High Court Weighs Overtime Pay for Drug Sales Reps

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  • A seemingly divided Supreme Court on Monday weighed a potentially costly challenge to the pharmaceutical industry’s practice of not paying overtime to its sales representatives.

    The justices questioned whether the federal law governing overtime pay should apply to the roughly 90,000 people who try to persuade doctors to prescribe certain drugs to their patients.

    Many sales jobs are exempt from overtime pay under the Fair Labor Standards Act. But unlike typical salespeople who often work on commission, pharmaceutical sales representatives cannot seal a deal with doctors. Federal law, in fact, forbids any binding agreement by a doctor to prescribe a specific drug.

    Two salesmen who once worked for drug maker GlaxoSmithKline filed a class-action lawsuit claiming that they were not paid for the 10 to 20 hours they worked each week on average outside the normal business day. Their jobs required them to meet with doctors in their offices, but also to attend conventions, dinners, even golf outings.

    Justice Ruth Bader Ginsburg was among several justices who wondered about limits on overtime opportunities if the court were to rule for the sales reps. A court filing by the industry said drug companies could be on the hook for billions of dollars in past overtime.

    “If you’re right, would the time on the golf course get time and a half?” Ginsburg asked the salesmen’s lawyer, Thomas Goldstein.

    The questions at Monday’s argument suggested the court could divide in unusual ways, not along ideological lines.

    In an exchange with Paul Clement, representing GlaxoSmithKline, Chief Justice John Roberts indicated he was skeptical of the company’s argument.

    Clement said the salesmen “were hired for a sales job. They were given sales training. They attend sales conferences. They are assigned to sales territory, and they are evaluated and compensated as sales people.”

    At this point, Roberts jumped in. “And they don’t do sales,” he said. “Your long list sort of stopped one step short. They don’t make sales.”

    Fellow conservative Antonin Scalia, however, left little doubt where he stands, saying the people who filed the lawsuit “look like salesmen to me.”

    Scalia said the sales reps are a key link in the chain that ends with people picking up prescriptions at pharmacies. “You can only get a prescription from a doctor. Obviously, the number of prescriptions, drugs sold depends upon the number of prescriptions given by doctors,” he said.

    The Obama administration is backing the sales reps, arguing that what they do can’t be considered sales.

    Liberal Justice Elena Kagan said the administration’s argument “seems a little bit blind to the way this industry really works.”

    But later in the hourlong session, Kagan suggested the pharmaceutical industry should be grateful that the Labor Department has not previously sought to compel drug makers to pay overtime.

    “You’ve been given a gift for all these years, is one way of looking at it,” she told Clement.

    A decision is expected by late June.

    The case is Christopher v. SmithKline Beecham Corp., 11-204.

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