The Supreme Court has ruled that sales representatives for pharmaceutical companies do not qualify for overtime pay under federal law, a big victory for the drug industry.
In a 5-4 decision Monday, the court’s conservative majority concluded that the roughly 90,000 people who try to persuade doctors to prescribe certain drugs to their patients are not covered by the federal law governing overtime pay.
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.
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.
Justice Samuel Alito, writing for the majority, said that the drug sales reps’ “end goal was not merely to make physicians aware of the medically appropriate uses of a particular drug. Rather, it was to convince physicians actually to prescribe the drug in appropriate cases.”
Chief Justice John Roberts and Justices Anthony Kennedy, Antonin Scalia and Clarence Thomas joined with Alito.
In dissent, Justice Stephen Breyer said the sales reps do not consummate sales and so should be allowed to claim overtime. Breyer referred to the employees not as salesmen, but as “detailers,” as they are known in the industry. “The detailer’s work, in my view, is more naturally characterized as involving ‘promotional activities designed to stimulate sales…made by someone else,’” Breyer said, quoting from federal regulations.
Justices Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor signed Breyer’s dissent.
The Obama administration backed the sales reps and argued that they do not make sales, as the law requires for a job to be exempt from overtime.