Ninth Circuit Asks For California Supreme Court's Guidance on Outside Sales Exemption
Several class action lawsuits are pending before the Ninth Circuit and federal district courts in California challenging the exempt classification of pharmaceutical sales representatives under the outside salesperson exemption and administrative exemption. One of these cases, D’Este v. Bayer Corporation is currently before the Ninth Circuit. Earlier this week the Ninth Circuit certified questions of California law to the California Supreme Court regarding the scope of these exemptions, reasoning that it is unclear under California law whether these exemptions apply to pharmaceutical sales representatives and the outcome of several pending cases depends on clear guidance on these issues. The specific questions certified to the California Supreme Court are as follows:
1. The Industrial Welfare Commission’s Wage Orders 1-
2001 and 4-2001 define “outside salesperson” to mean
“any person, 18 years of age or over, who customarily
and regularly works more than half the working time
away from the employer’s place of business selling tangible
or intangible items or obtaining orders or contracts for
products, services or use of facilities.” 8 Cal. Code Regs.,
tit. 8, §§ 11010, subd. 2(J); 11040, subd. 2(M). Does a
pharmaceutical sales representative (PSR) qualify as an
“outside salesperson” under this definition, if the PSR
spends more than half the working time away from the
employer’s place of business and personally interacts
with doctors and hospitals on behalf of drug companies
for the purpose of increasing individual doctors’ prescriptions
of specific drugs?
2. In the alternative, Wage Order 4-2001 defines a person
employed in an administrative capacity as a person whose
duties and responsibilities involve (among other things)
“[t]he performance of office or non-manual work directly
related to management policies or general business opera-
tions of his/her employer or his employer’s customers”
and “[w]ho customarily and regularly exercises discretion
and independent judgment.” Cal. Code Regs., tit. 8
§ 11040, subd. 1(A)(2)(a)(I), 1(A)(2)(b). Is a PSR, as
described above, involved in duties and responsibilities
that meet these requirements?
The California Supreme Court has discretion whether to accept the Ninth Circuit's request for certification. We will continue to monitor and post any developments.