Supreme Court Rules that Pharmaceutical Sales Reps Not Entitled to Overtime

The Supreme Court ruled yesterday that pharmaceutical sales representatives are “outside sales” employees, and thus are not entitled to overtime. The Court ruled against the Department of Labor, which had submitted briefs in support of the plaintiff. The Court ruled that an employee need not actually “sell” things within the common meaning of the word – i.e., exchange money or a promise of – in order to be exempt from overtime regulations. Pharmaceutical representatives are generally paid to convince doctors to prescribe one brand name drug over the other – but the drug is actually bought and sold by patients at pharmacies. The Department of Labor argued that pharmaceutical representatives were not in fact “selling” anything outside the company, but were rather promoting certain drugs over others. The Court reasoned that Department of Labor had never brought an enforcement action against pharmaceutical companies in the past or issued formal interpretive guidelines, and therefore that it had “acquiesced” to the industries’ practices. While reasonable people may argue over the meaning of “sell”, the Court’s argument that the Department of Labor cannot reasonably believe a practice to be illegal if no previous enforcement actions have been brought, is troubling. The Department of Labor is only one agency, working to fight an ocean of wage and hour abuse and economic injustice, and is unlikely to be able to spot all potential abuses prior to private litigation. In fact, that’s what plaintiffs’ lawyers – like Beranbaum Menken – strive to do: enforce wage and hour regulations that both compensate employees for their work and also clarify the law. Nevertheless, we hope that the administration takes steps to remedy the situation. Pharmaceutical reps are employees like any other – they don’t work for themselves, and they don’t receive commissions. They deserve to be paid time-and-one-half for their overtime hours, just like other employees.