Payday! - Supreme Court orders drug industry to pay reps overtime | NJ.com

The U.S. Supreme Court refused to insulate the drug industry from having to pay overtime to thousands of sales representatives, turning away appeals from units of Novartis AG and Merck & Co.

The companies sought to overturn a federal appeals court’s conclusion that their salespeople are covered by a federal wage- and-hour law. The decision against the Novartis unit leaves the company with claims of as much as $100 million on behalf of 2,500 past and current employees.

Drugmakers are facing a wave of suits by sales representatives for overtime pay. More than a dozen suits have been filed, including cases against Johnson & Johnson, Bristol- Myers Squibb Co. and a GlaxoSmithKline Plc unit. Drug companies have long treated sales representatives as exempt from the overtime requirements, according to court papers filed by an industry trade group.

The lower court ruling “threatens untold costs in unforeseen liability,” the Pharmaceutical Research and Manufacturers of America argued in the Novartis case.

The rulings by the New York-based 2nd U.S. Circuit Court of Appeals came in two separate suits—one against Novartis Pharmaceutical Corp. and another against Merck’s Schering unit.

Ruling Overturned
In the Novartis case, a trial judge had ruled that the sales representatives fell under exceptions to the U.S. Fair Labor Standards Act for outside salespeople and administrative workers. The 2nd Circuit overturned that decision on a 3-0 vote.

The ruling came after the Labor Department urged the 2nd Circuit to side with the Novartis salespeople.

The Novartis workers told the Supreme Court that the appeals court reached the right conclusion. They argued that the salesperson exemption doesn’t apply to workers, like them, who promote a product without actually making a sale.

The salespeople also contended they don’t exercise enough independence to qualify for the administrative-worker exception. They said they are required to deliver a tightly scripted message when they visit doctors.

“This case involves one company—Novartis—that micromanages its reps and gives them far less discretion than is typical in the industry,” the salespeople’s lawyers argued.

One of the lawyers for the salespeople, Jeremy Heisler of Sanford Wittels & Heisler LLP in New York, said his clients would be seeking about $100 million damages.

The cases are Schering v. Kuzinski, 10-459, and Novartis v. Lopes, 10-460.

via nj.com

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