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Supreme Court Intervenes in Pharma Rep Overtime Lawsuit

The nation's top court will consider whether pharmaceutical sales reps are entitled to overtime pay as well as possible industry ramifications.
  • Dec 7, 2011
  • Staff
  • U.S. Supreme Court Ruling

The Supreme Court agreed on Monday to consider whether pharmaceutical sales representatives are entitled to overtime pay, a case that could have significant financial ramifications on the industry. The case comes out of Arizona, where decisions about pharmaceutical sales representatives’ eligibility for overtime compensation have split the circuit courts.

In February 14 decision, the 9th Circuit held that GlaxoSmithKline correctly classified its sales reps as “outside salesmen” under the Fair Labor Standards Act thereby rendering them ineligible for overtime pay., according to Courthouse News. The court further ruled that it was proper for the workers to follow a commission-based model that has existed at GlaxoSmithKline for more than 70 years. In a similar case, the 3rd Circuit found that the “administrative exemption” provision applies to the sales representatives who filed cases against pharmaceutical companies Abbott Laboratories, Johnson & Johnson, AstraZeneca and Alphram.

Meanwhile, a 2nd Circuit decision determined that overtime laws do indeed cover sales reps from Novartis and Schering. The circuit split led the Supreme Court to take notice of the pharmaceutical sales rep overtime issue which demands a final, definitive decision from the high court.

Reportedly, the Supreme Court has said the two central issues it will consider are “whether deference is owed to the Secretary of Labor’s interpretation of the Fair Labor Standards Act’s outside sales exemption and related regulations” and whether that exemption applies to pharmaceutical sales representatives. As is custom, the high court has not commented on the case at hand.

In recent years, an increasing number of wage and hour lawsuits have been filed against employers. Employees who filed unpaid overtime lawsuits may be able to collect up to three years of unpaid overtime wages, an equal amount in liquidated damages, and attorney’s fees. If you have not been properly compensated for your extra hours, contact an overtime attorney to see if you could possibly be entitled to damages.