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Supreme Court Clarifies Meaning of 'Sale' Under the Fair Labor Standards Act

By Gil A. Abramson and Katherine Levy
August 31, 2012

The U.S. Supreme Court recently held, in Christopher v. SmithKline Beecham Corp., 567 U.S. ___, No. 11-204, 2012 WL 2196779 (June 18, 2012), that pharmaceutical sales representatives, commonly known as “drug reps,” are qualified as “outside salesm[e]n” under the Fair Labor Standards Act (FLSA) and are, therefore, not subject to the minimum wage and overtime requirements of the Act. In doing so, the Court rejected the Department of Labor's (DOL) interpretation of the Act and relevant regulations, and resolved a split between the Ninth and Second circuits.

The FLSA exempts those “employed in the capacity of outside salesm[e]n.” In order to qualify under this exemption, an employee's primary duty must be “making sales,” defined as “any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.” Under the DOL's interpretation, a “sale” required a transfer of title, an understanding the Court rejected, instead reading the “other disposition” language to permit a more
expansive meaning of the word.

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