“Prescription for Confusion: Second and Ninth Circuits Split on Exempt Status of Pharmaceutical Sales Representatives”
Do sales representatives who promote, but do not actually sell, a product qualify for the “outside salesman” exemption of the Fair Labor Standards Act of 1938 (“FLSA”)? The Courts of Appeals for the Second and Ninth Circuits have come to opposite conclusions and the Supreme Court has yet to consider the question. Accordingly, for now, whether or not an employer may be liable for unpaid overtime pay may depend to a certain extent on geography.
The Second Circuit has ruled in In re Novartis Wage and Hour Litigation, that pharmaceutical sales representatives who do not, and in fact cannot legally, sell the controlled substances that they promote do not qualify for the outside salesman exemption. It also ruled that the plaintiffs in Novartis Litigation, did not qualify for the administrative exemption. The Ninth Circuit, by contrast, held in Christopher v. SmithKline Beecham Corp., that to determine that pharmaceutical sales representatives do not sell to doctors is to ignore the realities of the pharmaceutical industry and, accordingly, such employees are not entitled to overtime pay.