Another Court has held that pharmaceutical sales representatives are nonexempt employees who are entitled to overtime pay

A Connecticut Court ruled that Schering Corp. violated the Fair Labor Standards Act (“FLSA”) by treating its sales representatives as exempt employees to deny them overtime pay.

This blog previously discussed cases where other pharmaceutical companies improperly treat their sales representatives as outside sales representatives in order to deny them overtime pay.  Schering also made this agrument but when that failed  it argued that its sales representatives were not entitled to overtime pay because they qualified under the “administrative employee” exception of the FLSA.

To qualify as an administrative employee the employee must three tests must be met:

  • The employee must earn a minimum amount of at least $455 a week,
  • The minimum amount must be paid on a salary or fee basis and
  • The employee must perform specific job duties.

The focus of the duties tests for exemption is the employee’s primary duty.  Primary duty means the principal, main, major or most important duty that the employee performs.

The Court said that “[w]ith respect to employees involved in sales, the distinction between whether or not their work directly relates to management of general business operations turns on whether that employee makes specific sales or promotes sales generally.”

The Court noted that the sales representatives really only promoted the company’s product.  The company provided the sales representatives with scripted dialogue that included:  sample openings; a menu of questions; responses to questions and sample closings.  As a result, the court found that the sales representatives were not directly related to Schering’s management or general business operations so as to qualify under the “administrative employee” exception.

The court said that the sales representative were similiar to the employee in a clothing store “who assists customers in finding their size of clothing.”

Are you a sales representative in a company which provides you with a script to promote its product and not receiving overtime pay?    Please tell me your story.

Abbey Spanier, LLP is located in New York City, is a well recognized national class action and complex litigation law firm.