This week, the United States Supreme Court held that pharmaceutical sales representatives (also known within the industry as “detailers”) qualify as “outside salesm[e]n” under the Fair Labor Standards Act (“FLSA”), thereby exempting them from the FLSA’s minimum wage and overtime requirements.
The plaintiffs in this case were pharmaceutical sales representatives who worked for SmithKline Beecham, which develops, manufactures, and sells prescription drugs. The prescription drug industry is subject to extensive federal regulation, including a requirement that prescription drugs be dispensed only upon a physician’s prescription.Because of this requirement, pharmaceutical companies have long focused their direct marketing efforts on the medical practitioners who possess the authority to prescribe the drugs in the first place (as opposed to the retail pharmacies that dispense prescription drugs).
The pharmaceutical sales representatives in this case were responsible for calling on physicians in an assigned sales territory to discuss the features, benefits, and risks of their employer’s prescription drugs. Their primary objective was to obtain a nonbinding commitment from the physician to prescribe those drugs in appropriate cases.
They spent about 40 hours each week in the field calling on physicians. Outside of normal business hours, they spent an additional 10 to 20 hours each week attending events, reviewing product information, returning phone calls, responding to e-mails, and performing other miscellaneous tasks. They sued, seeking compensation for the hours they worked over 40 in a workweek, but the Supreme Court ruled that because they met the statutory definition of “outside salesm[e]n,” they were exempted from the FLSA’s overtime provision.
Wage and hour laws often appear simple on their face, but the Department of Labor’s regulations (which the DOL is authorized to issue “from time to time” to “defin[e] and delimit” those laws) can be quite murky. Employers should not assume that the exemption they believe applies to their employees in fact exempts those employees from the FLSA’s minimum wage and overtime requirements. Often, legal counsel’s insight and analysis is necessary.