Supreme Court Affirms Second Circuit Court’s Ruling in Wage and Hour Case: Enormous Implications for the Pharmaceutical Industry

On Monday, the U.S. Supreme Court rejected a petition to challenge a Second Circuit court ruling regarding how Federal overtime law should apply to pharmaceutical companies. In July 2010, the Second Circuit (supported by an amicus brief from the U.S. Department of Labor) reversed an earlier ruling by a 3-0 vote about whether the Fair Labor Standards Act (FLSA) exempted pharmaceutical sales reps or not. The earlier ruling deemed that pharma workers should be considered outside salespeople and administrators.

Two pharmaceutical giants – Novartis Pharmaceuticals and Schering Corp – may have exhausted their legal remedies to fight the Second Circuit’s decision. Charles Joseph, a partner at Joseph & Kirschenbaum, noted: “The specter of a Supreme Court review is greatly diminished, although not eliminated, because the court could take it up with some other case in the future… for now, the Second Circuit decision remains the law of the land in the second circuit. I do not understand how these drug makers will not have to immediately start to change their practices.”

The denial of certiorari was applauded by Novartis workers. The decision may compel the pharmaceutical giant to pay up to $100 million to approximately 2,500 past and present pharmaceutical reps.

Beyond Novartis and Schering Corp
The Supreme Court’s denial of certiorari in this case has the potential for tremendous industry-wide ramifications in the pharmaceutical sector. Over a dozen suits have been filed against major drug makers like Bristol-Myers Squibb, GlaxoSmithKline, Merck, and Johnson & Johnson. These giant companies have long held that their sales reps should be exempt from FSLA overtime requirements. Their payment practices will almost certainly have to change in light of these court decisions. One report predicted that the Supreme Court decision may “open the flood gates for liability.” It seems likely that we may be witnessing the beginning of a monumental change in how drug companies treat, value, and pay for their workers.

If you or someone you care about needs help with a wage and hour violation situation (e.g. your employer has unfairly withheld your tips or had failed to pay you due overtime); or if you have been subjected to sexual harassment, retaliation, or discrimination at your job, look to the firm of Joseph & Kirschenbaum to get a confidential and helpful case evaluation. Phone (212) 688-5640, or visit the firm on the web at www.jhllp.com.