Two recent federal court decisions confirm that the FLSA overtime exemption for "outside sales" employees continues to be a tricky and unsettled area of law. In Christopher v. Smithkline Beecham Corp., the Ninth Circuit Court of Appeals held that pharmaceutical sales representatives were exempt outside sales employees, even though the sales employees were legally prohibited from taking orders from physicians. The court determined that because the sales representatives had a goal of causing doctors to prescribe more of their employer's prescription drugs, they did more than merely "promote" their employer's drugs and were in facts engaged in exempt sales activities. This decision conflicts with an earlier ruling by the Second Circuit Court of Appeals, which held under similar circumstances that pharmaceutical sales representatives did not "make sales" for purposes of the overtime exemption.
On the heels of Smithkline, a Northern California federal district court held that certain Retail Sales Representatives employed by The Hershey Company – whose job duties included meeting and consulting with key decisionmakers at retail stores to increase sales and assisting with merchandising – did not qualify for the outside sales exemption. While the district court found some similarities between the sales employees in its case and in the Smithkline case, the court also noted that the Smithkline plaintiffs were rewarded with commissions when their efforts generated more sales and had substantial autonomy outside of the office, unlike the Hershey plaintiffs.
These cases illustrate the continuing difficulties courts have regarding application of the outside sales overtime exemption, and stress the importance of making individualized, periodic assessments of job duties to ensure compliance with the wage and hour classification requirements.