The Supreme Court Pharma Rep Overtime Decision

February 2011

The Supreme Court's denial of the drug company appeals is great news for pharma reps joining lawsuits for overtime compensation. The High Court's ruling leaves standing the rep favorable July 2010 decision by the Second Circuit U.S. Court of Appeals in New York. Federal law requires employees to be paid time-and-a-half (their hourly rate times 1.5) for hours worked in excess of 40 in a week. The law provides for "exemptions" in the case of certain types of workers. The Supreme Court's decision leaves in place the federal appellate rejection of the drug companies' arguments that "administrative" or "salesperson" exemptions apply to their reps. These lawsuits allege that both of these exemptions stem from a misclassification of sales representatives, as they are not vested by the drug companies with sufficient independent judgment and discretion as to significant matters for the "administrative" exemption, nor do they engage in the actual sale of goods required for the "salesperson" exemption - rather, they promote (not sell) a product under strict company guidelines.

The Supreme Court decision to deny these drug companies' request for another chance to make the arguments tossed by the Second Circuit affects all cases brought under federal law in New York, such as the case against BMS. All federal judges in New York, including the BMS judge, must adhere to the Second Circuit decision.