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Christopher v. SmithKline Beecham Corp.
What’s at stake?
The ability of employees to get time-and-a-half pay for overtime work, as guaranteed under federal law.
Whether courts should defer to the Secretary of Labor’s interpretation of “outside salesman” under the Fair Labor Standards Act (FLSA), and whether the FLSA’s “outside sales” exemption applies to pharmaceutical sales representatives.
June 18, 2012
Outcome: 5-4 in favor of SmithKline. The conservative majority, in an opinion authored by Justice Samuel Alito, held that Christopher qualifies as an “outside salesman” and is therefore not entitled to overtime pay. The Court disregarded the Department of Labor’s extensive briefs arguing that their interpretation of the Fair Labor Standards Act did not serve to deny Christopher his earned pay as an “outside salesman.” During oral arguments, Chief Justice John G. Roberts seemed skeptical of the idea that Christopher could qualify as a salesperson when he does not in fact make sales of any kind. Similarly, Justice Sonia Sotomayor worried that over 90,000 employees who do promotional work might be denied overtime pay as a result of a ruling for SmithKline.
What the Court held: This case arose from a dispute between Michael Shane Christopher and his employer, SmithKline Beecham, a drug company. As a “pharmaceutical representative,” Christopher’s work consisted mainly of visiting doctors’ offices and encouraging doctors to prescribe SmithKline drugs to patients. He sometimes worked more than 40 hours per week, but did not receive time-and-a-half pay for his overtime work. He and another plaintiff sued on behalf of themselves and a class of all other similarly situated employees working for SmithKline for time-and-a-half pay, which is generally guaranteed to workers under the federal Fair Labor Standards Act (FLSA).
SmithKline claimed that Christopher was not entitled to overtime pay because he was an “outside salesman,” and thus fell into one of several narrowly-drawn classes of employees exempted from the FLSA’s overtime pay requirement. Christopher argued that he should not be categorized as an outside salesman because he did not actually sell anything.
Through the FLSA, Congress delegated to the Secretary of Labor the authority to define terms such as “outside salesman.” The Secretary of Labor has issued regulations providing that an “outside salesman” must in some sense make sales. According to the Secretary, who filed an amicus brief in this and a related case, these regulations do not exempt drug companies from paying pharmaceutical representatives like Christopher overtime.
It is a well-established principle of federal law that courts generally defer to agencies’ interpretations of statutes and of their own regulations. However, in this case, the Ninth Circuit Court of Appeals agreed with SmithKline that the Secretary’s interpretation deserved no deference because the Secretary merely “parroted” federal law in writing the regulations. As a result, the Ninth Circuit substituted its judgment for the judgment of the agency, and decided that Christopher was in fact an outside salesman who did not merit overtime pay.
The Supreme Court’s conservative majority, in an opinion authored by Justice Samuel Alito, affirmed the Ninth Circuit, holding that Christopher qualifies as an “outside salesman” and is therefore not entitled to overtime pay, despite the Department of Labor’s interpretation to the contrary. During oral arguments, Chief Justice John Roberts seemed skeptical of the idea that Christopher could qualify as a salesperson when he does not in fact make sales of any kind. That did not, however, prevent him from voting with the majority to rule that Christopher is excluded from the FLSA.
In his dissent, Justice Stephen Breyer described the duties of a pharmaceutical representative, pointing out that when an employee in such a position is successful, the only person making a sale is – potentially – a pharmacist. Justice Breyer reiterated the Department of Labor’s description of the process, particularly the nonbinding nature of a doctor’s promise to prescribe the recommended drug, which is a far cry from the completion of a sale.
Although this case raised the technical question of the degree of deference a reviewing court should give to an agency’s interpretations of its own regulations, it is important to remember the core dispute at issue in this case. Christopher worked longer hours than a full-time employee is expected to work. Federal law demands that such workers receive overtime pay, unless they fall into specific, narrowly drawn categories. Congress delegated the authority to define the boundaries of these categories to the Secretary of Labor, who has determined that employees in Christopher’s position should receive overtime pay.
By siding with the drug companies, the Supreme Court’s decision represents an earthquake in administrative law. Under established precedent, the Court would defer to an agency’s interpretation of the statute it was tasked with implementing. Yet in this case, the conservative majority issued a ruling contrary to the Department of Labor’s considered judgment. As a result, roughly 90,000 drug company employees in Christopher’s situation, not to mention workers in other industries that perform similar “promotional” work, will never see a dime in overtime pay.