U.S. SC to decide if drug reps can receive overtime pay

Bryan Cohen Apr. 11, 2012, 1:00pm

WASHINGTON (Legal Newsline) - The U.S. Supreme Court will hear arguments on Monday in Christopher v. SmithKline Beecham Corp., a case under the Fair Labor Standards Act that could allow for pharmaceutical reps to receive back overtime pay.

The particular question in the case is whether pharmaceutical sales representatives have the eligibility to receive overtime pay. The larger issue at hand is the deference owed to the U.S. Department of Labor's interpretation of that law.

The Fair Labor Standards Act and Department of Labor regulations typically require employers to pay 1.5 times an employee's regular hourly rate of pay for each hour worked over 40 hours per week, unless the employee qualifies for an exemption from rules of overtime.

One of those exemptions covers outside salespersons - employees whose primary job duty is to sell products outside of the offices of their employers.

The case involves the overtime allegations of pharmaceutical representatives who are employed by GlaxoSmithKline who never received overtime pay despite working much more than 40 hours each week. Glaxo reps visit doctors' offices on what are called detail calls to promote Glaxo's products so that doctors will prescribe the products and patients will buy them.

The U.S. Chamber of Commerce had filed an amicus brief in support of Smithkline Beecham last October. The U.S. Chamber Institute for Legal Reform owns Legal Newsline.

The reps don't sell any pharmaceuticals to the physicians they visit because that practice is against federal law. While the reps' work consists of some of the same activities as traditional salespeople, federal regulations prohibit them from selling the products directly.

The Department of Labor supports the position of the representatives of the pharmaceutical company. Glaxo maintains that its representatives are exempt from receiving overtime pay because of the outside salesperson exemption. Other pharmaceutical companies have a similar viewpoint.

JacksonWhite, an Arizona law practice, filed the lawsuit against Glaxo on behalf of plaintiffs Frank Buchanan and Shane Christopher. Shareholder Michael Pruitt argued the case before a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit and the District Court in Phoenix.

Concurrently, David Sanford and Jeremy Heisler of the law firm of Sanford Wittels and Heisler were shepherding a parallel lawsuit against Novartis. The Second Circuit ruled for the reps and the Ninth Circuit ruled for the drug companies, setting up an appeal of the Ninth Circuit's decision to the Supreme Court.

Multiple cases await the April 16 argument as similar lawsuits have been filed against other pharmaceutical companies, including Pfizer, Sanofi, Abbott Labs and AstraZenica.

If the Supreme Court holds that the Glaxo representatives are not outside salespersons, the law firms involved anticipate that many more plaintiffs will contact them to become part of collective or class actions against multiple drug manufacturers to recover payment for overtime. Novartis settled a related case in March for $99 million.

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