The U.S. Supreme Court ruled last month that pharmaceutical sales representatives are not subject to the overtime pay specified in the Fair Labor Standards Act. In a 5-4 decision, the court ruled in Christopher v. SmithKline Beecham Corp. that the employers of pharmaceutical representatives aren’t obligated to pay time-and-a-half wages if the sales reps work more than 40 hours a week. The FLSA established minimum wages and maximum work hours for employers and their workers, but specified that these requirements don’t apply to those working “in the capacity of an outside salesman.”
The Court said the sales representatives, Michael Christopher and Frank Buchanan, who were hired at SmithKline Beecham Corp. in 2003, qualified as outside salesmen in their work. Their work, according to the Court, included obtaining commitments from physicians to prescribe prescription medications. The Court’s majority found that the petitioners fit the description in other ways, too:
• they were hired on the basis of their sales experience;
• they worked outside an office with minimal supervision; and
• they were awarded “incentive pay” — an uncapped amount that was based on their sales in assigned territories — on top of their base salary.
Justice Samuel Alito noted in the majority opinion that the FLSA exempted outside salesmen from overtime pay because they “typically earned salaries well above the minimum wage” and received other benefits. Justice Alito wrote for the majority in the opinion:
Petitioners — each of whom earned an average of more than $70,000 per year … are hardly the kind of employees that the FLSA was intended to protect. And it would be challenging, to say the least, for pharmaceutical companies to compensate detailers for overtime going forward without significantly changing the nature of that position.
In the dissenting opinion, Justice Stephen Breyer said pharmaceutical representatives don’t qualify as outside salesmen because they “do not promote their ‘own sales’ but, rather, ‘sales made, or to be made, by someone else.’” That surely makes sense, but apparently it didn’t bother the Justices in the majority.
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