Authored by Michael Fleischer
On August 12, 2011, the plaintiffs in Christopher v. SmithKline Beecham Corp., filed a petition for writ of certiorari with the U.S. Supreme Court seeking review of the 9th Circuit’s decision holding that pharmaceutical sales representatives for GlaxoSmithKline are exempt from overtime as outside sales employees under the Fair Labor Standards Act. The Ninth Circuit reasoned that the Plaintiffs and other Glaxo sales reps “share many more similarities than differences” with sales representatives in other industries, including the fact that they “are driven by their own ambition and rewarded with commissions when their efforts generate new sales.” The court rejected a contrary position espoused by the DOL in an amicus brief, in part because the DOL’s position departed from “pharmaceutical industry norms[ ] and the acquiescence of the Secretary [in the exempt classification of similar positions] over the last seventy-plus years.” The Ninth Circuit did not address the alternative issue raised in many of the exempt status classification cases regarding the application of the administrative exemption to pharmaceutical sales reps.
The Plaintiffs’ cert petition presents two questions for Supreme Court review: (1) Whether deference is owed to the Secretary of Labor’s interpretation of the Fair Labor Standards Act’s outside sales exemption and related regulations; and (2) Whether the Fair Labor Standards Act’s outside sales exemption applies to pharmaceutical sales representatives. Glaxo’s response is due on September 16, 2011.
If the Court grants cert., this case would resolve a Circuit split between the Second Circuit and the Ninth Circuit on the applicability of the outside sales exemption to pharmaceutical sales representatives. Earlier this year, the Supreme Court denied a petition by Novartis Pharmaceutical Corp. for review of the Second Circuit’s decision in Novartis Pharmaceuticals Corp. v. Lopes. In that case, contrary to the Ninth Circuit’s decision, the court gave controlling deference to the DOL’s positions expressed in an amicus brief and ruled that pharmaceutical sales representatives are not covered by the FLSA’s outside sales or administrative exemption. The Supreme Court’s decision on Plaintiffs’ cert. petition in Christopher is not expected until the late fall.