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Pharma biz: Does anyone make a pill for HR headaches?

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in Human Resources,Overtime Labor Laws

The pharmaceutical industry must have a bull’s-eye on its back, because employees’ attorneys continue to take aim at it, filing class-action lawsuits that allege unfair or illegal pay practices. Blame the arcane and cut-throat world of pharmaceutical sales.

In the latest round of litigation, four former sales representatives for Leo Pharma—which employs hundreds in the New York City area—have filed a class action claiming the company improperly misclassified them as exempt from the federal Fair Labor Standards Act (FLSA). The suit also seeks damages under state laws in New York, California and Washington.

The former reps filed their suit on behalf of the entire class of similarly situated employees.

They argue that they are not outside sales people under the FLSA because, technically, they don’t sell anything. Patients may only purchase pharmaceuticals with a doctor’s prescription. The sales reps merely attempt to persuade doctors to prescribe their company’s drug, never actually making a sale themselves.

Pharmaceutical companies often give sales reps scripts to use when making calls. Sales reps claim this reduces the freedom they are supposed to have as outside salespeople, a key measure of whether they meet the exemption.

The former Leo Pharma sales reps are represented by the same law firm that sued pharmaceutical giant Novartis in 2010 for both gender discrimination and FLSA violations. Female Novartis employees won a $253 million jury verdict in 2010, although Novartis ultimately negotiated a $99 million settlement.

A similar case, filed against Smith­KlineBeacham, is headed to the U.S. Supreme Court. In that case, the 9th Circuit sided with the employer.

Advice: Pay attention to what’s happening to your competitors on the employment law front. If they’re getting sued now, you could be next. It’s better to learn from their mistakes than your own.

Most likely the law firm in this case—fresh from its big win against Novartis—went looking for other pharmaceutical sales reps, theorizing that the entire pharmaceutical industry might be easy prey for FLSA lawsuits.

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