Drug companies might have to give up their long-standing practice of denying <"http://www.yourlawyer.com/topics/overview/Pharmaceutical-Sales-Representatives-Unpaid-Overtime-Lawsuits">pharmaceutical sales representatives overtime pay. This after the U.S. Supreme Court refused to hear appeals by Merck’s Schering unit and Novartis that were seeking to overturn recent decisions by an appeals court which found drug company sales representatives are not exempt from the overtime provisions of the Fair Labor Standards Act (FLSA).
It has been standard practice for drug makers to avoid paying overtime for pharmaceutical sales representatives by classifying them as commissioned outside sales people, or administrative personnel, both categories that are exempt from FLSA. But recently, sales reps have been going to court to challenge those exemptions and win the right to overtime pay. What’s more, according to a Wall Street Journal report, the U.S. Department of Labor has been backing pharmaceutical representatives in these types of claims.
Last year in two important unpaid overtime lawsuits – one against Novartis Pharmaceutical Corp. and another against Merckâ€™s Schering unit – the Second Circuit Court of Appeals ruled that pharmaceutical reps are entitled to overtime pay. In the Novartis case, a trial judge had ruled that the sales representatives fell under exceptions to the FLSA for outside salespeople and administrative workers. The Second Circuit overturned that decision on a 3-0 vote. The Second Circuit also upheld a two-year-old federal court decision which denied a motion to dismiss an unpaid overtime case brought against Schering by some of its sales reps.
Both Novartis and Merck appealed to the U.S. Supreme Court, but last month it refused to take the cases, and did not comment on either. The high court’s decision could affect more than a dozen lawsuits filed by sales reps against drug makers like Johnson & Johnson, Bristol-Myers Squibb, Novartis, Merck & Co. and GlaxoSmithKline. For its part, Novartis is facing an estimated payout of at least $100 million to 2,500 current and former members of its sales force because of the decision, according to a report on NJ.com.
According to a report on Pharmalot, the Supreme Court’s refusal to hear the Novartis and Merck appeals suggests that sales reps are likely to win their cases in courts within the Second Circuit’s jurisdiction. However, appeals courts in other jurisdictions have come down with different decisions recently. For example, last month the San Francisco-based 9th U.S. Circuit Court of Appeals said former sales reps for GlaxoSmithKline were not entitled to overtime pay.