Supreme Court Rules on Overtime for Pharmaceutical Reps
In a major ruling, the Supreme Court, in a 5-4 vote, found that pharmaceutical reps are not entitled to overtime payments for time worked in excess of 40 hours a week. In the Christopher v. SmithKline Beecham opinion, released earlier this week, the Court found that the sales reps, who provide information to doctors about the company''s products were outside salespeople, not entitled to overtime. Knowing several pharma reps, they do work long hours, including many nights making presentations to doctors. In 2009, the Department of Labor first asserted that pharma reps were not exempt, and reiterated this position in several other cases since then. Although courts often defer to the interpretation of a department's own regulations, the Court found that the DOL's interpretation would create massive liability for the companies, and that the DOL never took this position until 2009. Although the reps do not actually sell the drugs to doctors, they try to obtain commitments to prescribe the drugs they promote. This is the most they can do, based on the heavily regulated industry. The Court found that the reps "bear all of the external indicia of salesmen", with their experience, training, work in the field and incentive compensation. In fact, the Court noted that the average income for a rep is $90,000/year. The dissent maintained that the reps were merely promoting their drugs, not selling them.
Practice Pointers. Although this decision is relatively narrow due to the special nature of the pharmaceutical industry, the Court rejected the DOL's interpretation of it's own regulations. This may have a major impact with other agencies, such as the EEOC. Time will tell. Additionally, this is another stinging defeat for the Department of Justice, which has lost a number of high profile cases in the recent past, from the Montgomery Bingo trial to John Edwards to Roger Clemens. There are 2 more important decisions that should be issued very shortly concerning Obama Health Care and Arizona's Immigration law. We will see how the DOJ fares in these cases.
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