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U.S. Supreme Court Resolves Glaxo Overtime Dispute

Wage-and-hour disputes based on an employer's failure to heed the Fair Labor Standards Act (FLSA) usually involve issues over contract terms, employee misclassification or overtime pay. The U.S. Supreme Court recently resolved a high profile wage-and-hour claim filed by two employees of pharmaceutical giant GlaxoSmithKline.

The employees, sales representatives who visited physicians in assigned territories to promote the company's prescription drugs, worked 50 to 60 hour weeks for Glaxo. The received both a base salary and bonuses, and were not required to report their hours to supervisors, but claimed that they were eligible for overtime under the FLSA because they only promoted the company's products.

The Arizona Federal District Court granted summary judgment to the employer, ruling that the employees were outside salesmen who were exempt from FLSA overtime requirements. The U.S. Ninth Circuit Court of Appeals agreed, despite a different outcome based on a Department of Labor interpretation of the definition of "outside salesman" that had recently been decided in a similar case against Novartis before the U.S. Second Circuit in New York.

The basic issue in both cases was whether pharmaceutical company representatives who do not consummate sales transactions can be considered "salesmen" for FLSA purposes. In a five to four decision, the Supreme Court held that they can, even though they merely pursue non-binding pledges from physicians to prescribe a company's products.

The majority cited the "unique regulatory environment" that pharmaceutical companies operate within as a key factor in defining them as sales personnel, as well as their salary level. While this decision also overturned the result in the Second Circuit Novartis case, the $99 million settlement those employees reached with their employer will not be affected.

Employees who feel that a company has exploited workers by requiring them to work excessive hours without fair compensation have strong protections under state and federal law. As complex as these cases may be, the unique nature of every claim is a good reason for employees to seek experienced advice from an employment law attorney.

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