Monday, 25 June 2012

Supreme Court Rules in Favor of Glaxo in Overtime Case

The Supreme Court has ruled in favor of the pharmaceutical industry in a lawsuit that analyzed whether these companies need to pay sales representatives over time.
The Supreme Court ruled 5-4, defeating 2 former sales representatives who had filed a lawsuit against Britain's GlaxoSmithKline PLC.  The 2 employees, Michael Christopher and Frank Dunn and, had filed a class-action lawsuit, claiming compensation for overtime for approximately 10 to 20 hours that they worked weekly on an average.  Those hours were outside their average business day, and were spent mostly in visits to doctors to promote pharmaceutical products.
According to Glaxo, the sales representatives were eligible for salary as well as commissions that were based on performance, and therefore, overtime requirements do not apply to these people.  A California court ruled in favor of Glaxo, and the 2 men appealed.  Glaxo holds that these 2 men were “outside sales personnel,” and are therefore not eligible for federal overtime pay requirements.  Now the Supreme Court has also agreed with the appeals court. 
The decision comes as a disappointment to California employment lawyers, but not surprisingly, has been welcomed by the pharmaceutical industry.  The industry had been at a heavy risk of losses if the Supreme Court had ruled that sales representatives were eligible for overtime in this case. 
The decision however conflicts with another deposition earlier by the 2nd US Circuit Court of Appeals in New York.  In that case, the judge had ruled that pharmaceutical sales representatives did indeed qualify for federal overtime pay under the Fair Labor Standards Act.
The SC decision has been hailed by the Pharmaceutical Research and Manufacturers of America, which says that if the decision had gone the other way, then the industry would have been financially burdened by overtime payments to sales representatives which would have run into the billions of dollars.

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