Is Pharma Rep Overtime Debate Destined for US Supreme Court?


Seattle, WA Should pharmaceutical reps qualify for overtime? It has proven to be a contentious issue, rife with debate and conflicting rulings. It's an Employment issue that is not confined to pharma reps, but has affected a number of sectors that pit employees who feel they have been stiffed out of extra pay, against employers who sometimes pull every trick in the book to get out of paying overtime.

Law Suits are often the only way to settle it. And sometimes it settles nothing.

Pharmalot reports that a federal appeals court ruling from Valentine's Day affirmed a lower court ruling in November of last year that two GlaxoSmithKline sales reps who claimed to be owed overtime pay are, in the opinion of the court, exempt from the relevant provisions of the Fair Labor Standards Act (FLSA).

However, those rulings contradict that of the US Court of Appeals last summer, which ruled that plaintiffs working for Novartis are entitled to overtime. The latter ruling seems to jive with a US Department of Labor brief that supports overtime pay for pharmacy reps and makes a case for it.

Under federal law, employers are required to compensate employees for all hours worked above 40 in any given week, with overtime pay calculated according to the given rate. The only time this law does not apply is when an FLSA exception applies.

Defendants in the pharma overtime lawsuit argue that the FLSA compensation exemption requirement does not apply to employees who work outside the company as sales reps and account executives in a capacity for obtaining orders and sales contracts.

Drug companies say that is indeed the case. The plaintiffs in this particular lawsuit, however, argued that a direct sale does not occur given that sales reps are calling on doctors. While the doctor prescribes the medications, the doctor isn't the one selling the medication. The latter are purchased by patients and hospitals, often from wholesalers.

However, the Ninth Circuit Court noted that the plaintiff's assertions failed to take into account the realities and the heavily regulated nature of the pharmaceutical industry. And that even though drugs are not actually sold to and therefore purchased by doctors, the "sale" exists as only it can exist in the drug industry.

Sales reps "are driven by their own ambition and rewarded with commissions when their efforts generate new sales," the Ninth Circuit Court ruled. "They receive their commissions in lieu of overtime and enjoy a largely autonomous worklife outside of an office. The pharmaceutical industry's representatives�detail men and women�share many more similarities than differences with their colleagues in other sales fields, and we hold that they are exempt from the FLSA overtime-pay requirement."

Legal watchers are looking for this issue to go all the way to the Supreme Court.

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1 Comment

  1. pitbullstew
    March 2, 2011
    I wonder if Stephen G (pay me what I want or I will let you die) Sudovar past president of Hoffman La Roche, Stephen G. Sudovar (Executive Chairman and Interim Chief Executive Officer) ... of the Pharmaceutical Research and Manufacturing Association (PhRMA). Has read this article yet?

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