Schering Reps Win Overtime Ruling; Courts Leaning Against Drug Companies on Back Pay

(MoneyWatch)  A federal court in Connecticut has declared that sales reps for Schering-Plough may be entitled to back pay for the unpaid overtime they have worked.

The court ruled that reps are not the kind of sales people who are "exempt" from the Fair Labor Standards Act, and thus a case demanding overtime pay for extra hours worked can go forward. The case is a potential class action suit affecting all Schering sales reps.

The ruling also indicates that as a raft of similar cases move through the federal court system, companies are beginning to lose them and sales reps are beginning to win.

Initially, Novartis and Ortho McNeil won rulings in three rep overtime cases. But the Connecticut court held these rulings were unpersuasive.

The complaint was filed by four former and current Schering reps, Eugene Kuzinski, Marc Campano, Jerry Harris, and Shawn Jones. Kuzinski had worked for Schering for 20 years, ending in 2006.

Here's a digest of the judge's ruling, which you can read yourself here. The original complaint can be downloaded here.

Employers are granted an exemption from the [Fair Labor Standards Act] requirement that they pay overtime to "any employee employed ... in the capacity of outside salesman ..."

...the outside sales exemption to exempt employees from overtime pay required that the employees consummate sales...

The regulation itself thus dictates that if employees do not make any sales and do not obtain any orders or contracts, then they cannot fit within the outside sales exemption...

... during their visits with physicians Schering's [pharma sales reps] do not enter into contracts with physicians over the price or quantity of Schering's products...

Thus reps aren't sales people, the court concluded.

The court also took note of recent similar cases, including Ruggeri v. Boehringer Ingelheim (which BNET wrote about here and here). That case also concluded that Boehringer's reps were not sales people under the law, because they don't actually consummate sales:

The same conclusion the Court reached in Ruggeri as to Boehringer's PSRs applies here given the material similarities between the duties performed by Schering's PSRs and Boehringer's PSRs.

The court mentioned three earlier cases won by drug companies, In re Novartis Wage and Hour Litigation (2009), Yacoubian v. Ortho-McNeil Pharmaceutical (2009) and Delgado v. Ortho-McNeil Primary Care (2009). Of those cases the court wrote:

This Court finds the analysis underpinning In re Novartis unpersuasive...

This Court declines to follow Yacoubian and Delgado because of what it sees as their misplaced reliance on ... In re Novartis [and other cases].

Hat tip to Pharmagossip.

• See previous BNET coverage of sales rep overtime back pay
• Boehringer Reps' Names in Back-Pay Class-Action Suit Will Be Known to Their Bosses
• Boehringer Reps Get Legal Victory on Back Pay; Amgen, Serono Reps Could Be Affected