Client Alert

Ninth Circuit Finding in Pharmaceutical Sales Reps Case is a Coup for Big Pharma

February 18, 2011

Barbara Johnson, Neal Mollen & Derek Bottcher

On February 14, 2011, the United States Court of Appeals for the Ninth Circuit handed employers (and particularly pharmaceutical manufacturers) an important Fair Labor Standards Act (FLSA) victory, concluding that defendant (and Paul Hastings client) SmithKline Beecham Corporations (GSK) pharmaceutical sales representatives (PSRs) were outside sales employees, and thus properly classified as exempt from the FLSA overtime-pay requirements. (Click here for the decision). In doing so, the Ninth Circuit explicitly rejected the views of Department of Labor expressed in an amicus brief filed in support of the plaintiffs appeal. In holding that PSRs are exempt outside salespeople, the Ninth Circuit also disagreed with the Second Circuits interpretation of the same FLSA exemption in an earlier case. In re Novartis Wage & Hour Litigation, 711 F.3d 141 (2d Cir. 2010). This division of authority sets the stage for potential review by the United States Supreme Court.

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