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U.S. Supreme Court to Decide Key Case on FLSA and Drug Reps

Are drugs representatives exempt from the provision of the Fair Labor Standards Act (FLSA), that mandates compulsory overtime? That is the question the U.S. Supreme Court agreed to answer on Monday by issuing a writ of certiorari. The Court’s decision will put an end to a split between the San Francisco based Ninth Circuit and New York based Second Circuit Court.

The Ninth Circuit ruled in February that Drugs Reps were exempt from the FLSA provision and that they were not entitled to the time and a half overtime pay. The case was brought by two GlaxoSmithKline former Drug Reps on behalf of a nationwide class. The Department of Labor supported the Plaintiffs in this case but according to the Wall Street Journal, the Court ruled that its arguments were “plainly erroneous” and at odds with a common-sense understanding of how the industry functions.

However, this ruling is in direct conflict with a decision from the Second Circuit from last year. In this case, Defendants were Merck & Co and Novartis AG. The Court noted that Drug Reps can’t take orders or obtain binding commitments from doctors, and accordingly ruled that they should be paid overtime.

The Pharmaceutical Research and Manufacturers of America, the drug’s industry main trade group, immediately reacted, saying in a brief statement that classifying salespeople as eligible for overtime could cost the industry billions of dollars. The statement also added that pharmaceutical companies would have to restructure sales-rep jobs to avoid paying overtime.

The Supreme Court will likely hear arguments in the Spring and specialists expect a decision by July 2012.

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