Pharma "Sales" Representatives Entitled to California Overtime

Sacramento, CAThe preliminary approval granted to current and former Novartis Pharmaceutical sales representatives to the tune of $99 million likely has Glaxo sales reps and other pharma sales reps optimistic regarding the outcome of their California Overtime lawsuits.

On January 25, 2012, Novartis, which is based in New Jersey, agreed to settle the 2006 overtime lawsuit, covering almost 8,000 plaintiffs. Last July 2011, the 2nd US Circuit Court of Appeals in New York ruled that, under the federal Fair Labor Standards Act, the sales reps were entitled to overtime after 40 hours in a workweek.

Last November 2011, the Supreme Court decided to review a decision by the 9th US Circuit Court of Appeals in California that stated Glaxo sales reps were exempt from the Fair Labor Standards Act overtime rule because they are "outside sales reps."

The Supreme Court agreed in November to review a decision by the 9th US Circuit Court of Appeals in California that classified the Glaxo sales representatives as "outside sales" personnel exempt from the FLSA overtime pay requirement. And in May 2011, a class action was filed in Sacramento Superior Court against pharmaceutical company Novo Nordisk, alleging their sales reps were denied California overtime pay. As well, California overtime lawsuits have been filed against other pharmaceutical companies including Merck and Schering-Plough.

The lawsuits claim that the pharmaceutical drug representatives are misclassified as "outside sales persons" because they are not actually making sales. Instead, the Novo Nordisk overtime class-action lawsuit plaintiffs claim they visit physicians to promote the company's drugs. A physician cannot directly purchase drugs from the reps, therefore no sales transaction takes place. As well, the class action claims that overtime should be paid to "sales" reps for working more than eight-hour days under the California Labor Code and/or forty hour weeks under the Fair Labor Standards Act. The California overtime law requires that companies pay all non-exempt employees overtime compensation whenever the employees work more than eight hours in a day or forty hours in a week.

In the future, perhaps it would be wise for drug sales representatives to refer to themselves as "drug promotion reps."

The overtime lawsuit against Novo Nordisk was filed in Sacramento Superior Court (Brown v. Novo Nordisk, Case No. 34-2011-001036390); the Merk class action was filed in the Central District of California (Frudakis v. Merck, Case No. SACV11-00146); and the Schering-Plough overtime class action was filed in the Southern District of California, (Valadez v. Schering-Plough, Case No. 10-CV-2595).