Second Circuit Rules: Sales Reps for Drug Companies Not Exempt from FLSA Protection

2nd Circ. Finds Drug Reps Not Exempt From FLSA

This July 6th article from Law360 discusses a Federal appeals case that focuses on whether the Fair Labors Standards Act (FLSA) provides protection for pharmaceutical sales representatives. The Second Circuit ruled in two critical cases -- one involving pharmaceutical giant, Novartis, and one involving the Schering-Plough Corporation -- that the US Department of Labor was correct in claiming that drug sales reps should be covered by the FLSA.

Lower courts had ruled differently in the two cases. In the Novartis case - a class action suit - the lower court ruled in favor of the Swiss drug maker, Novartis. In the Schering case - in which attorneys from Joseph & Kirschenbaum LLP represented the claimants, incidentally -- the plaintiffs won and Merck Inc. (the owner of Schering-Plough) had appealed.

At issue was the extent of discretion and independence sales reps could exercise. Novartis insisted that the reps were relatively independent operators, since they can choose how to allocate their budgets for promotion and decide when to go to physicians' offices to make sales calls. But the court did not buy this. In its decision, the court noted that "we agree with the Secretary that the four freedoms advanced by Novartis do not show that the Reps are sufficiently allowed to exercise either discretion or independent judgment in the performance of their primary duties." For instance, the reps could not participate in planning company marketing strategies, nor could they answer questions that the company had not scripted. In addition, they had to adhere to a "core message" when speaking with physicians.


Victory for Plaintiffs in Compensation Case against Abbott Lab Pharmalot

Abbott Should Pay Overtime To Sales Reps: Judge

This Pharmalot article tells of that a federal court judge in the Northern District of Illinois issued a critical ruling in a case that may have vast national implications for how the Fair Labor Standards Act (FLSA) should be interpreted. The case revolves whether sales representatives for Abbott should have been paid overtime for their work, pursuant to the FLSA.

Lawyers for Abbott Lab maintained that the sales reps were "outside salespeople" -- a designation that would make the company exempt from paying overtime for hours worked per week beyond 40 hours. The drug maker also argued that the sales reps should not get overtime pay because of a rule called "administrative exemption."

Judge Ruben Castillo ruled for the plaintiffs on both points.


Habana Girls File Lawsuit Over Wages, Pinup Calendar

Sexual Harassment and Discrimination Lawsuit Slapped on Cafe Habana

'Habana Girls' File Lawsuit Over Wages, Pinup Calendar

Allegations of sexual harassment, retaliation, and wage and hour violations have roiled Cafe Habana, one of Gotham's most well known restaurants. This December 10, 2009 article in Grub Street New York (a service of nymag.com) discusses many of the salacious allegations, such as:

  • Restaurant owner Sean Meenan punished waitresses who refused to star in a pinup calendar designed to generate income for an eco charity.
  • Servers were forced to work in 'scantily clad' uniforms and were sent home and/or punished if they did not dress provocatively.
  • One waitress was ordered to go out on a date with Owen Wilson because he was 'a good customer' and needed to be taken care of.
  • A different server allegedly wrote a letter to the restaurant's management complaining about a culture of sexual harassment and was subsequently fired.
  • Other servers claim that they had been pressured (illegally) to pool their tips and forswear overtime pay that should have been theirs.

The case, Johnson et. al. vs. Cafe Habana, is being handled by attorneys D. Maimon Kirschenbaum and Matthew Kadushin of Joseph & Kirschenbaum LLP. Plaintiffs seek remedies pursuant to the Fair Labor Standards Act.