Drug Representatives Exempt from Overtime, Considered Salespeople

By Deanne Katz, Esq. on June 21, 2012 | Last updated on March 21, 2019

Drug representatives are not entitled to overtime pay ruled the Supreme Court in Monday's decision.

The ruling came from a suit between GlaxoSmithKline PLC and two of its former drug representatives. The representatives claimed they had worked significant time outside of normal work hours and were entitled to overtime compensation.

The Supreme Court disagreed, ruling 5-4 that drug representatives are outside salespeople under the Fair Labor Standards Act. According to the Act, outside salespeople are not entitled to overtime pay.

The Court's decision contained some new factors in determining if an employee is a salesperson that don't necessarily rely on making a physical sale.

In his majority opinion, Justice Samuel Alito noted that drug representatives come as close to making sales as is possible given pharmaceutical regulations. He also relied on the FLSA's intention for the exemption to support his holding.

"The exemption is premised on the belief that exempt employees 'typically earned salaries well above the minimum wage' and enjoyed other benefits that 'se[t] them apart from the nonexempt workers entitled to overtime pay,' " as quoted from Alito's opinion by The Washington Post.

This decision could potentially have impact employees in other fields who are trained in sales techniques and enjoy a high salary but do not officially make sales.

The Court's dissent, authored by Justice Stephen Breyer and joined by Justices Ruth Bader Ginsburg, Sonia Sotomayor, and Elena Kagan, argued that drug representatives never actually make sales. The most they can get from a doctor is a nonbinding commitment, a factor cited by the dissent.

The Supreme Court's decision settled an issue about which Circuit courts had issued conflicting rulings. The Seventh Circuit Court of Appeals ruled that drug representatives were exempt from overtime payment requirements. The Second Circuit had found that they were entitled to overtime.

Drug makers endorsed the decision which will save them millions of dollars in overtime payments to drug representatives, according to Reuters.

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