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Overtime case threatens pharmaceutical sales industry

The U.S. Supreme Court may soon decide a groundbreaking employment law case revolving around whether sales people working in the field have the right to overtime pay. The court is considering the appeal filed by two former sales representatives of GlaxoSmithKline. The two had earlier filed a class action lawsuit to argue that the company owes them overtime pay for up to 20 hours of overtime that the men worked each week.

The federal Fair Labor Standards Act, as well as Florida state statutes, protect the wage and overtime rights of workers in Florida. And in general the Fair Labor Standards Act requires that companies pay hourly workers overtime, but there are many exemptions for various white-collar workers, including "outside salesmen."

The Labor Department did agree with the former employees of the pharmaceutical company in 2009, saying that the outside salesman exemption only applies in cases where the overtime hours consummate in a sales transaction.

The company however has defended itself by saying that its sales representatives are compensated with a base salary in addition to performance-based commission pay. Overtime requirements, the company has argued, are not a part of this compensation package.

The Supreme Court is expected to hand down a ruling by the end of June. The implications of a ruling in favor of the employees would be very significant as pharmaceutical companies have billions of dollars in potential liability. The case may also have an effect on outside salespeople working in other industries here in south Florida.

Source: Reuters, "Supreme Court hears Glaxo overtime pay case," April 16, 2012

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