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The Supreme Court ruled drug representatives are not entitled to overtime pay in its decision on Monday.
Two ex-GlaxoSmithKline employees sued their former employer for OT. GSK and other pharmaceutical companies have historically treated drug representatives as outside salespeople exempt from overtime pay. That classification was challenged by the plaintiffs but the Supreme Court ruled in favor of pharmaceutical companies.
The 5-4 decision will have a significant impact on existing lawsuits against the pharmaceutical industry.
The decision from the Supreme Court originated in the Seventh Circuit Court of Appeals but it wasn't the first lawsuit about drug representative overtime pay to reach the Circuit courts.
The Second Circuit Court of Appeals previously ruled that drug representatives are entitled to overtime pay. As a result of that decision, drug maker Novartis paid out a settlement to several former employees seeking overtime payment.
However, the Seventh Circuit Court of Appeals' decision stated that drug representatives are exempt from overtime under the Fair Labor Standards Act. The Supreme Court upheld the Seventh Circuit's decision.
In his majority opinion, Justice Samuel Alito dismissed the Department of Labor's arguments for overtime pay. He noted that the Department considered drug representatives exempt from overtime requirements until 2009, as reported by Dow Jones Newswires. Alito disagreed with the Department's decision to announce its new position in court briefs rather than the typical rulemaking process.
The Court split along ideological lines, with Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan in dissent.
Pharmaceutical companies applauded the Court's decision as consistent with longstanding sales practices, the Pharmaceutical Research and Manufacturers of America told Reuters.