Supreme Court to Rule on Sales Rep Overtime Pay

Posted February 24, 2012 in Labor and Employment by Keith Ecker

Usually, the question of whether you have a right to overtime pay is pretty clear. The Fair Labor Standards Act (FLSA) establishes a minimum threshold for wage-hour standards that all employers in all states must abide by. These standards generally say that if you are not in a managerial role and you are not making a large salary, then you are entitled to overtime pay if you work more than 40 hours in a week.

 

“It’s easy to determine if someone has a right to overtime if they are at either end of the employment spectrum,” says Brian Kabateck, a lawyer at Kabateck Brown Kellner. “At one end you have the $10-an-hour employee sitting on a factory line, and at the other end you have the vice president of the corporation.”

But for employees that fall within the middle, the issue of overtime pay can become a gray area. This is especially true for pharmaceutical sales reps, who have a long and inconsistent history within the courts regarding their right to overtime pay.

The Supreme Court is slated to hear a case on this very issue in April. The case, known as Christopher v. GlaxoSmithKline, may determine once and for all whether pharmaceutical sales reps are deserving of overtime pay for putting in work weeks of more than 40 hours.

“We really have no idea how the Supreme Court will rule,” says Jeremy Heisler, a founding partner at Sanford Wittels & Heisler. Heisler represented a class of Novartis sales reps in a similar case, which settled at the end of January for $99 million. “The law is on our side, but the fact remains that courts have reached different decisions on this issue.”

 

Definition of a Salesman

The central issue in the now-settled Novartis case and the pending Supreme Court GlaxoSmithKline case is whether several overtime exemptions apply to pharmaceutical sales reps. If any exemption does apply, then that would mean employees are not subject to overtime pay.

One of these exemptions is known as an “administrative exemption”. The administrative exemption basically says that if the employee is managed and has little discretion with regards to conducting his or her own work, then he or she may be subject to overtime pay. Heisler says that this exemption may in fact apply to some pharmaceutical sales reps, depending on how the company defines the role of their workers.

Jeremy Heisler

Jeremy Heisler

“The Novartis reps don’t qualify for this exemption because they are tightly controlled and don’t exercise independent judgment,” Heisler says. “That being said, the issue of the administrative exemption arguably could vary among different companies based on the degree of discretion pharmaceutical companies give their reps.”

The other major exemption, and the one that the Supreme Court is likely to address directly in the GlaxoSmithKline case, applies specifically to outside sales representatives. According to the FLSA, an outside sales rep is defined as anyone who makes sales or obtains orders that will be paid by the client or customer and who does this largely away from the employer’s place of business.

Pharmaceutical companies argue that their sales reps do in fact fit this definition, which means they are not entitled to overtime pay. However, the sales force disagrees, claiming that they merely provide medications and counsel physicians on selling and distributing the them to their patients.

“The employees are saying that they’re much more goodwill ambassadors and disseminators of information as opposed to people who directly make the sale,” Kabateck says. “The truth is it is a hybrid role.”

 

Waging War

As the pharmaceutical sales rep cases highlight, sometimes the FLSA does not clearly apply to a person’s job function. If you believe that your employer is improperly denying you overtime pay, the first thing you should do is make sure you are not subject to a collective bargaining agreement that may place extra stipulations on when you can and cannot collect overtime.

Brian Kabateck

Brian S. Kabateck

Next, check to see if your state has an agency that oversees labor and employment issues. The agency may have a hotline that you can call to better understand your legal issue. You can also contact your local office of the U.S. Department of Labor’s Wage and Hour Division for information. If you still need more assistance, you should definitely seek out the help of a knowledgeable employment lawyer.

“You’ll want to set up a consultation with the lawyer and ask if the situation you are in is one where you should be getting compensated for overtime,” Kabateck says.

Kabateck recommends that when you meet with the attorney, you bring several documents along, including:

  • Pay stubs
  • An employment manual or information your employer has on how you are paid
  • Documents that explain your job duties
  • Any information that shows the hours you have worked
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