Supreme Court Rules Drug Company Sales Employees Are Not Entitled to Overtime Pay

Supreme Court Rules Drug Company Sales Employees Are Not Entitled to Overtime Pay

In Christopher et al. v. SmithKline Beecham Corp., d/b/a Glasxosmithkline, 567 U.S. ___ (2012), No. 11-204, decided June 18, 2012, the U.S. Supreme Court, in a 5-4 decision, ruled that certain drug sales employees are to be treated as "outside salesmen" under the Fair Labor Standards Act (FLSA) and therefore are exempt from the overtime requirements of the law.  The drug sales employees had filed a private action against their employer under the FLSA seeking unpaid overtime pay.  The U.S. Department of Labor had filed an amicus brief supporting the employees' claims.

The court's opinion was authored by Justice Alito, who was joined by Chief Justice Roberts, and Justices Scalia, Kennedy and Thomas.  Justice Breyer wrote a dissenting opinion that was joined in by Justices Ginsburg, Sotomayor and Kagan.

The majority, after rejecting any deference to the Department of Labor's interpretation, reviewed the FLSA and its regulations and concluded that the drug sales employees were exempt even though they only obtained non-binding commitments from doctors to prescribe their drugs to their patients (who actually were the purchasers in most cases).  The statutory provision in question, 29 U. S. C. §203(k), states that "'[s]ale' or 'sell' includes any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition." [Emphasis added].  The majority seized upon the "or other disposition" phrase and ruled for the drug company defendant, pointing out, "Petitioners-each of whom earned an average of more than $70,000 per year and spent between 10 and 20 hours outside normal business hours each week performing work related to his assigned portfolio of drugs in his assigned sales territory-are hardly the kind of employees that the FLSA was intended to protect." Slip Opinion Page 22.

Lexis.com subscribers can access a Lexis enhanced version of the Christopher v. Smithkline Beecham Corp., 2012 U.S. LEXIS 4657 (U.S. June 18, 2012) decision with summary, headnotes, and Shepard's.

Read about additional Labor and Employment Law Developments by Edwin S. Hopson in the Wyatt Employment Law Report.

For more information about LexisNexis products and solutions connect with us through our corporate site.