Second Circuit Overturns Summary Judgment in Novartis Overtime Suit
On July 6, 2010, a three judge panel of the Second Circuit overturned a district court’s finding that pharmaceutical sales representatives fall into the outside sales and administrative employee exemptions to the overtime provisions of the Fair Labor Standards Act. The opinion narrows the definition of a “sale” and refines what it means to exercise discretion and independent judgment.
According to the Second Circuit, “where the employee promotes a pharmaceutical product to a physician but can transfer to the physician nothing more than free samples and cannot lawfully transfer ownership of any quantity of the drug in exchange for anything of value, cannot lawfully take an order for its purchase, and cannot lawfully even obtain from the physician a binding commitment to prescribe it, we conclude that it is not plainly erroneous to conclude that the employee has not in any sense, within the meaning of the statute or regulations, made a sale.” In comparison, the district court opined that while the plaintiffs may not “sell” in a technical sense, holding them exempt is within “the Act’s spirit, purpose, and goals.”
Regarding the administrative exemption, the court noted the absence of any “evidence . . . that the Reps have any authority to formulate, affect, interpret, or implement Novartis’s management policies or its operating practices, or that they are involved in planning Novartis’s long-term or short-term business objectives, or that they carry out major assignments in conducting the operations of Novartis’s business, or that they have any authority to commit Novartis in matters that have significant financial impact.” The court also discounted the importance of contracts made between the plaintiffs and hotels and convention centers, observing that all contracts are subject to predetermined budgets.
The court relied heavily upon an amicus curiae brief filed by the Department of Labor in support of the approximately 2,500 plaintiffs in the case. We blogged about the DOL’s brief here. The case is In re Novartis Wage and Hour Litigation, and a copy of the court’s opinion is available here.
The employment attorneys at The Employment Law Group® law group have extensive experience recouping unpaid wages and fighting for employees who are misclassified as exempt from overtime. To learn more about the firm’s Unpaid Wages and Overtime Practice, click here.
