Last week, the U.S. Supreme Court agreed to review a lower court decision concluding that drug sales representatives are exempt Outside Salespersons for purposes of overtime pay under the Fair Labor Standards Act. In Christopher v. SmithKlineBeecham, the Ninth Circuit declared the employees exempt, in contrast to a 2010 Second Circuit case concluding that the representatives were entitled to overtime pay. The Supreme Court decision should resolve the conflict between the two appellate courts.
The Second Circuit decision deferred to the Department of Labor's position that the drug reps are not exempt outside salespersons because they promote company sales to individual physicians, and do not actually make the sales themselves. The Ninth Circuit took a broader view of the sales function, characterizing it as including promotional efforts intended to conclude with sales.
The duties of pharmaceutical sales representatives are somewhat unique, and the Supreme Court's decision may not translate to other sales positions. However, the petition for review noted that drug companies employ 90,000 representatives, and this decision will have a significant impact on companies selling drugs and medical devices. Oral arguments on this case have not been calendared, but the Court could issue a decision by the end of its current term in June.