The U.S. Supreme Court heard oral argument Monday on the hotly questioned issue of whether pharmaceutical sales representatives are subject to the outside sales exemption under the Fair Labor Standards Act.
The case, Christopher v. SmithKline Beecham, Corp., challenges the Ninth Circuit’s decision that sales representatives were subject to the outside sales exemption of the FLSA. That decision conflicts with a prior decision of the Second Circuit holding that pharmaceutical sales reps are entitled to overtime compensation.
The reps – and the Department of Labor – argue that they are not subject to the exemption because they do not interact with the patients and hospitals that ultimately purchase the medications from wholesalers. Rather, they promote medications to physicians, who write prescriptions for their patients.
The case impacts employment conditions of tens of thousands of sales representatives, and could give rise to astronomical claims for unpaid overtime compensative. In January, for example, Novartis agreed to pay $99 million to settle a similar case after receiving an adverse ruling on appeal.
As important as the overtime issue is, the case raises a second issue that could prove to be more wide reaching in its effect, specifically, the deference owed to the Secretary of Labor’s interpretation of regulations.
The Supreme Court should issue its decision in June.