Alabama Injury Attorneys Blog

A New York Circuit Court of Appeals ruled on Tuesday that Novartis Pharmaceutical Sales Representatives were not exempt from overtime claims under the Fair Labor Standards Act (FLSA).

The three-judge panel overturned a prior ruling that pharmaceutical sales representatives fell under the exception to the Federal Fair Labor Standards Act of outside sales representatives.

The court ruled in favor of the 2,500 plaintiffs, both current and former Novartis representatives that were employed with the company between March 23, 2000 and April 2, 2007. According to the Fair Labor Standards Act, employees working an excess of 40 hours a week are subject to overtime pay of 1.5 times their hourly wage. The plaintiff's claimed they routinely work over 40 hours a week. Most pharmaceutical reps work nine-hour days and are encouraged often required to host outside, after-hours social events to better interact with the physician and cater to their social styles.

The court relied on the U.S. Labor Department regulations that define the term "outside sales representative" claiming pharmaceutical sales representatives are not actually selling a product. Essentially they are "promoters" of a product and do not directly sell to the physicians they "call" on. The court also agreed that "their jobs lack the discretion and independent judgment required to classify them as administrative employees under the statute."

In a similar case, the court upheld a ruling that pharmaceutical reps employed with the drug company, Schering Plough, are not outside salesman therefore they are subject to FLSA overtime requirements.

This case marks the first federal appellate ruling on administrative employees exemption and outside sales exemption in the pharmaceutical sales industry. The decision to reverse the court order in favor of the plaintiffs is extremely important for FLSA violations going forward.