Monday, June 18, 2012

Just In: SCOTUS Issues Opinon on FLSA Outside Sales Exemption for Pharmaceutical Sales Reps

Minutes ago, the Supreme Court issued its opinion in Christopher v. Smithkline Beecham. I blogged about this case when the Court granted Cert., and identified the issues as:
(1) Whether deference is owed to the Secretary [of Labor's] interpretation of the Fair Labor Standards Act’s outside sales exemption and related regulations; and
(2) Whether the Fair Labor Standards Act’s outside sales exemption applies to pharmaceutical sales representatives
After a brief skim of the opinion, the 5-4 majority of the Court held that:

(1) The Department's interpretation was "flatly inconsistent with the FLSA," and an evolving view that didn't provide an opportunity for public comment. It also didn't provide "clear notice" that the practice in question constituted a violation of the FLSA and therefore amounted to an "unfair surprise." In this instance, the Department's interpretation is "only as strong as the reasoning underlying its conclusion." This holding could have significant admin law implications in cases well outside of the employment law arena.

(2) The Court held that pharmaceutical sales reps fall under the FLSA's outside sales exemption. The reps "obtain nonbinding commitments from physicians to prescribe [pharmaceutical compaies'] drugs." Accordingly, they do not make direct sales. The Court relied on textual clues, and the purpose of the FLSA to conclude that the pharmaceutical reps are "hardly the kind of employees that the FLSA was intended to protect." No mandatory overtime wages for the reps.

The opinion was the standard 5-4 conservative split, with Justice Alito authoring the opinion, and Breyer for the dissenters. More analysis forthcoming (after I've had a chance to read the full opinion and digest it a little bit).