SCOTUS to Hear Outside Sales Exemption Case

The U.S. Supreme Court (SCOTUS) recently agreed to decide whether the Fair Labor Standards Act's “outside sales exemption” applies to pharmaceutical sales representatives who do not directly sell, but rather meet with doctors to encourage them to prescribe their brand of prescription medications.

In the case of Christopher v. SmithKlineBeecham Corp. d/b/a GlaxoSmithKline, U.S., No. 11-204, cert. granted 11/28/11). The SCOTUS will review a February 2011 decision by the U.S. Court of Appeals for the Ninth Circuit, which held that the FLSA's outside sales exemption barred the claims of a proposed class of drug sales representatives for GlaxoSmithKline. (635 F.3d 383 (9th Cir. 2011)). The Ninth Circuit declined to defer to the DOL’s position that the exemption did not apply to the pharmaceutical sales representatives because their job was to promote their company's drugs, not to make final sales. The Ninth Circuit’s decision was contrary to a Second Circuit decision from July 2010 which held that the pharmaceutical sales representatives for Novartis and Schering were non-exempt under the FLSA and entitled to pursue overtime claims. (611 F.3d 141 (2d Cir. 2010)).

With its upcoming decision the SCOTUS will to resolve the circuit split on the scope of the FLSA's outside sales exemption. The SCOTUS will also likely address what deference federal courts owe to the secretary of labor's interpretations of the FLSA. We will keep you informed when the SCOTUS decision comes down.