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New Work Rules for Pharmaceutical Sales Representatives

Several courts have now determined that pharmaceutical sales representatives should be considered “non-exempt” hourly employees and therefore are entitled to overtime pay.  In coming to this conclusion the courts agreed with the pharmaceutical sales representatives who filed the suits claiming they were not sales people or professionals exercising discretion or independent judgment as defined by provisions of the Fail Labor Act for “exempt” employees.  If the courts continue to hold these findings to be true, here are some new work rules “non-exempt” pharmaceutical representatives can expect to see:

  •  Your work day is expected to be 8 hours per day Monday through Friday between 7am and 6pm.  You must not work more than 8 hours per day or more than 40 hours per week without prior written approval from your District Manager.
  • Working weekends (Saturday or Sunday) or holidays is prohibited unless you have prior written approval from your District Manager for a particular weekend or holiday requiring your presence for work related activities.
  • You are expected to “clock in” using your iPad when you leave your home for work and “clock out” when you have completed your 8 hour work day.  You must plan to complete your 8 hour work day with arrival back at your home.  You can chose to complete your 8 hour work day in your territory but that will be your choice and you will be on personal time after the point you “clock out.”   Use of the company car from that point to the return to your home must be recorded as personal miles .
  • If you receive emergency customer calls (you are not to make customer calls except in response to their call) outside your work day hours, you are to record those (caller name, time of call, purpose of call) in your weekly activity report and include the time in your time log.  You will have to adjust your subsequent work time so as not to exceed the 40 hours per week maximum.
  • Failure to “clock in and out” may result in loss of pay for that period of time.  Repeatedly “forgetting to clock in or out” may result in disciplinary action including the possibility of termination.
  • You may take personal time during the work day as long as you put in your 8 hours between the hours of 7am and 6pm.  You must clock out and back in for all personal time taken during the work day.  Other than clocking out and back in, you do not have to provide any information regarding personal time activities.
  • If you plan to take more than 2 hours of personal time during work day hours (7am to 6pm) on any one day you must get prior approval for a vacation day.
  • You will be gps tracked to verify time and location for all work related time during your work day.  This will also be used to verify mileage for business versus personal use of the company car.
  • You are required to clock out and back in for your mandatory 15 minute breaks, once in the morning and once in the afternoon.  You can not skip breaks or combine break times. You are not to do work related activities during your breaks.
  • You must clock out and back in for your mandatory 1 hour lunch break during which you are not to do work related activities.  You can not skip your lunch break and your lunch break must be taken daily between 10am and 1pm.   If you do a work related food activity with physicians or office staff during lunch time, this can not be your lunch break.
  • Nobody, not even your District or Region Manager or the VP of Sales, can require you or request that you do work related activities when you are clocked out, including for breaks and lunches.
  • Because all work related travel time counts against your 8 hours per day and 40 hours per week, all territories will be reevaluated and realigned where necessary to minimize travel requirements.
  • Where possible, all company required meetings will now be by teleconference or video conference to avoid travel.
  • You will not be expected or allowed to travel outside your territory to attend any medical or scientific meetings or conferences, if it means you will exceed your 8 hours per day of work.
  • District meetings will be kept to a minimum and centrally located to minimize travel for all attendees.  District meetings will be structured to an 8 hour work day with the mandatory “non-business-related” breaks and lunch for which you must “clock out and back in”.  You will be required to take your lunch break and can not do any work related activities during your District meeting lunch break.   So as to not encourage work related activity during District meeting lunch breaks, you will be expected to determine where you would like to have your lunch and pay for your own lunch.  There will be no District meetings requiring overnight stays.
  • Any travel outside your territory, except for District Meetings, will require prior written approval from your District Manager.  If travel time requires you to take more than 8 hours per day to attend and return home from a District meeting, you must have prior written approval from your District manager with the anticipated “Overtime” required to make the meeting.
  • Only company provided training programs will be considered “work related” required training for which work day time will be allotted.   Any additional training, reading, or research you choose to do with regards to your job or career development will be your choice and done on your personal time.  These “extra” activities will not be required and are therefore “on your own personal time.”
  • You will be allotted 2 hours of “work time” every week to take care of any company required administrative tasks (e.g., expense reports, weekly activity reports, or planning) or training. You must be clocked in during this time.
  • Your biweekly pay will be automatically calculated from your time sheets captured from your “clock in and clock out” data.
  • Any exceptions to these work rules must be identified upfront with the anticipated number of “work hours” involved, any anticipated overtime hours identified, and must have prior written approval from your District Manager.
  • Failure to comply with any of these new work rules will result in disciplinary action including the potential for termination.

I am not espousing these rules and I have probably missed a few.  I’m not an attorney but I tried to look at what pharmaceutical companies might have to do to avoid further Fair Labor Act liabilities by establishing work day expectations and accurately tracking and recording work hours for pharmaceutical representatives who are considered “non-exempt” hourly employees.

