Supreme Court Rules in Favor of Pharmaceutical Companies in Overtime Dispute

The US Supreme Court ruled in favor of GlaxoSmithKline in an overtime dispute lawsuit in July, according to sources. Two former sales representatives for Glaxo, an England-based pharmaceutical company, alleged they worked overtime hours unpaid in California when visiting doctors’ offices to promote products. The Supreme Court ruled 5-4 that the employees were outside sales representatives, therefore exempt from federal overtime pay requirements.

The ruling is in conflict with a separate ruling from the 2nd U.S. Circuit Court of Appeals in New York that pharmaceutical sales reps did in fact qualify for overtime under the Fair Labor Standards Act. The Pharmaceutical Research and Manufacturers of America (PhRMA) stressed to the Supreme Court that if the sales reps were eligible for overtime pay, it would cost the industry billions.

“PhRMA strongly supports the Supreme Court’s decision,” PhRMA said in a released statement. “The Supreme Court’s opinion is consistent with the arguments advanced in our amicus brief and with the longstanding sales practices of our member companies.”

This practice is nothing new in the pharmaceutical industry. Eli Lilly & Co and Abbot Laboratories have successfully defended similar lawsuits.

“It’s fair to say that almost every major pharmaceutical manufacturer has been hit by one of these lawsuits,” said Lisa Schreter, an Atlanta attorney who was not involved in this case.

After the ruling, Glaxo noted that pharmaceutical sales reps receive a base salary and performance-based commission and bonuses, therefore overtime requirements do not apply.

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Kesluk, Silverstein & Jacob—Los Angeles wage dispute lawyers