According to a recent decision handed down by the U.S. Supreme Court, pharmaceutical sales representatives fall under the U.S. Department of Labor's (DOL) definition of "outside salesmen" and are not owed overtime compensation.
In this case, two sales representatives of a large pharmaceutical company sued their employer, alleging that they were owed overtime wages. GlaxoSmithKline hired Michael Christopher and Frank Buchanan as pharmaceutical sales reps (PSRs) in 2003. GSK uses PSRs to call on physicians and encourage them to prescribe GSK's products. PSRs typically work outside of a normal GSK office and spend most of their time traveling around visiting doctors. Christopher and Buchanan say they visited eight to 10 physicians each day and worked an extra 10 to 20 hours extra per week with no overtime wages. Christopher and Buchanan filed a class action claim against GSK in the U.S. District Court for the District of Arizona in August 2008, seeking unpaid overtime
The pharmaceutical company argued the sales representatives were not entitled to overtime wages because they were classified as "outside salesmen," who are exempt from the federal law that requires payment of overtime wages. The Court agreed, holding that the sales representatives were outside salesmen and, as such, were not entitled to overtime wages.
The split decision by the high court was a surprise given that it meant rejecting the DOL's interpretation of its own regulations. The justices wrote that they found the DOL's interpretation "quite unpersuasive." They said that the offered interpretation was "flatly inconsistent" with the Fair Labor Standards Act. The majority opinion also rejected the claim that drug reps should be classified as nonexempt promotional employees. The reps claim they merely stimulate sales made by others and are not the same as outside salesmen. The Court said this was ridiculous, claiming that by the same logic a car salesman who asks his assistant to type up an order form should also be treated as a nonexempt promotional employee.
Justice Stephen G. Breyer wrote a dissent wherein he expressed his opinion that drug reps do not fall under the DOL's "outside salesman" definition. Breyer believes that drug reps provide information to doctors and, based on that information, doctors enter into nonbinding commitments to advise patients to take the recommended drugs. Breyer asks, "Where does the sale comes in?" He goes on to say that obtaining "a commitment to advise a client to buy a product is not to obtain a commitment to sell that product.
The Supreme Court decision is published for Christopher et al. v. Smithkline Beecham Corp., dba Glaxosmithkline.
Christopher et al. v. Smithkline Beecham Corp., dba Glaxosmithkline Argued April 16, 2012 - Decided June 18, 2012.
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