Supreme Court to Decide
Whether Tighter USDOL Regs
Control For Drug Reps Job
Is it a “sale”?
When Congress passed the Fair Labor Standards Act the law included an exemption from overtime and the minimum wage for an “outside salesman.” 29 USC § 203(k). Under §203(k) a “sale” includes “any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.” The Obama Department of Labor has taken the position that workers treated as exempt outside sales people may be in fact non-exempt if their duties do not actually involve “sales” under 29 CFR §541.503(a). The test of an employee’s primary duty of sales is not met if in fact the individual is a promoter, stimulating interest in a product or service that might lead to a sale down the road. Although the DOL has traditionally made this distinction, the current leadership at the agency has substantially narrowed the concept of “sales” to mean actual transfers of title.
The U.S. Supreme Court has accepted certiorari in a case focusing on outside sales people who were employed by GlaxoSmithKline PLC in the position of pharamceutical sales representatives. Christopher v. GlaxoSmithKline PLC, __U.S.__, No. 11-204. The Ninth Circuit Court of Appeals last year found for the company, declining to defer to the restrictive USDOL interpretation of 29 CFR §541.503(a). Christopher v SmithKline Beecham Corp., 635 F3rd 383 (9th Cir. 2011). In the past, the courts have classified drug reps as outside salespeople, and therefore exempt, so the court of appeals ruling was not out of the ordinary.
What has changed is the agency’s interpretation, which it had pushed in an amicus brief in the Ninth Circuit and that will certainly be trumpted by the agency in an amicus filed with the Supreme Court. The drug reps, appellants to the High Court, argue that they were actually promoters, and that the sales in fact occurred when end users went to pharmacies and purchased drugs sold to the pharmacies by wholesale distributors. Glaxo disagrees, and its brief to the Court has stressed that employees sell by convincing doctors to prescribe drugs to their patients. All reps are trained intensively in sales techniques so that when visiting doctors they deliver sales presentations and appeal to doctors to prescribe Glaxo products.