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Federal Appeals Court Rules Pharmaceutical 'Sales' Reps Entitled to Overtime Pay
Date:7/6/2010

Katherine Kimpel, another SWH partner, noted that the United States Department of Labor, the agency delegated by Congress with the authority to issue regulations "defining and delimiting" exemptions from overtime pay, submitted an amicus brief in the Novartis appeal and argued that neither the outside sales nor administrative exemption should cover the Novartis sales Reps.  According to Ms. Kimpel, the Second Circuit, consistent with Supreme Court precedent, gave "controlling deference" to the Department's position that the Reps were non-exempt. 

David Sanford of SWH emphasized that the Second Circuit completely rejected Novartis' and the pharmaceutical industry's persistent contention that the Reps are "outside salespersons" and therefore exempt from overtime pay under federal and state law.  Sanford pointed to the Court's conclusion that when a pharmaceutical representative visits a doctor's office, drops off a sample and delivers a pre-scripted company message about his employer's drugs, "in no sense" is the Rep making a sale to the doctor within the meaning of federal and state overtime law and regulations. According to Sanford, the Court held that the Reps were promoting pharmaceuticals to the doctor and, as the decision stated, "a person who merely promotes a product that will be sold by another person does not, in any sense, intended by the [overtime] regulations make the sale." 

The Second Circuit also found that that Novartis Reps were not exempt "administrative" employees because the Reps were tightly controlled and therefore could not exercise either discretion or independent judgment in the performance of their primary duties, both of which are a preconditions to applying the administrative exemption.  The Court rebuffed Novartis' argument that the Reps were imbued w
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SOURCE Sanford Wittels & Heisler, LLP
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