Are pharmaceutical sales representatives covered by the “outside sales” exemption under the federal Fair Labor Standards Act? For decades the pharmaceutical industry has been left without any clear guidance in answering this question. The wider implication, of course, is that, without any guidance, pharmaceutical companies have been left to determine on their own whether thousands of “sales reps” across the country are entitled to overtime compensation. Finally now that the legal landscape relative to this issue has reached maximum levels of confusion as the Ninth and Second Circuits recently took diametrically opposed positions the Supreme Court has agreed to review the issue and provide the industry with some clarity and certainty. Well, sort of.
On Nov. 28, 2011, the United States Supreme Court agreed to review the decision of the Court of Appeals for the Ninth Circuit in Christopher v. Smithkline Beechman Corp., 635 F.3d 383 (9th Cir. 2011). The Supreme Court was presented with two questions: (1) whether deference is owed to the Secretary of the Department of Labor’s interpretation of the Fair Labor Standards Act’s (FLSA) sales exemption and related regulations; and (2) whether the FLSA’s outside sales exemption applies to pharmaceutical sales reps.
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