News
June 28, 2012

United States Supreme Court Rules That Pharmaceutical Sales Representatives Are Exempt From Federal Overtime Requirements Under The "Outside Salesmen" Exemption

Arnold & Porter Advisory

In a significant victory for the pharmaceutical industry and employers generally, the United States Supreme Court held last week in a 5-4 decision that pharmaceutical sales representatives qualify as exempt outside salesmen who are not entitled to overtime under the Fair Labor Standards Act (FLSA). See Christopher v. SmithKline Beecham Corp. (No. 11-204, U.S. June 18, 2012). Pharmaceutical sales representatives' primary objective is to obtain non-binding commitments from physicians to prescribe their employer's products to patients in appropriate cases.

The Department of Labor had encouraged the Court in an amicus brief to defer to its interpretation of FLSA regulations -- that an "employee does not make a 'sale' for purposes of the 'outside salesman' exemption unless he actually transfers title to the property at issue." As explained in more detail below, in a decision that could have broader implications, the Court rejected the DOL's interpretation, declining to grant the deference ordinarily conferred upon an agency's interpretation of its own regulations.

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