Supreme Court zeroes in on pharma reps' OT claims

Will pharma reps' crusade for overtime pay survive the U.S. Supreme Court? Hearing arguments in a key case yesterday, some of the justices seemed skeptical of the very idea. And at least one was clearly irked at the Labor Department for claiming that its interpretation of labor law deserves proper respect.

The background: GlaxoSmithKline ($GSK) reps sued the company, claiming that because they didn't actually close sales, they weren't really exempt under the Fair Labor Standards Act's "outside sales" provision. The company essentially claimed that if they look, walk, talk and act like outside sales reps, then they are, whether they ink sales contracts or not.

Appeals courts conflict on the issue, and the Supreme Court took up the case. If it sides with the reps, then multiple lawsuits get a jump-start, threatening the industry with hundreds of millions in liability for back pay. If it sides with GSK, then the same lawsuits falter, and companies have clearance to continue treating their reps as salaried workers.

The question seems to be just how literally the FLSA exemption should be taken. Strictly, which would mean no closed sales, no exemption? When GSK's lawyer reeled off a list of reasons why pharma reps are salespeople--hired for a sales job, given sales training, assigned a sales territory, etc.--Chief Justice John Roberts pointed out that the "long list sort of stopped one step short. They don't make sales."

Or will they give more weight to the reps' day-to-day routine, closed sales or no? Justice Antonin Scalia, for instance, said pharma is "weird" because of the no-sales-closed factor, but "these people look like salesmen to me." Meanwhile, Justice Ruth Bader Ginsburg pointed out that reps don't punch a time clock, and questioned whether pharma reps deserve overtime pay for every bit of time spent promoting drugs. Dinners? Golf? "Would the time on the golf course get time-and-a-half?" Ginsburg wondered.

A ruling is expected by the end of June. Until then, lawsuits will stall and pharma execs may well run the numbers on overtime they might owe--or not.

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- see the Bloomberg piece