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In what can only be called a refreshing display of common sense,
the Supreme Court ruled 5-4 that pharmaceutical
representatives are exempt outside salespeople. For those not
following the case, the difficulty in analyzing such
representatives under the exemption arises because the reps
don't actually sell anything because prescriptions must be
written by a doctor. The facts showed, however, that the reps
made sales calls and were paid commissions based on the sales of
the drugs within their territories, just like
salespeople.
Perhaps the most important and far reaching part of the decision
is the rejection of the Department of Labor's hypertechnical
analysis of the term "sale" as being non-binding, and
instead focusing on the practical reality that these employees are
outside sales people for all intents and purposes. The
majority summed up its opinion as follows: "Our point is that,
when an entire industry is constrained by law or regulation from
selling its products in the ordinary manner, an employee who
functions in all relevant respects as an outside salesman should
not be excluded from that category based on
technicalities." The Court even went so far as to note
that pharmaceutical reps have been treated as outside salespeople
for 40 years without any intervention or concern from the
Department of Labor, which suggests that the practice was
lawful.
The takeaway from the case is that the Supreme Court is trying
to push the lower courts to close the floodgates on these overtime
cases, many of which are based on nothing more than creative legal
arguments as opposed to legitimate violations of the law.
Highly paid white collar employees are in no way
"wronged" by being paid a salary, even if a technical
argument can be made as to why their job description does not match
a duties test which was crafted by Congress 75 years ago.
Hopefully, the lower courts will get the message.
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