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McDonald Hopkins Law Firm Alert: Recent Court of Appeals Decision Highlights the Need to Properly Define the Role of Sales Representatives
Date:4/7/2011

CLEVELAND, April 7, 2011 /PRNewswire/ -- The Ninth Circuit, in Christopher v. Smithkline Beecham Corporation, 2011 WL 489708 (9th Cir., Feb. 14, 2011), found on February 14, 2011 that pharmaceutical sales representatives were "outside sales representatives" under the Fair Labor Standards Act (FLSA) of 1938, 20 U.S.C. section 201 et seq, exempting them from overtime pay. Pharmaceutical Sales Representatives (PSRs) are prohibited from making actual sales of drugs to physicians or patients, and are instead used to promote drugs so that physicians will prescribe them to be purchased from a pharmacy. The PSRs claimed that they were entitled to overtime pay under the FLSA for the time they spent promoting the defendants products outside of normal business hours, arguing that because they did not make sales themselves, they were not outside sales representatives.

The Court, however, reasoned that even though the PSRs did not make actual sales, they were outside sales representatives under the FLSA. The highly regulated nature of the industry prevented the PSRs from making actual sales, but the nature of the work was such that the PSRs were essentially getting commitments from physicians to prescribe drugs, which was analogous to a sale. They were, therefore, exempt from overtime pay under the FLSA as an outside sales representative.

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McDonald Hopkins Law Firm Alert; Recent Court of Appeals decision highlights the need to properly define the role of sales representatives

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