Read the U.S. Department Of Labor’s Amicus Brief Contending That Novartis Sales Representatives Are Entitled To Overtime Pay

Law360, New York (October 15, 2009) — The U.S. Department of Labor has filed an amicus brief urging the U.S. Court of Appeals for the Second Circuit to reverse a lower court’s ruling that a putative class of Novartis Pharmaceutical Corp. sales representatives is exempt from federal overtime requirements.

The brief, filed Wednesday, argues that a January ruling by the U.S. District Court for the Southern District of New York granting summary judgment to Novartis failed to follow the department’s regulatory provisions on both the outside sales exemption and administrative exemption.

The brief describes the ruling as an attempt to “back-fit” the Fair Labor Standards Act regulations into the pharmaceutical industry’s practices.

Contrary to the ruling, sales representatives do not meet the requirements for the outside sales exemption because they do not sell or take orders for Novartis drugs, only provide information to physicians, the Labor Department claims.

While the representatives’ work may resemble sales in that their promotion work affects sales and they use methods similar to salespersons, the department argues, the actual sales take place between Novartis and pharmacies.

“The fact that the reps do not actually ‘make sales’ conclusively demonstrates that the position is not that of an outside salesperson consistent with the department’s legislative rules,” the brief said.

Likewise, the Labor Department contends that the representatives do not qualify for the administrative exemption because they do not exercise discretion and independent judgment and are not permitted to deviate from scripts provided by Novartis when meeting with doctors.

While the sales reps work without direct supervision and decide how best to make their presentations, they do not perform any of the primary duties found in the administrative exemption, such as implementing management policies and planning business objectives, according to the department.

The brief cites several U.S. Supreme Court cases that the Labor Department says support the contention that the department is entitled to controlling deference in defining and delimiting the FLSA’s overtime exemptions.

David Sanford, an attorney for the Novartis workers, called the department’s brief a “significant moment” in the litigation.

He said he hoped that the Second Circuit would agree with the Labor Department and remand the case to the lower court solely to determine the amount of damages the sales reps should receive.

The reasoning in the brief should also apply to several other pending suits involving similar allegations by sales representatives for other drug companies, Sanford added.

An attorney for Novartis declined to comment on the brief.

The consolidated putative class action, which brought together several suits in 2006, includes over 2,500 Novartis sales representatives.

The plaintiffs are represented by Sanford Wittels & Heisler LLP.

Novartis is represented by White & Case LLP, Morrison & Foerster LLP and Vedder Price PC.

The case is In re: Novartis Wage and Hour Litigation, case number 09-0437, in the U.S. Court of Appeals for the Second Circuit.

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