By Alan B. Morrison, Lerner Family Associate Dean for Public Interest & Public Service, George Washington University Law School. The writer did an unpaid moot court for plaintiffs’ counsel in the case discussed in this essay.
In Christopher v. SmithKline Beecham (No. 11-204, decided June 18, 2012), the Supreme Court had to decide whether individual plaintiffs who were detailers for drug companies were exempt from the overtime provisions of the Fair Labor Standards Act (FLSA), which do not apply to workers employed “in the capacity of outside salesmen.” The relevant facts were undisputed and also appear to be unique to this industry. There is an interesting administrative law issue relating to whether the interpretation of the Department of Labor, which enforces the FLSA, should be given deference, but what caught my eye was the battle between the literalists and the pragmatists and how it came out in this case.
The job of a drug detailer is to persuade doctors to prescribe the prescription drugs sold by their company to their patients in appropriate situations. By law, those drugs can only be purchased from a licensed pharmacy, with a doctor’s prescription, and the actual sales of the drugs are made by the manufacturer (the employer of the detailer) to the pharmacy, but never to a doctor or a patient directly. Detailers are paid good salaries, plus a modest bonus that is loosely determined by the sales of the drugs in their territory. The individual plaintiffs earned in excess of $70,000 per year and the industry average is above $90,000. They regularly work between 10-20 hours a week above the 40 hours, after which they would be entitled to overtime. Their work is almost always out of the office, and no one supervises them on a daily basis.
The issue the Court had to decide was whether these plaintiffs (and nearly 90,000 others in the industry who work in virtually identical arrangements) are exempt from the overtime law because they are outside salesmen. At stake was potentially millions of dollars in unpaid overtime for whatever period was not barred by the statute of limitations. The companies could probably restructure their pay systems in the future to minimize the impact, by reducing salaries or bonuses to offset any anticipated overtime, but they would prefer not to have to do that.