• U.S. Supreme Court Rules Drugmakers Don't Owe Overtime Pay To Pharmaceutical Sales Representatives
  • June 22, 2012
  • Law Firm: Colodny, Fass, Talenfeld, Karlinsky, Abate & Webb, P.A. - Fort Lauderdale Office
  • On Monday, June 18, 2012, the U.S. Supreme Court issued a 5-4 opinion that pharmaceutical companies don't have to pay their sales representatives for working overtime hours because these staff members fall under a provision of the Fair Labor Standards Act that removes overtime-pay requirements for those employed as outside salespeople.

    The case in question centers on a lawsuit filed against drug manufacturer GlaxoSmithKline by two former sales representatives who were seeking overtime pay on behalf of a nationwide class of GlaxoSmithKline sales personnel.

    The court's ruling rejected claims made by the U.S. Department of Labor that the outside-sales exemption shouldn't apply because sales representatives don't actually sell drugs to physicians and instead promote them.  However, in issuing the opinion, Justice Samuel Alito said the Labor Department's position was "quite unpersuasive" and agreed with an earlier ruling by the U.S. Circuit Court of Appeals in New York that the employees qualified as "outside sales" personnel and were therefore exempt from the federal law.

    The Pharmaceutical Research and Manufacturers of America had argued in an earlier court brief that making such employees eligible for overtime could expose drugmakers to retroactive liability and cost the pharmaceutical industry billions of dollars.  In January 2012, Novartis Corporation agreed to pay up to $99 million to settle a lawsuit by current and former sales representatives who claimed they were denied overtime pay despite working more than 40 hours per week.

    Similar cases have been filed against Bristol-Myers Squibb, Johnson & Johnson and Merck & Co.