Glaxo Sales Reps Are Denied Overtime By Court
8 CommentsBy Ed Silverman // November 30th, 2009 // 9:28 am
In yet another twist in the ongoing battle over whether sales reps should be paid overtime, a federal court in Arizona recently ruled that two Glaxo reps are exempt from the overtime provisions of the Fair Labor Standards Act and, therefore, should not be paid overtime. The decision contradicts a US Labor Department brief filed recently in a Novartis case supporting overtime payments (see here).
The FLSA’s overtime compensation requirement doesn’t apply to employees who work as outside salespeople, but the law does require employers to pay overtime for hours worked beyond 40 hours a week, unless a FLSA exemption applies. What are those exemptions? If an employee’s primary duty is to obtain orders or contracts (as defined by the statute) and regularly does so away from the employer’s place of business.
Drugmakers argue their sales reps are, indeed, outside salespeople who close sales because the primary customer is the physician. In their suit, Glaxo reps Michael Christopher and Frank Buchanan argued, however, that a direct sale doesn’t occur because medicines are actually purchased by patients and hospitals, which receive the drugs from wholesalers. US District Court Judge Frederick Martone sided with Glaxo. Here’s what he wrote in his ruling:
“The pharmaceutical industry is unique in that federal regulations prohibit a direct sale to an end-user, thereby shifting the focus of sales efforts from the consumer to the physician - the catalyst behind any pharmaceutical sale. A (sales rep’s)s ultimate goal is to close an encounter with a physician by obtaining a non-binding commitment from the physician to prescribe the PSR’s assigned product.
“In this highly regulated industry, that is the most a PSR can achieve. His compensation is designed to encourage him to work during his lunch hour and into the evening, hosting meals, meetings, and presentations, all for the purpose of increasing the sales of his assigned products in his territory, with a payoff in the form of bonuses. In all regards, a PSR engages in what is the functional equivalent of an outside salesperson and to hold otherwise is to ignore reality in favor of form over substance.”
Guzzo
Sounds like a fair decision to me. I’ve never viewed drug reps as hourly employees entitled to OT pay. I’ve even met some reps who could manage their accounts in less than 40 hours weekly. As far as I know, none of them asked to be compensated less for working less hours.
Marilyn Mann
“a federal court in Arizona recently ruled that two Glaxo reps are not exempt from the overtime provisions of the Fair Labor Standards Act”
I think you mean “are exempt.”
Anon 2
Let’s see do product managers and others in house who are also on salary ever go to court re overtime. Reps whine beyond belief they have a salary hello. They have no contract re overtime pay like other jobs so the case of reps asking for overtime pay is beyond stupid.The rep job is not on the clock so they can’t even prove 40 hrs per week it’s a joke ! All these cases re this should not even make it into the courtroom and the reps are wasting the court’s time. I’m glad this judge said no !
nitpicker
Guzzo dear –it’s ‘fewer’ hours and ‘fewer working hours.’ It would be ‘less’ time. I could possibly ignore one ‘less’ instead of the correct ‘fewer,’ but two! I don’t think so.
Fewer = individual things; less = one lump thing.
(My long-suffering copy editors would be very proud of me for this if I had the guts to leave my name.)
Former Rep
This is not so much about having to work over lunch or during evening hours. It is more about having to do ALL administrative work during non-working hours. Eight to Five in the field then new product training, expense reporting, conference calls, and team meeting before the work day actually begins. This was not allowed during the work day. It is not about the money for some people as much as trying to change the intrusion of the job into all waking hours and weekends.
Pharma girl
Bravo to above poster! This is so true, and it is getting worse and worse. So many more reports, plans etc. Evrything has to be done on line, and you can’t get a good connection anywhere but plugged in at home. I have never seen companies “require” so much evening work. I’ve been at this 20+ years. They are squeezing more and more out of us, and paying for performance- which means no raises.
Harvey Grove
I was a Hospital Rep in a major market for 35 years. I worked “overtime” most days because the only time I could see the doctor I had to see was after hours. I was known as a “head hunter” because I concentrated on seeing the HEAD OF THE DEPARTMENT. At the end of the day his office was empty (no secretaries or patients). He did not want to fight the rush hour traffic so he put his feet up on the desk and relaxed for a while before going home. This is when I found him to be more receptive. In addition, he remembered me because my visit was informative, especially under the conditions we met. The residents under him saw how he treated me, therefore, they were more receptive to me. If the chief thought I was OK than they copied him. It worked for me as I repeatedly won prizes for performance along with the money that went with it.
I brought in the sales, therefore, I feel I should be rewarded with the bucks. I did received bonuses directly related to sales volume, however, I had a definite effect on sales to outside my territory but these could not be tracked . I was called into the home office with some other reps to inquire how I worked my territory as I had such phenominal sales so rapidly after a new product was released among doctors who were notoriously conservative that they wanted to know how I did it.
Former Rep
I worked as a rep for over 17 years with GSK. I had one developmental promotion to associate recruiter where I could not contact any candidates during the day, but only after 5:00 and on weekends. I also had to interview 6 candidates a month in the evening or weekends and send in reports. When I went to the training for this position I was informed that it was voluntary and I would not receive any additional compensation nor allowed to conduct business during the day. This was in addition to my responsiblities as a field sales rep, testing, daily samples counting, sales reports, expense reports, evening programs, weekend programs and 2 hours of evening work preparing for the next day. GSK wormed it’s way into getting us to work a sales job during the day and an administrative/training/analyzing job during each evening. You even had to get samples before work or in the evening. Which for women ment going to poorly lit sample storage units and pray that you aren’t accousted! They never cared for our safety or our sanity.