Are Missouri Pharmaceutical Sales Reps Entitled to Overtime Pay?

Historically, under the Fair Labor Standards Act, Pharmaceutcal Sales Representatives (PSRs) have been deemed not to be entitled to overtime pay. However, a number of recent developments in federal law have reversed that course and led to PSRs’ entitlement to overtime pay. These developments are significant for two primary reasons: (1) PSRs typically work substantial amounts of overtime, which makes the stakes high in litigation; and (2) the entire pharmaceutical industry treats PSRs as exempt employees, thus increasing the likelihood of an industry-wide violation of the law. Also, these developments are important for Missouri PSRs, as state and federal appellate courts in Missouri have yet to decide the issue of whether PSRs are entitled to overtime. These developments will certainly impact arguments being made by Missouri overtime lawyers.

In denying PSRs overtime pay, pharmaceutical companies have traditionally relied on the outside sales exemption and/or the administrative exemption. To be an exempt “outside salesman,” an employee’s primary duty must be to make sales or obtain orders or contracts for services or for the use of facilities for which consideration will be paid by the client or the customer. To fall under the administrative exemption, an employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers, and, must include the exercise of independent discretion and judgment with respect to matters of significance.

Recently, a number of courts have found that the outside sales and administrative exemptions are inapplicable, and have decided that PSRs are entitled to overtime pay. These courts have rejected the application of the outside sales exemption to PSRs because they do not “sell” anything, and because the doctors they meet with on a daily basis are not customers who “buy” anything. Further, courts have rejected the application of the administrative exemption to PSRs because pharmaceutical companies have such control over the job of the PSR that the PSR exercises little or no independent discretion or judgment. In 2010, the Second Circuit Court of Appeals made such a finding in a case called In Re Novartis Wage and Hour Litigation, and upon an attempted appeal by Novartis, the U.S. Supreme Court essentially upheld the victory in favor of PSRs by declining to review the case. In many of the cases PSRs have filed against pharmaceutical companies for unpaid overtime, the U.S. Department of Labor has filed a brief taking the position that PSRs are entitled to overtime pay.

If you are a pharmaceutical sales rep who works in Missouri, you may be entitled to overtime pay. You should contact a St. Louis overtime lawyer if you are interested in pursuing a claim or want to better understand your rights under the law.