Monday, February 28, 2011

Supremes Hint (Via Silence) That Most Pharma Reps Must Be Paid Overtime

The US Supreme Court has declined to hear arguments out of the Second Circuit that were intended to keep Novartis, Schering-Plough (and now Merck) from having to pay overtime to the sales reps of each.

But, as we've repeatedly noted -- these "sales" reps are not selling anything, in the traditional sense -- so this ruling (or lack thereof) makes good common sense.

While other circuits have come out the other way, denying pharma reps O/T, it seems clear that the Supremes see these folks as more akin to hourly workers, with set schedules (and thus protected by, and subject to US DoL overtime pay rules).

And so, the Second Circuit's last order will be the final word on this matter:

. . . .Defendant Schering Corporation ("Schering") appeals pursuant to 28 U.S.C. § 1292(b) from an order of the United States District Court for the District of Connecticut, Janet Bond Arterton, Judge, which denied its motion for summary judgment dismissing the claims of plaintiffs, pharmaceutical sales representatives ("Reps") formerly employed by Schering, for overtime pay under the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. § 201 et seq. Schering moved for summary judgment, arguing that Reps fall within the FLSA's exemption for "outside salesm[e]n," 29 U.S.C. § 213(a)(1). In a ruling dated March 30, 2009, and reported at 604 F.Supp.2d 385, the district court denied Schering's motion, concluding that, because the Reps undisputedly do not sell or make sales as those terms are defined in the FLSA and the regulations promulgated thereunder by the Secretary of Labor, the Reps fall outside the FLSA's outside sales employee exemption. In an order dated April 17, 2009, the district court certified its order denying summary judgment as worthy of an immediate appeal pursuant to § 1292(b). Schering petitioned this Court, as required by that section, for leave to appeal; we granted the petition and heard Schering's appeal in tandem with the appeal in In re Novartis Wage and Hour Litigation, No. 09-0437-cv. We assume the parties' familiarity with the remaining facts and procedural history of the case.

On appeal, Schering contends that the district court erred as a matter of law in determining that the Reps were not exempt outside salesmen. We disagree. The burden of proving that employees fall within an exemption from the FLSA overtime pay requirements is on the employer. See, e.g., Bilyou v. Dutchess Beer Distributors, Inc., 300 F.3d 217, 222 (2d Cir. 2002). Reviewing the matter de novo, and taking the record in the light most favorable to the plaintiffs, see, e.g., Dillon v. Morano, 497 F.3d 247, 251 (2d Cir. 2007), we conclude, for the reasons stated in the district court's well-reasoned ruling, see 604 F.Supp.2d at 395-403, that Schering did not meet its burden. Accordingly, we affirm the order denying summary judgment for the reasons stated in the district court's ruling and for the reasons stated in our opinion in In re Novartis Wage & Hour Litigation, No. 09-0437 (2d Cir. July 6, 2010), also issued today.

We have considered all of Schering's contentions on this appeal and have found them to be without merit. . . .

That is where we now stand.


Anonymous said...

I wonder if Stephen G (pay me what I want or I will let you die) Sudovar past president of Hoffman La Roche, Stephen G. Sudovar (Executive Chairman and Interim Chief Executive Officer) ... of the Pharmaceutical Research and Manufacturing Association (PhRMA).
Has read this article yet?

Anonymous said...

Lets hope that he sees it -- and pays his people what they are due.