Pharmaceutical Reps Not Exempt Under The FLSA
In a recent decision, the Second Circuit determined that Novartis Pharmaceutical Corps representatives were not covered by the “outside sales” exemption under the Fair Labor Standards Act and hence, were entitled to overtime pay.
Pursuant to the FLSA, employees who are not exempt must be paid at a rate of one and one half times their regular rate of pay for all hours worked in excess of 40 hours in any workweek.
One of the biggest issues to arise under the FLSA is whether the work you do is considered “exempt.” Generally, exemptions under the FLSA fall into three main categories – executive, administrative, and professional.
In Novartis, the company asserted that the representatives were covered by the administrative exemption as outside sales employees. Under the FLSA, an “outside salesman” is an employee whose primary duty is make sales or “obtaining order of contracts for services.”
Judge Amayla L. Kearse, writing for the U.S. Court of Appeals for the Second Circuit disagreed, reasoning that although a pharmaceutical representative may be “actively engaged in persuading physicians to prescribe a drug” the reps were not specifically making sales. As a result, the reps did not fit within the “outside salesman” definition and were not exempt. Judge Kearse noted that although her interpretation differed from other federal district courts’, it more closely followed the Secretary of Labor’s interpretation of this provision.
Further, Kearse noted that the skills characterized by the company as evidence of the reps’ exercise of discretion were actually developed and/or honed in Novartis training sessions. These skills were not evidence of independent thinking and judgment, but rather actions further bolstering the reps’ claims that their work was strictly controlled by the company.
Determining whether a particular job is covered by the FLSA can be confusing. As this case demonstrates, even federal courts may disagree on what job duties are considered exempt.
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