Supreme Court Rules Drug Company Sales Employees Are Not Entitled to Overtime Pay

By Edwin S. Hopson

In Christopher et al. v. SmithKline Beecham Corp., d/b/a Glasxosmithkline, 567 U.S. ___ (2012), No. 11-204, decided June 18, 2012, the U.S. Supreme Court, in a 5-4 decision, ruled that certain drug sales employees are to be treated as “outside salesmen” under the Fair Labor Standards Act (FLSA) and therefore are exempt from the overtime requirements of the law.  The drug sales employees had filed a private action against their employer under the FLSA seeking unpaid overtime pay.  The U.S. Department of Labor had filed an amicus brief supporting the employees’ claims.

The court’s opinion was authored by Justice Alito, who was joined by Chief Justice Roberts, and Justices Scalia, Kennedy and Thomas.  Justice Breyer wrote a dissenting opinion that was joined in by Justices Ginsburg, Sotomayor and Kagan.

The majority, after rejecting any deference to the Department of Labor’s interpretation, reviewed the FLSA and its regulations and concluded that the drug sales employees were exempt even though they only obtained non-binding commitments from doctors to prescribe their drugs to their patients (who actually were the purchasers in most cases).  The statutory provision in question, 29 U. S. C. §203(k), states that “‘[s]ale’ or ‘sell’ includes any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.” [Emphasis added].  The majority seized upon the “or other disposition” phrase and ruled for the drug company defendant, pointing out, “Petitioners—each of whom earned an average of more than $70,000 per year and spent between 10 and 20 hours outside normal business hours each week performing work related to his assigned portfolio of drugs in his assigned sales territory—are hardly the kind of employees that the FLSA was intended to protect.” Slip Opinion Page 22.

Supreme Court Confirms Company’s Right to Prohibit Class Action Claims Being Litigated Under an Arbitration Agreement

By Edwin S. Hopson

On April 27, 2011, in a 5 – 4 decision, authored by Justice Scalia and joined in by Chief Justice Roberts, and Justices Kennedy, Thomas and Alito, the U.S. Supreme Court in AT&T Mobility LLC v. Concepcion, 563 U.S. ____ (2011), held that the Federal Arbitration Act (“FAA”) preempted California law holding that an arbitration provision that disallowed class action proceedings was unconscionable and unenforceable.  Justices Breyer, Ginsburg, Sotomayor and Kagan dissented.  Although the underlying case was commercial in nature, this decision has significant ramifications in the employment law arena in light of the fact that many employers require employees to sign on to arbitration agreements or programs that limit the types of disputes that can be litigated in court or before administrative agencies.  Indeed, Justice Scalia relied in part on and cited Gilmer v. Interstate/Johnson Lane Corp., 500 U. S. 20, 33 (1991) which allowed age discrimination claims to be arbitrated.   Also, this case could have application to collective bargaining agreement arbitration provisions as well.