Supreme Court to Decide Whether Pharmaceutical Sales Reps Are Exempt from Overtime

The U.S. Supreme Court recently heard oral arguments in a case involving overtime pay for pharmaceutical sales representatives (PSRs). Under the Fair Labor Standards Act (FLSA), outside sales representatives are exempt and are thus not entitled to overtime pay. The question the Court is considering is whether PSRs qualify for that outside-sales exemption — specifically, whether they are engaged in making sales.

The Second and Ninth Circuits came up with different answers to that question, with the Second Circuit taking the position that PSRs are not making sales, and the Ninth Circuit holding that they are making sales. With more than 90,000 pharmaceutical sales representatives in the U.S., the impact of the Court’s decision could be enormous. If PSRs are reclassified as non-exempt, employers could owe billions of dollars in retroactive overtime.

Points raised during oral argument included whether the PSRs receive binding commitments from doctors to use their products, or if the doctors only say they will consider using the products.

The Department of Labor (DOL) had filed amicus briefs in the Second and Ninth Circuit cases in which it backed a new position on the issue — that PSRs are not exempt and thus are entitled to overtime pay. Another issue under consideration in the case is whether the DOL's change in position was an improper end run around the administrative notice-and-comment rulemaking process. One Supreme Court justice questioned whether DOL could change its position in an amicus brief without ever having issued any agency guidance in support of the new position. 

Wage-and-hour lawsuits, especially those involving questions of overtime exemption, are one of the fastest-growing areas of class-action litigation. WeComply’s online Fair Labor Standards Act training course and Worker Classification training course help keep managers up to date on this crucial area of the law.

Categories: Workplace Compliance
Tags: Worker Classification, FLSA