Novartis Salespeople Covered by Law Requiring Overtime, Appeals Court Says

Novartis AG’s sales representatives are covered by federal wage-and-hour laws requiring payment of overtime, a U.S. appeals court in New York ruled.

A three-judge panel of the appeals court today overturned a lower-court finding that the sales representatives fell under exceptions to the federal Fair Labor Standards Act for outside sales people and administrative workers.

“The district court should have ruled that the reps are not outside salesmen,” the appeals court said in its opinion today.

The decision affects about 2,500 current and former sales representatives employed by Novartis between March 23, 2000 and April 7, 2007, who are suing for unpaid overtime, according to the court’s decision. The law requires the payment of 1 1/2 times a worker’s hourly wage for more than 40 hours’ work in a week.

In its decision today, the appeals court relied on U.S. Labor Department regulations that define “outside salesman” and “administrative” employees. The Labor Department submitted a friend-of-the-court brief supporting the position of the sales representatives on the appeal.

The court today agreed that sales representatives, who are barred from making sales to doctors, aren’t outside sales people. It also agreed that their jobs lack the “discretion and independent judgment” required to classify them as administrative employees under the statute.

In a related case, the appeals court today upheld a district court ruling that a group of Schering Corp. sales representatives aren’t outside salespeople. The FLSA overtime requirement therefore applies to them, the court said.

Eric Althoff, a Novartis spokesman, didn’t immediately return a voicemail message seeking comment.

The case is Re Novartis Wage and Hour Litigation, 09-437, 2nd U.S. Circuit Court of Appeals, (Manhattan).

To contact the reporter on this story: Bob Van Voris in U.S. District Court in New York at 4171 or rvanvoris@bloomberg.net.

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