretation favoring the employees' claims). The interpretation by DOL was first published only recently in court briefs (not in agency regulations), and DOL had never previously questioned the exempt status of pharmaceutical sales reps who have long been treated as exempt by such companies. Christopher v. SmithKline Beecham.

Were The Sales Reps "Making Sales"?

The FLSA exemption for an "outside salesman" applies to an employee if both of the following criteria are met: 1) the employee's primary duty is either "making sales" or "obtaining orders" for his employer; and 2) the employee is customarily and regularly away from the employer's places of business while performing such exempt work.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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