Supreme Court hears arguments on Fair Labor Standards Act

Supreme Court hears arguments on Fair Labor Standards Act

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[JURIST] The US Supreme Court [official website] heard oral arguments [day call, PDF] Monday in Christopher v. SmithKline Beecham Corp. [transcript; JURIST report] on the breadth of the Fair Labor Standards Act (FLSA) [text, PDF] regarding pharmaceutical sales representatives (PSRs) as well as the Secretary of Labor’s [official website] interpretation of the act. Circuits are split on whether PSRs are considered “outside salespersons” for the purposes of FLSA. If they are, then they cannot achieve overtime pay under the requirements of FLSA. The Labor Department has stated that PSRs are not outside salespersons and can thus apply for overtime. This decision and whether the court must defer to it is as a valid departmental regulation interpretation are also in question. The petitioners are two PSRs who believe they should be able to collect overtime pay. Under FLSA, an outside salesperson makes sales rather than promotes them. The petitioners’ attorney argued that PSRs are only promoters and thus nonexempt:

Now, everyone agrees that a pharmaceutical detailer engages in promotion. They tout drugs to doctors. Everyone agrees that there can’t be a commitment to issue a prescription. Everyone agrees that a prescription is not an exchange with a pharmaceutical company. But nonetheless, the Respondent argues that pharmaceutical detailers sell drugs directly to doctors as a matter of law.

The respondents’ lawyer, representing the petitioners’ pharmaceutical company-employer, argued that for the purposes of their industry, PSRs are salespersons: “They were hired for a sales job. They were given sales training. They attend sales conferences. They are assigned to sales territory, and they are evaluated and compensated as sales people. … We think they do make sales in the way that is relevant in this industry, and we do think they make sales in some sense, which is the practical construction the agency has always put on the sales requirement.”

The Solicitor General argued for the definition of sales presented in their amicus brief [text, PDF], which the court noted differed from the arguments they made to the Ninth Circuit. Justice Anthony Kennedy particularly criticized the Department’s updates of its regulations: “[I]t’s gone on for 70 years, and you’re—instead of doing a regulation, amended regulation, as Justice Breyer indicates, you’re filing amicus briefs quietly in different—different courts. It seems to me that’s not nearly as fair or straightforward or as candid as—as an agency ought to be.” Last summer, the court ruled on another aspect of FLSA’s wording [JURIST report]: that the language “filed any complaint” refers to both oral and written complaints.