Supreme Court Docket Report - November 28, 2011

Originally published November 28, 2011

Keywords: Fair Labor Standards Act, Outside-sales exemption, overtime pay, criminal sentencing, criminal fines, RCRA

The outside-sales exemption of the Fair Labor Standards Act ("FLSA") provides that workers who are employed "in the capacity of outside salesman" are not entitled to overtime pay. See 29 U.S.C. § 207(a)(1); 29 U.S.C. § 213(a)(1). Today, the Supreme Court granted certiorari in Christopher v. Smithkline Beecham, Corp., No. 11-204, to determine whether the outside-sales exemption applies to pharmaceutical sales representatives ("PSRs"), and to clarify whether courts must defer to the Secretary of Labor's interpretation of the exemption with regard to PSRs.

The Court's resolution of these issues will be important to the pharmaceutical industry, which currently employs approximately 90,000 PSRs. Numerous class-action lawsuits have been filed across the country, and if the Supreme Court concludes that PSRs do not qualify as outside sales employees, pharmaceutical companies could face billions of dollars of liability. The Court's ultimate decision will also be of interest to businesses in other industries that are subject to the FLSA and have classified certain employees as outside salesmen.

The Court's decision in this case could also have far-reaching implications outside the FLSA context, because the Court will have occasion to decide whether courts should defer to a position that an agency takes without formal rulemaking, e.g., in an amicus brief, even when that position marks a significant change from the agency's prior position.

Generally speaking, PSRs are hired by drug manufacturers to explain the benefits of the manufacturers' products to physicians and to encourage physicians to prescribe those products to patients. PSRs receive both a salary and incentive-based compensation. Petitioners, the plaintiffs below, filed suit on behalf of themselves and a putative nationwide class of PSRs, alleging that respondent's practice of requiring overtime work without providing additional pay violated the FLSA. The district court granted respondent's motion for summary judgment, and the Ninth Circuit affirmed. 635 F.3d 383. The Secretary of Labor had filed an amicus brief in the Ninth Circuit in which she asked that the court defer to her view that PSRs do not satisfy the test for the outside-sales exemption. The Ninth Circuit declined to defer to the Secretary's interpretation, thereby creating a...