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Pharmaceutical Sales Overtime Debate Will Go On

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Portland, ORLong after the last appeal has been filed and the final arguments made, debate will continue to rage over whether or not individuals performing in pharmaceutical sales are entitled to overtime pay. Pharmaceutical reps promote the products of their employers—which are then prescribed to patients by doctors and dispensed through pharmacies or hospitals to patients.

But do individuals in pharmaceutical sales jobs actually make sales? That appears to be a distinction that will be forever subject to interpretation, even with a February 28 opinion by the US Supreme Court that those engaged in pharmaceutical sales are entitled to overtime.

When Michael Christopher and Frank Buchanan were employed with GlaxoSmithKline (Glaxo), they were classified by Glaxo as outside sales professionals under the Fair Labor Standards Act (FLSA). According to the April, 2011 issue of the Oregon Employment Law Letter, their compensation included a pharmaceutical sales salary, together with additional compensation based on incentive performance.

The latter was determined through a number of factors—Glaxo's market share, sales volume, sales revenue and dose volume within a representative's assigned territory.

Glaxo—like most pharmaceutical companies—considered their sales reps as exempt from the requirement to pay overtime under FLSA.

However, when Buchanan and Christopher left the employ of Glaxo, they challenged that exemption in court based on the actual hours they claim to have put in while working, together with their interpretation that even though they served in a sales support capacity, they could not be classified as actual salesmen because they didn't actually sell anything.

Their position was supported by the US Department of Labor, which filed a brief supporting their position to the Ninth Circuit Court.

As pharmaceutical representatives, the two plaintiffs supported their claim by stating they routinely worked anywhere between 10 and 20 hours each week outside the standard workday, engaged in activities ranging from honing their knowledge on Glaxo products, and the preparation of presentations and reports, to the attendance of specials events during evenings and weekends, among other activities.

They challenged the FLSA exemption in court, seeking compensation for the extra hours worked in the role of pharmaceutical rep. Their case was thrown out of federal district court without a trial. The plaintiffs appealed to the Ninth Circuit Court, which upheld the trial court's view, based largely on the pay structure that largely supports the classification as outside sales representative under FLSA, regardless of the fact pharmaceutical sales employment does not involve actual sales.

Nonetheless, the case, as well as the various positions taken by different courts, is expected to fuel continued debate over the realities and interpretations surrounding pharmaceutical sales rep jobs.


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