Management at Novartis (Basel) may be looking for a pill to combat employee-induced headaches. Not even two months after the company lost a class-action lawsuit that alleged discrimination against female workers, a federal appeals court ruled that the company’s sales representatives are entitled to overtime pay.
The suit was brought by Novartis employees whose primary responsibility is to visit physicians’ offices, drop off drug samples, and deliver scripted messages about the company’s products. Echoing the opinion of much of the pharmaceutical industry, Novartis argued that these workers are outside salespersons and therefore exempt from overtime pay under federal and state law.
The case finally reached the US Court of Appeals for the Second Circuit, which rejected Novartis’s reasoning. The decision might have been influenced by the US Department of Labor, which took the unusual step of filing an amicus appeal brief in support of the sales reps. This decision likely will affect the entire pharmaceutical industry, which faces several similar lawsuits filed by sales reps seeking overtime pay.
At first glance, the decision seems like good news for pharmaceutical sales reps. But the obligation to pay overtime might become another excuse for drug companies to cut their sales forces. In response to the recession, pharmaceutical manufacturers have laid off thousands of reps as a cost-cutting measure. Even without the recession, reps have been on shaky ground as physicians become increasingly unwilling to meet with them. As a result, companies have sought alternative ways of reaching doctors such as e-detailing.
I’m happy to see the Department of Labor and the Second Circuit protect sales reps’ right to fair compensation. On the other hand, I still fear for the reps’ jobs under the current market conditions. Maybe new blockbusters would be the best cure for these workers’ job insecurity.