The U.S. Supreme Court may just decide this pharma-rep overtime issue once and for all. Two GlaxoSmithKline ($GSK) reps who lost their suit for back overtime pay on appeal are asking the Supremes to review the case, Pharmalot reports. The move is important because sales-rep overtime suits have gone one way in the Second Circuit and another in the Ninth. Legal types say no one can settle that conflict but the nation's top court, and that ruling could cost drugmakers hundreds of millions in back overtime--or save them from paying it at all.
The GSK suit came up through the Ninth Circuit, whose appeals panel found that drug reps are exempt from overtime under the Fair Labor Standards Act. Overtime pay is required neither for outside salespeople, nor for administrative employees, two exemptions cited by drugmakers. And the Ninth Circuit determined that the GSK reps qualified as salespeople.
Meanwhile, similar cases filed by reps from Novartis ($NVS) and Schering-Plough worked their way through the Second Circuit. In those cases, the appeals court determined the reps didn't actually close sales, so they didn't qualify for the sales exemption. And they didn't qualify for the administrative exemption, either, because their jobs didn't require enough autonomy and independent decision-making. The Supreme Court declined to review the case, in effect affirming that the appeals judges were correct to make the sales people subject to overtime pay.
So now, the GSK reps' lawyers want the Supremes to review their case. They argue that "the question of whether the exemption applies to (reps) is one that affects the operations of an entire industry, not just the specific parties in this matter," according to their petition (as quoted by Pharmalot). "This is a question of national application."
- read the Pharmalot coverage