Pharma sales reps deserve overtime pay. That's the upshot of a U.S. Supreme Court refusal to reconsider appellate court decisions against Novartis and Merck's Schering unit. The question now is whether the court's denial in these cases translates into overtime requirements for all pharma reps.
The court didn't comment on the two lawsuits, which have been working their way up the court-system ladder for several years now. But here are the basic facts: A federal appeals court ruled last year that neither Novartis nor Merck should have been exempting their sales forces from overtime rules in the Fair Labor Standards Act. As the Star-Ledger reports, that ruling was partly based on a Department of Labor brief supporting the sales reps' claims for overtime.
Naturally, Novartis and Merck didn't agree and asked the Supreme Court to consider their appeals. The ensuing "No" means Novartis could have to pay at least $100 million in back overtime to 2,500 current and former reps.
The drugmaker's reaction illustrates just how problematic the high court's choice could be for the pharma industry. "For decades, companies in the pharmaceutical industry have classified their sales representatives as exempt employees and have compensated them on a pay-for-performance basis," Novartis said, adding that it's exploring "all legal options" that remain.
Indeed, the court's denial could affect more than a half dozen companies now dealing with overtime lawsuits. Plaintiffs' lawyers in the Novartis case are representing sales reps from Pfizer, Roche and Abbott Laboratories. Complicating matters, however, is that other appellate court decisions have gone the opposite direction.