Supreme Court Rules Drug Reps are Exempt Employees

In a victory for the pharmaceutical industry, the U.S. Supreme Court ruled today that pharmaceutical sales representatives are exempt employees under the federal Fair Labor Standards Act (FLSA). Christopher v. SmithKlineBeecham (2012).

Drugs reps generally engage in direct marketing of pharmaceuticals to physicians and travel extensively for that purpose. The reps try to persuade physicians to write prescriptions for their products in appropriate cases. Long-time industry practice has been to classify these positions as exempt under the outside sales exemption. Recently, the pharmaceutical industry has been plagued by class action lawsuits. The U.S. Dept. of Labor has taken the position in amicus briefs filed in response to these lawsuits that drug reps do not engage in “sales” within the meaning of the FLSA regulation and therefore do not qualify for exempt status. In a 5-4 decision released today, the Court held the drug reps most often do qualify for the outside sales exemption to the minimum wage and overtime provisions of the FLSA.

The Court said that the DOL’s interpretation “lacked the hallmarks of thorough consideration” and was “quite unpersuasive.” The Court acknowledged that although agency interpretations are normally entitled to deference, but that was not the case in this instance.