Supreme Court Approves Treatment Of Pharmaceutical Sales Reps As Exempt From Overtime Under The FLSA

The U.S. Supreme Court has issued its much-anticipated opinion on whether pharmaceutical sales representatives can properly be treated as exempt from overtime under the Fair Labor Standard Act's "outside salesman" exemption. In Christopher v. SmithKline Beecham, the Court affirmed the 9th Circuit's ruling that the exemption applies, and that pharmaceutical sales representatives therefore are not entitled to overtime compensation under federal law. The opinion can be found here.

The dispute centered on the argument that pharmaceutical sales representatives do not actually "sell" a product. Rather, they encourage physicians to prescribe certain medications, which are then dispensed by retail pharmacies. The plaintiffs argued that this framework removed them from the category of salespeople covered by the exemption. The Court disagreed, holding that a "sale" can occur even in the absence of a firm agreement or commitment to buy a particular good.

The Court emphasized the "unique regulatory environment within which pharmaceutical companies must operate" in concluding that obtaining a nonbinding commitment from a physician to prescribe a certain drug...