New York Sales Representatives Win Overtime Pay Case
New York pharmaceutical sales representatives won a victory this week in a decision that granted them the right to overtime pay. The sales representatives worked for Novartis and their job was to visit doctors to promote the companies drugs. Novartis did not pay them overtime pay even though the sales representatives worked long hours and sometimes would not return home until 10 p.m. after wining and dining the doctors.
Novartis did not pay them overtime because it relied on the "outside sales" exemption under the Fair Labor Standards Act. Under this law, outside sales representatives are not entitled to overtime pay. The sales representatives succeeded in court by arguing that they were not really sales people because they did not actually sell the drugs, rather they just promoted the drugs. The actual sale of the drugs took place at the drug stores when the patients would pick up their prescriptions. The sales representatives had nothing to do with the actual sale of the drugs because it was illegal for them to sell the drugs themselves. All the Novartis reps could do was visit the doctors and persuade the doctors to prescribe the drugs to their patients.
The court found that the "outside sales" exemption did not apply to the Novartis sales reps because they did not sell anything. Under the FSLA, an outside sales person must actually sell a product or service in order to fall within the exemption. The exemption does not apply to promoters, marketers or other sales support people who do not actually cause the sale to take place.
In this case, the court strictly and narrowly construed the law and limited the scope of the exemption. According to the court, a true outside salesperson has to be more like a door to door salesman who sells the goods himself. A door to door vacuum salesman would qualify as a true outside sales person if he actually produced sales himself by obtaining orders for vacuum cleaners. But if he did not actually solicit and obtain orders and instead just promoted the product and only asked the prospects to consider using his companies vacuum cleaners, then he would not be an outside salesperson. The bottom line here is that overtime pay must be provided to everyone who helps promote or market a product and only people who actually consumate sales are exempt from the overtime pay requirements. For more on this case and access to a copy of the decision, please see the Connecticut Employee Rights Blog.
