In a decision sure to change the way that pharmaceutical industry pays their sales representatives, the United States Court of Appeals for the Second Circuit Court ruled today that sales representatives at Novartis are non-exempt employees and are entitled to be paid overtime.
This blogger wrote about a case on April 1, 2009 in which Judge Janet Arterton, of the District of Connecticut, had ruled that sales reps for Schering Corporation are entitled to overtime pay. The upshot of that decision was that the sales reps do not actually “make” a sale since they simply promote the product to the physicians, who may or may not later prescribe the drug to a patient who later may or may not purchase the drug from a pharmacy.
Well, the Second Circuit agrees with her decision and reversed the decision of Judge Crotty in the Southern District of New York by which he had granted a motion for summary judgment for Novartis.
“The Reps may give physicians free samples, but the Reps cannot transfer ownership of any quantity of the drug in exchange for anything of value. The physician is of course an essential step in the path that leads to the ultimate sale of a Novartis product from a pharmacy without a prescription, and it is the physician who must be persuaded that a particular Novartis drug may appropriately be prescribed for a particular patient. But it is reasonable to view what occurs between the physicians and the Reps as less than a “sale.”
This decision is yet another from this court which construes the FLSA strictly and narrowly. The take-away here, of course, is that if you are a sales rep but aren’t actually selling anything, you might be entitled to overtime pay.