Norman B. Blumenthal Class Actions Law Blog on Lawyers.com

Are Pharmaceutical Sales Reps Entitled to overtime Compensation?

California wage and hour litigation heats up in Orange County, where the San Diego based employment law firm of Blumenthal, Nordrehaug & Bhowmik filed an overtime lawsuit against Merck in the California Superior Court for the County of Orange on December 10, 2010. The Southern California class action law firm alleges that Merck failed to pay drug sales reps overtime compensation in violation of California overtime laws and the Labor Code.

California Overtime Laws

Under California overtime laws, all employees are entitled to be paid one and a half times the regular hourly rate of pay for working more than 8 hour days, More than 40 hour weeks, More than 6 days in the same workweek. Employees are entitled to be paid two times the regular rate of pay for working overtime hours that consist of more than 12 hours in a single workday and more than 8 hours on the seventh straight workday in the same week.

The Outside Salesperson Exemption from Overtime Pay

In this Orange County sales rep overtime lawsuit the main issue portends to be whether pharmaceutical sales representatives meet the requirements of the outside salesperson exemption from overtime pay. Outside salespeople are exempt from overtime pay only if the sales employees spend more than half (50%) of their working time away from the employer's principal place of business or away from their home office "making sells." If a sales employee in California meets these criteria, the drug companies do not even have to pay the sales reps the state minimum wage that applies to the white collar exemptions from overtime pay.

Unlike the outside sales employee overtime exemption under the Fair Labor Standards Act, California wage and hour law does not permit work performed incidental to and in conjunction with the sales reps outside sales. This means that employees in California that are making deliveries or collections a majority of the time rather than actually making sales are entitled to overtime compensation under California labor laws.

The Requirement of "Making Sales"

The argument that the sales reps are making in this Orange County Employment lawsuit is that they are entitled to overtime compensation because they do not satisfy the "making sales" requirement of the overtime exemption because they are not actually making sales. Instead, the drug sales reps claim that they are really promoters rather than salespersons. The overtime claims rely on the fact that the doctors do not actually buy the drugs from the sales reps but instead verbally promise to prescribe it when appropriate, at most.