Supreme Court to Decide Overtime Fate for Pharmaceutical "Sales Representatives" -- JacksonWhite, Kingsley & Kingsley and Sanford Wittels & Heisler
The Court's decision could pave way for reps to receive back overtime pay
WASHINGTON, April 11, 2012 /PRNewswire/ -- On April 16, the U.S. Supreme Court will hear arguments in an important case under the Fair Labor Standards Act, Christopher v. SmithKline Beecham Corp. The specific question in the case is whether pharmaceutical sales representatives are eligible to receive overtime pay. The larger issue is the deference that is owed to the U.S. Department of Labor's interpretation of that statute.
The Fair Labor Standards Act and Department of Labor regulations require, in general, that employers pay 1.5 times an employee's regular hourly rate of pay for each hour worked in excess of 40 hours per week, unless the employee qualifies for an "exemption" from the overtime rules. One of those exemptions covers "outside salespersons," employees whose primary job duty is to sell products away from their employers' offices.
The Christopher case involves the overtime claims of pharmaceutical representatives who are employed by drug manufacturing giant GlaxoSmithKline, but who never received overtime pay despite working significantly more than 40 hours per week. The Glaxo reps visit doctors' offices on "detail calls," and promote Glaxo's products in the hope that doctors will prescribe and that patients will buy those products.
The sticking point is that the reps don't sell any pharmaceuticals to the physicians they visit. In fact, they are barred by federal law from doing so. So, while at a superficial glance, their work consists of some of the same activities as traditional salespeople, federal regulations actually prohibit them from selling their employer's drugs to doctors or anyone else.
The Department of Labor has weighed in, strongly supporting the reps' position.
Glaxo, like other drug manufacturers, nonetheless maintains that its representatives are exempt from overtime pay based on the "outside salesperson" exemption.
The Arizona law firm of JacksonWhite filed the lawsuit against Glaxo on behalf of plaintiffs Shane Christopher and Frank Buchanan. Shareholder Michael Pruitt argued the case before both the Federal District Court in Phoenix and a three-judge panel of the 9th U.S. Circuit Court of Appeals. At the same time, Jeremy Heisler and David Sanford of the law firm of Sanford Wittels and Heisler were shepherding a parallel lawsuit against Novartis. The conflict between the 2nd Circuit, which ruled for the reps, and 9th Circuit, which ruled for the drug companies, set the stage for the successful appeal of the 9th Circuit's decision to the Supreme Court.
Now, numerous cases await the outcome of the April 16 argument. Since 2006, several similar cases have been filed against other pharmaceutical companies, including AstraZenica, Abbott Labs, Sanofi, and Pfizer. One of the firms involved in the Christopher case at the Supreme Court, Kingsley and Kingsley of Encino, California, is responsible for many of these cases.
If the Supreme Court holds that the Glaxo representatives are not outside salespersons, all three firms anticipate that many more plaintiffs will contact them to become part of class or collective actions against multiple drug manufacturers to recover overtime pay. The amounts at stake are very substantial. For example, In re Novartis settled last month for 99 million dollars.
The case will be argued by Supreme Court advocate Thomas Goldstein of Goldstein and Russell, P.C., in Washington, D.C. Goldstein is one of the nation's preeminent Supreme Court attorneys; this will be his 25th argument before the Supreme Court. Goldstein teaches Supreme Court Litigation at both Stanford and Harvard Law Schools. After much preparation, the team is cautiously optimistic about the outcome of the appeal. "We believe that the Supreme Court will agree that the Department of Labor's view that a salesperson must actually 'sell' something is entirely sound," Goldstein said.
The Supreme Court will likely issue a decision on the Christopher appeal in June 2012.
The Court's decision could pave way for reps to receive back overtime pay
WASHINGTON, April 11, 2012 /PRNewswire/ -- On April 16, the U.S. Supreme Court will hear arguments in an important case under the Fair Labor Standards Act, Christopher v. SmithKline Beecham Corp. The specific question in the case is whether pharmaceutical sales representatives are eligible to receive overtime pay. The larger issue is the deference that is owed to the U.S. Department of Labor's interpretation of that statute.
The Fair Labor Standards Act and Department of Labor regulations require, in general, that employers pay 1.5 times an employee's regular hourly rate of pay for each hour worked in excess of 40 hours per week, unless the employee qualifies for an "exemption" from the overtime rules. One of those exemptions covers "outside salespersons," employees whose primary job duty is to sell products away from their employers' offices.
The Christopher case involves the overtime claims of pharmaceutical representatives who are employed by drug manufacturing giant GlaxoSmithKline, but who never received overtime pay despite working significantly more than 40 hours per week. The Glaxo reps visit doctors' offices on "detail calls," and promote Glaxo's products in the hope that doctors will prescribe and that patients will buy those products.
The sticking point is that the reps don't sell any pharmaceuticals to the physicians they visit. In fact, they are barred by federal law from doing so. So, while at a superficial glance, their work consists of some of the same activities as traditional salespeople, federal regulations actually prohibit them from selling their employer's drugs to doctors or anyone else.
The Department of Labor has weighed in, strongly supporting the reps' position.
Glaxo, like other drug manufacturers, nonetheless maintains that its representatives are exempt from overtime pay based on the "outside salesperson" exemption.
The Arizona law firm of JacksonWhite filed the lawsuit against Glaxo on behalf of plaintiffs Shane Christopher and Frank Buchanan. Shareholder Michael Pruitt argued the case before both the Federal District Court in Phoenix and a three-judge panel of the 9th U.S. Circuit Court of Appeals. At the same time, Jeremy Heisler and David Sanford of the law firm of Sanford Wittels and Heisler were shepherding a parallel lawsuit against Novartis. The conflict between the 2nd Circuit, which ruled for the reps, and 9th Circuit, which ruled for the drug companies, set the stage for the successful appeal of the 9th Circuit's decision to the Supreme Court.
Now, numerous cases await the outcome of the April 16 argument. Since 2006, several similar cases have been filed against other pharmaceutical companies, including AstraZenica, Abbott Labs, Sanofi, and Pfizer. One of the firms involved in the Christopher case at the Supreme Court, Kingsley and Kingsley of Encino, California, is responsible for many of these cases.
If the Supreme Court holds that the Glaxo representatives are not outside salespersons, all three firms anticipate that many more plaintiffs will contact them to become part of class or collective actions against multiple drug manufacturers to recover overtime pay. The amounts at stake are very substantial. For example, In re Novartis settled last month for 99 million dollars.
The case will be argued by Supreme Court advocate Thomas Goldstein of Goldstein and Russell, P.C., in Washington, D.C. Goldstein is one of the nation's preeminent Supreme Court attorneys; this will be his 25th argument before the Supreme Court. Goldstein teaches Supreme Court Litigation at both Stanford and Harvard Law Schools. After much preparation, the team is cautiously optimistic about the outcome of the appeal. "We believe that the Supreme Court will agree that the Department of Labor's view that a salesperson must actually 'sell' something is entirely sound," Goldstein said.
The Supreme Court will likely issue a decision on the Christopher appeal in June 2012.