On June 18, the United States Supreme Court resolved a circuit split regarding whether pharmaceutical sales representatives are exempt from overtime compensation as “outside salesm[e]n” pursuant to Department of Labor (DOL) regulations under the Fair Labor Standards Act (FLSA).
In Christopher v. SmithKline Beecham Corp., 132 S.Ct. 2156 (2012), a 5-4 decision, the Supreme Court affirmed a Ninth Circuit decision, which held that pharmaceutical sales representatives are exempt from the overtime provisions of the FLSA as “outside salesm[e]n.” In so holding, the Supreme Court refused to accord deference to a DOL regulatory interpretation that determined such employees were not exempt. This regulatory interpretation was initially announced by the DOL in an amicus brief filed in a similar action pending in the Second Circuit. In the Second Circuit case, the court accorded deference to the DOL’s interpretation and held that pharmaceutical sales representatives were nonexempt under applicable DOL regulations and, therefore, entitled to overtime compensation. See In re: Novartis Wage & Hour Litig., 611 F.3d 141, 153-155 (2d Cir. 2010). Therefore, the Christopher decision not only resolved a circuit split in favor of the employer defendant but, in so doing, further eroded the deference that courts have traditionally accorded to administrative agency interpretations.
