California Labor &
Employment Law Blog

May. 8 2011

Ninth Circuit Asks For California Supreme Court’s Guidance on Outside Sales Exemption

Topics: Court Decisions, Wage & Hour Issues

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 customarilyand regularly works more than half the working timeaway from the employer's place of business selling tangibleor intangible items or obtaining orders or contracts forproducts, services or use of facilities." 8 Cal. Code Regs.,tit. 8, §§ 11010, subd. 2(J); 11040, subd. 2(M). Does apharmaceutical sales representative (PSR) qualify as an"outside salesperson" under this definition, if the PSRspends more than half the working time away from theemployer's place of business and personally interactswith doctors and hospitals on behalf of drug companiesfor the purpose of increasing individual doctors' prescriptionsof specific drugs?
  2. In the alternative, Wage Order 4-2001 defines a personemployed in an administrative capacity as a person whoseduties and responsibilities involve (among other things)"[t]he performance of office or non-manual work directlyrelated to management policies or general business opera-tions of his/her employer or his employer's customers"and "[w]ho customarily and regularly exercises discretionand independent judgment." Cal. Code Regs., tit. 8§ 11040, subd. 1(A)(2)(a)(I), 1(A)(2)(b). Is a PSR, asdescribed above, involved in duties and responsibilitiesthat 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.

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About the Editor

Robin Largent represents employers, including major food and retail companies, in all types of employment litigation: wrongful termination, retaliation, breach of contract, wage and hour (California Labor Code) and unfair competition. She also regularly counsels and advises California employers on issues of compliance with California and federal employment laws.
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