When is a “sales rep” not a sales rep? When they don’t actually make sales, says the United States District Court for the District of Connecticut (Arterton, J).
The Fair Labor Standards Act requires that overtime premiums be paid (time and a half) for all non-exempt employees. Schering Corporation had designated its Pharmaceutical Sales Representatives (PSAs) as exempt under the FLSA’s outside sales exemption. A group of these employees brought suit, claiming that they were not actually sales reps because they didn’t actually sell anything. Kuzinski, et al v. Schering Corporation(2009 WL 807572 (D.Conn. March 20, 2009). Judge Arterton bought the plaintiffs’ argument and denied Schering’s Motion for Summary Judgment. The case is an interesting read, if for no other reason than to see how the pharmaceutical industry actually works. In effect, these sales reps spend their days promoting the drugs with the goal of having the doctors prescribe their drug instead of the competition. What the reps don’t do is actually consumate a sale. That happens after the doctor prescribes the drug and the patient goes to the drug store.
The opinion contains great employee friendly language, including references to the 2d Circuit about the remedial nature of the FLSA. It can be used as a reference in almost any FLSA litigation. And, as usual, Judge Arterton’s logic and analysis is impeccable. She distinguished the defendant’s argument that their work is “incidental” to sales beautifully, indicating that this argument fails if you aren’t the person who actually makes the subsequent sale.
The take away is that you have to actually sell something to be an exempt outside sales person under the FLSA. The larger question is why didn’t Schering’s executives and attorneys get this simple question right when they misclassified these workers? I hope the plaintiffs and their lawyers (Hurwitz, Sagarin, Slossberg & Knuff, LLC) go on to win double damages in this interesting case.