To Sell Or Not To Sell, That Is The Question: The Supreme Court's View Of Outside Sales Employees

Author:Ms Monica Velazquez
Profession:Strasburger & Price, L.L.P.

As an attorney, unfortunately, you are always spotting legal issues in day to day life. The other day, as I sat waiting at the nurse station in my doctor's office, an all-too familiar scenario unfolded: A young, attractive, well-dressed woman with a rolling briefcase, blue tooth in her ear, and black locked bag walked in the door. The box of donuts, bag of candy, and carrying-case with several hot coffees gave her away. The pharmaceutical sales representative dropped off the goodies at the reception desk, re-stocked one of the cabinet drawers with samples of prescription goodies, asked a few questions of the nurses, and then left, indicating she would be back in next week. Instead of wondering where she got her cute shoes that matched her purse like a normal person, I wondered if she was aware of the Supreme Court's recent decision against pharmaceutical sales representatives holding that they were not entitled to overtime pay under the Fair Labor Standards Act (FLSA). Pharmaceutical companies directly promote their products to physicians through pharmaceutical sales representatives (PSRs) or "detailers" who try to get physicians to make non-binding promises to prescribe their companies' drugs as appropriate. PSRs are usually highly-compensated; earning both a salary and incentive pay based on the performance of their drug portfolios. For years, PSRs had been classified as exempt outside salespeople not entitled to overtime pay under the FLSA. While that exempt classification had been challenged in courts, the long-standing practice remained in tact. Then, in 2009, the Department of Labor (DOL) filed amicus briefs in the Second and Ninth Circuit Courts of Appeal, indicating the agency's position that PSRs were non-exempt employees entitled to overtime pay. According to the DOL, PSRs did not qualify for the outside sales exemption because they were not actually selling (i.e. transferring title to tangible property) as defined in the agency's regulations. Interestingly, however, the DOL never initiated any enforcement actions against the employers of PSRs. Conflicting court opinions ensued and the United States Supreme Court finally decided the issue in Christopher et al. v. SmithKline Beecham Corp., d/b/a GlaxoSmithKline issued on June 18...

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