Supreme Interest

Once again this week, the entire pharmaceutical industry turns its attention back to the Supreme Court as they hear the legal arguments in the specific case of Christopher vs. SKB (now GSK).  This is the pivotal case that argues pharmaceutical reps are not outside sales people and should be paid overtime when they work over 40 hours a week.  The Sacramento Bee clearly outlines the case and notes that this may not be a sure thing for either side.  They do remind us that Novartis has already settled a similar case with their workers for $99 million.

First, for full disclosure, I am a huge proponent of Fair Labor Laws, and I am proud to serve on the board of Interfaith Worker Justice (, a not for profit that helps protect the rights of workers, especially low wage workers, across the country.  There are a huge number of problems with workers not being paid minimum wage, being forced to work without legal compensation and being put in unsafe work environments.  Even with that bias, I am having a hard time seeing the argument for the sales representatives, but who knows what will happen.

Overtime laws clearly play an important role in our country, but they are subject to a number of “exemptions” as outlined by the Department of Labor.  The two that should be argued this week have to do with the outside salesperson and the administrative exemptions.  We will see how this turns out.

My mind can’t stop thinking of all the posts in CafePharma where reps talk about how few hours they have to work, at least during the day.  I think of all the time spent trying to design the perfect incentive compensation plans thinking that the reps really were responsible for the business in their areas.  I wonder about the fairness of layoffs based on performance, when performance was measured by sales in an area.  Were all those hours spent with ZS trying to analyze the value of having a rep in an area a waste in that they are not really sales people?  The argument that reps are not sales people just doesn’t seem right, but this is now in the hands of the Supreme Court.

What would happen if the the court rules in favor of the overtime?  Would this completely change the way the industry does business?  First, I would see no reason to pay incentive compensation based on sales in a specific area if the reps were not sales people.  Perhaps, they would need some type of bonus similar to those in the home office within a similar grade level, but not the higher commissions they currently get paid.  I would think companies would immediately put a 40 hour limit on work each week, but really make representatives prove they are working the 40 hours through some type of tracking system.  What would we call the sales organization in the future?  Would this be a “customer service team” or what?

I am trying not to make light of a serious situation but in some ways it shakes my thinking.  As a former sales representative I know I was responsible for what happened in my territory, well at least the good things!  I am proud that I was a sales person and that I was viewed as the face of my company in my geography.  I think most representatives feel that way and would hate to see the consequences of their not being viewed as sales people by the court.  People go into sales because they want the challenge and the rewards that go with managing the business in their territory.  They recognize that they are often not in total control, but still feel they influence their own destiny and should be recognized for that effort.  It should be another interesting decision.

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