Here in the United States we have labor laws that entitle worker’s to compensation for their labor. Those same laws also protect companies from unlawful lawsuits, etc. But, what happens when an employee believes they are being treated unfairly, yet the employer doesn’t agree? The majority of the time a pending lawsuit ensues.
And, that is exactly what happened recently, when 2 salesmen sued their company for what they thought was uncompensated overtime.
But did you know that some industries are not required to pay overtime? According to the Fair Labor Standards Act many sales jobs are exempt from overtime pay, because they are outside salesmen. And these men were pharmaceutical sales representatives that worked for drug maker GlaxoSmithKline.
The two salesmen filed a class-action lawsuit claiming that they were not paid for the 10 to 20 hours they worked each week on average outside the normal business day. Their jobs required them to meet with doctors in their offices, but also to attend conventions, dinners, even golf outings, therefore they believed they were entitled to compensation. But, the Supreme Court disagreed.
“Outside salesmen” aren’t entitled to overtime pay under the Fair Labor Standards Act. That category now includes drug company sales reps, a divided U.S. Supreme Court has ruled.
The High Court’s 5-4 decision means GlaxoSmithKline will not have to pay overtime to sales representatives who visit doctor’s offices to make pitches for their company’s drugs, The Washington Post reports.
Key to the ruling was whether drug company representatives should be considered “salesmen” — a question that divided the Justices.
In a dissent, the Court’s liberal Justices argued that Glaxo’s “sales reps” shouldn’t fall under the Fair Labor Standards Act’s overtime exemption because they don’t actually make sales. Rather, their jobs require them only to convince doctors to prescribe their company’s drugs, according to The Post.
In dissent, Justice Stephen Breyer said the sales reps do not consummate sales and so should be allowed to claim overtime. Breyer referred to the employees not as salesmen, but as “detailers,” as they are known in the industry. “The detailer’s work, in my view, is more naturally characterized as involving `promotional activities designed to stimulate sales…made by someone else,’” Breyer said, quoting from federal regulations.
“Where in this process does the [employee] sell the product?” Justice Stephen Breyer wrote in the dissent.
Justices Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor signed Breyer’s dissent.
Justice Samuel Alito, writing for the majority, said that the drug sales reps’ “end goal was not merely to make physicians aware of the medically appropriate uses of a particular drug. Rather, it was to convince physicians actually to prescribe the drug in appropriate cases.”
And the majority opinion by Justice Samuel Alito found Glaxo’s representatives “bear all the external indicia of salesmen”: They were hired for their sales know-how and worked away from the office with minimal supervision, Alito wrote.
Chief Justice John Roberts and Justices Anthony Kennedy, Antonin Scalia and Clarence Thomas joined with Alito.
Glaxo’s sales reps also collected bonuses based on the company’s drug sales in their regions, The Post reports. Those bonuses played a role in the majority’s decision.
The FLSA’s “outside salesman” overtime exemption “is premised on the belief that exempt employees ‘typically earned salaries well above the minimum wage’ and enjoyed other benefits that set them apart from the nonexempt workers entitled to overtime pay,’” Alito wrote, citing the law.
About 90,000 drug-company sales representatives are directly affected by the Court’s ruling and are no longer entitled to overtime.