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CCH® PAYROLL — 12/31/08

Outside sales exemption didn't apply to pharmaceutical reps

The FLSA's outside sales exemption was inapplicable to a group of pharmaceutical sales representatives because they neither sold the pharmaceuticals they promoted nor obtained orders or contracts for the sale of pharmaceuticals, ruled a federal district court in Connecticut. Further, the FLSA's administrative exemption did not apply where issues remained as to the reps' primary duties.

The employer's sales reps visited doctors and provided them with information and samples of the employer's various pharmaceutical products. These reps did not choose the subjects or objects of their visits but, rather, the employer's commercial analytics department assigned specific drugs to promote to specific doctors. The reps' visits also did not result in formal contracts to write a particular number of prescriptions because the reps were not allowed to negotiate contracts. Sales were actually accomplished by non-sales rep personnel, who sold the employer's products to wholesalers.

In light of these facts, the district court held that the outside sales exemption was clearly inapplicable because the employees neither sold the pharmaceuticals they promoted nor obtained orders or contracts for the sale of pharmaceuticals. Moreover, the court noted that the employer's organization of its sales force suggested that, even under its own definition of "consummation," sales reps do not "consummate sales." Employees in a division called the "Trade Relations Group" were actually responsible for consummating sales to wholesalers. (Ruggeri v Boehringer Ingelheim Pharmaceuticals, DConn, 156 LC ¶35,506; for denial of motion for interlocutory appeal, see 156 LC ¶35,507).

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