Drug Company Sales Reps Entitled to Overtime Pay Under Fair Labor Standards Act

Recent federal court decisions are victories for pharmaceutical sales representatives or drug reps. The drug reps are fighting for overtime pay under the Fair Labor Standards Act (FLSA). Federal courts are finding drug companies improperly misclassified drug reps as exempt from laws requiring they receive time-and-a-half pay for their overtime hours worked.

The U.S. Department of Labor has submitted briefs supporting the pharmaceutical sales representative plaintiffs who seek overtime pay. In finding drug reps are entitled to overtime compensation, the federal courts struck down two key arguments made by the drug companies who failed to pay overtime.

First, the courts held the Fair Labor Standards Act’s “Outside Salesman” exemption doesn’t apply to pharmaceutical sales representatives because the drug reps don’t actually sell anything. The court found it compelling the drug reps are prohibited by federal and state law from making the “sales” that the drug companies say makes the drug reps exempt from overtime pay rules. In truth, drug reps provide information to physicians and health care professionals about a drug’s profile.

Second, on July 5, 2010, the Court of Appeals for the Second Circuit further held drug reps also cannot be exempt as “Administrative Employees.” The Second Circuit held drug reps are not subject to the administrative exemption because the number of visits they make to doctors are set by the drug company. Nor do drug reps have a role in creating the marketing strategy, and they are not permitted to deviate from a promotion’s “core message,” which is scripted by the drug company.

The Court held it does not matter that drug reps decide on their own when to visit physician’s and health care professional’s offices, how best to develop relationships, how to allocate their company budget for promotional events, or how to allocate drug samples.

These new and important decisions mean thousands of drug reps may be entitled to many hours of previously unpaid overtime compensation. Overtime compensation is calculated at one and a half times the regular rate of pay for those hours worked beyond a forty-hour workweek.

Notably, being a pharmaceutical sales representative requires long hours — often in excess of forty hours in a single week. The federal court rulings make clear drug reps may each be owed tens of thousands dollars for unpaid overtime going back several years.

If you are a current or former pharmaceutical sales representative and believe you are entitled to overtime pay and would like to speak with an attorney about your rights, please fill out the form below.