The 2nd Circuit ruled yesterday that Novartis AG's sales representatives merit overtime and are covered by federal wage-and-hour laws under the Fair Labor Standards Act (FLSA). Plaintiffs claimed they were underpaid because they were denied time-and-a-half for each hour worked over 40 hours per week from 2000 to 2007.

FLSA requires that employees be paid overtime for more than 40 hours worked per week but allows an exemption for "outside" salespeople and "administrative" employees. This is the first federal appellate decision finding that pharmaceutical sales reps do not qualify as outside salespeople and administrative employees.

The Labor Department submitted an amicus brief in which Secretary of Labor Hilda L. Solis explained that, because the representatives do not make sales or obtain orders, they are not salespeople, and because they do not exercise discretion and independent judgment, they are not administrative employees.

With this ruling, "The 2nd Circuit vindicated two of the main purposes of overtime laws: to prevent the evil of overwork and to spread work among as many employees as possible," Steven Wittels, partner at Sanford Wittels & Heisler told Sys-Con Media.

The ruling covers Novartis employees in New York, California and other states because the suit was consolidated in New York. Novartis may owe employees around $10 million in back pay.

This is the second major case Novartis has lost in New York in less than two months. Recently a federal court jury awarded female Novartis sales reps $250 million in punitive damages in a gender discrimination class action case."

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