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Victory for Micro-Managers: King's Alpharma Sales Reps Lose Overtime Case Against "Controlling" Bosses

Drug sales reps at King Pharmaceuticals' (KG) just lost a ruling on overtime pay, which sets up an impending collision between the four federal courts that have ruled sales reps should get overtime pay and the three that have found the opposite. In addition, a new federal suit demanding overtime pay has been filed against Boehringer Ingelheim.

This fight is all about how menial the job of a sales rep is. If the reps can convince the courts that they're basically robots, as Novartis (NVS) employees did, then they will win. In the King case, reps at Alpharma (later acquired by King) said "the controlling nature of Alpharma" makes them such drones that they might as well be factory workers pulling levers:

... their direct supervisors were micro-managers that "wanted to know everything you were doing" and required plaintiffs to check in with management at least three times per day.
Life at King certainly seems to be micromanaged: The sales reps are videotaped even when they're just practicing their roleplaying, according to CafePharma.

The courts have reached opposite conclusions on this issue because of their differing interpretation of the law. The ones favoring overtime for reps have found that as they don't actually sell anything they're not technically sales reps. Non-managerial employees must be paid overtime but sales reps are exempt. The courts favoring employers have found that as sales reps work out in the field most of the day, unsupervised by management, they are the type of white-collar managers who are exempt from overtime pay rules.

Sales reps may face a tough fight if they are to win this. While they've won some rulings in the trial courts, the more senior Third Circuit Court of Appeals has now ruled twice (in cases involving Johnson & Johnson (JNJ) and AstraZeneca (AZN)) that drug reps are salaried employees whose managerial discretion at work makes them exempt from federal overtime law.

That OT scorecard:

  • Companies that have lost rulings favoring OT for reps: Novartis
    Abbott Labs (ABT)
    Schering-Plough
    Boehringer Ingelheim
  • Companies that have won rulings denying OT for reps:
    King (Alpharma)
    Johnson & Johnson (Ortho McNeil)
    AstraZeneca
  • Pending cases:
    Amgen (AMGN), Serono
Related: Image by Flickr user borman818, CC.