A U.S. appeals court added more weight to the argument that pharma sales reps are entitled to overtime pay. Overturning a lower court ruling, the three-judge panel in New York ruled that Novartis sales folks aren't exempt from wage-and-hour laws because they're neither true outside sales people nor administrative employees.
By the court's calculation, pharma reps don't close sales in the field at all. Indeed, in promoting drugs to doctors, they're not even dealing with the ultimate buyers of their company's products. And they're not administrative workers because they don't have much in the way of individual power or discretion.
"The effect of the decision is not only to reverse the trial court's grant of summary judgment against the pharmaceutical reps," plaintiffs' lawyer Jeremy Heisler told the New York Law Journal, "but to hold, in effect, that Novartis is liable to pay the reps overtime." Observers figure that Novartis may end up owing some $100 million in back pay.
In knocking down both of these defenses against overtime, the court's decision could ripple through the industry. That's because Novartis is far from alone in fighting off sales reps' claims for overtime pay; almost a half-dozen cases have been decided, mostly in favor of the reps, while similar cases are pending at Amgen and Serono. And this is the first appellate ruling that addresses both the outside sales and the administrative employee questions.
- get the New York Law Journal story
- see Bloomberg's take
- read the post at BNet Pharma