Worker-Status Rulings A Relief To Drug Firms

Big pharmaceutical firms are applauding separate federal court decisions to deny class-action status for lawsuits alleging Bayer Corp. and Wyeth Pharmaceuticals misclassified workers’ status.

Both lawsuits were brought by former employees who contend the companies should have assigned them nonexempt status, thus entitling them to certain privileges including compensation for overtime as well as meal and rest breaks.

In the Wyeth case, U.S. District Judge Stephen Wilson in Los Angeles dismissed the lawsuit October 26 before the plaintiff could file for class-action status. Two weeks before that, U.S. District Judge John Walter in Los Angeles denied plaintiffs in the Bayer case class-action status.

The rulings are significant because they could affect the way employers categorize scores of pharmaceutical representatives working in the industry and influence the outcome of several pending lawsuits involving high-profile pharmaceutical companies.

Wyeth and Bayer attorneys invoked an outside-salesperson exemption rule, which was enacted by the U.S. Department of Labor, to argue their cases, according to Michael Banks, a partner at Morgan, Lewis & Bockius in Philadelphia, which represented both companies.

The DOL stipulates several factors must be met before a company can assign the exempt status to its employees. The employees should regularly work off site with the primary responsibility of making sales. Both Wyeth and Bayer believe the plaintiffs in these cases met the requirements during their tenure at the companies and therefore were not eligible for either overtime payments or breaks, explains Richard Rosenblatt, a Morgan, Lewis & Bockius partner in its Princeton, New Jersey, office.

“Pharmaceutical sales professionals should not be treated differently from any other person who engages in outside sales, whether it’s a widget or a copy machine,” Rosenblatt says. “The Bayer decision reflects the common-sense conclusion that there is no legislative, regulatory or societal purpose for doing so.”

Pharmaceutical companies rely heavily on field agents rather than conventional in-house salespeople to service doctors, who are their primary customers. The situation looks promising for the pharmaceutical industry, yet Banks believes there could be appeals in the future.

Indeed, San Diego-based class-action law firm Cohelan & Khoury, which also represented the Bayer plaintiffs, wouldn’t specify whether the plaintiffs would appeal. But attorney Jason Hill says pharmaceutical representatives are chronically misclassified because employers want to save money.

“Applying the outside-salesperson exemption status to this group of workers is incorrect because these agents are not actually engaged in selling,” Hill says. “Therefore, they do not meet the requirements stipulated by the DOL.”

He says the agents’ primary duty is to increase prescriptions for specific pharmaceutical products among doctors. Making direct sales to patients is not part of their job. “They are primarily there to raise brand awareness and to carry out marketing efforts,” he explains.

Hill believes pharmaceutical company lawyers arguing in other pending cases may look to follow the strategy used in the Bayer and Wyeth cases.

“I am hoping they do because the argument is like a house of cards that will eventually fall onto itself,” he notes.

—Gina Ruiz