Of course, the company will have the choice to just pay the overtime when they want to make the exceptions for business reasons.  But, to manage overtime pay and not have it be abused or extended beyond financial feasibility and to avoid litigation, these types of work rules will almost certainly be required.  One could also argue that these work rules are necessary to protect the “non-exempt” pharmaceutical representative from being taken advantage of by management.

While I’m sure some reps may be applauding the overtime pay rulings, I see this as an unfortunate situation, fostering a distrustful work environment with a demoralizing outcome for “professional pharmaceutical representatives.”  How disappointing that it has come to this.    mike@pharmareform.com

  • bubba

    IIRC, according to IRS regs for sales people who “work from home” the work day begins at the site of the first sales call, and ends at the site of the last sales call. Travel to the first call, and home from the last call, is considered a commute. It’s personal time and personal miles.

    The rules might depend upon whether or not you work for home for your convenience, or that of your employer. It’s buried in the mileage expense rules.

  • http://www.pharmareform.com Mike Wokasch

    bubba,
    Thanks for the input. It will be interesting to see all the tax and labor relations implications for this change. The lawyers will be busy. mike@pharmareform

  • Pharma was my life

    LOL
    This will ruin the life of most reps with the GPS, except many companies now consider drive time to and from the first call personal time, in reality I suspect most reps will not appreciate the monitoring. It is going to be interesting…..can this actually be done…..”big brother” as Mr Orwell described.

  • Mikey

    I think the main issue the greedy sales reps have not figured out is that the traditional salaries they’re received in the past will be greatly reduced since they don’t consider themselves “sale people”.

    See what happens when the lawyers get involved!

  • aliveone

    Not going to happen, and I hope your article was sincere and not a scare tactic to dissuade other reps from filing cases. Here’s why it is not going to happen. Pharma likes it the way it is. They like the game. Pharma doesn’t pay particularly well versus our counterparts in medical equipment and device which are clearly “sales jobs”. People have multimillion dollar pharma territories and they may not crack six figures on their W2. Have a multimillion dollar device territory and you can earn $300K+ a year. I’ve done both and tell you this from experience. “Pharma Sales” is a big game, so all the HR departments and the lobbying group Pharma will merely rewrite job descriptions and SOP’s for the jobs to fit into the “exempt” classification. That is far easier than implementing all the scenarios you suggested. It would be cheaper for drug companies to just structure our compensation like that off medical device and equipment versus implementing all the changes you suggest.

    If drug companies wanted to avoid all this they would stop with the outdated, micromanagement and over-management philosophy that plagues this industry and has created an entire generation of reps disenfranchised with this industry. It really is a simple fix. Simply train your people well, and then evaluate them on pure performance and not a bunch of meaningless metrics like reach and frequency, and how many fake calls you can put into Seibel or how many dinner programs you’ve done, or if you ask pointless questions on the conference calls just to sound positive, etc. Look at the numbers. If you don’t think someone is worth keeping because their numbers are low than fire them and stop with all the games. It happens all the time in most other sales organizations. By not doing just that, the Pharma industry is admitting that this is not a “sales job” but rather a “marketing job”. Seriously how many outside sales job pay you substantially more in base salary versus commission? Very few if any.

  • pharmvet

    Mike, if drug reps wish to be considered as non-exempt employees, that’s fine, as long as they realize that they will miss out on the biggest perk of all: the company bonus plan. Such plans are generally restricted to exempt employees, and only a subset at that. Any extra they make up in OT will likely pale in comparison to what they could have made in bonus money.

  • http://www.pharmareform.com Mike Wokasch

    aliveone,
    Appreciate your thoughtful commentary. My article was sincere and not written as a scare tactic. The issue will ultimately be decided in the courts and if ,as I state, the courts continue to view the pharmaceutical representatives as “non-exempt”, companies will have only one of two choices… functionally change the job to comply with “exempt” definitions (not sure how this could be done) or abide by the law and implement some of the types of rules suggested. mike@pharmareform.com

  • Roscoe

    Time and a half for those evening speaker programs. Will the rep now have to pay for his own meal and booze? Lunch presentation form 11:30 – 1:30 then have to take a mandatory 1 hr lunch break until 2:30?? It will be interesting to see how this all eventually works out–but I will be retired by then, thank GOD!

  • aliveone

    pharmvet :Mike, if drug reps wish to be considered as non-exempt employees, that’s fine, as long as they realize that they will miss out on the biggest perk of all: the company bonus plan. Such plans are generally restricted to exempt employees, and only a subset at that. Any extra they make up in OT will likely pale in comparison to what they could have made in bonus money.

    Not sure I agree. If the target compensation for a position is, for the sake of easy math, $100K a year, it doesn’t really matter how you get to the $100K. Whether it is all base salary or all commission or an hourly rate that gets you there, all that matters is what you W2 at the end of the year. If the labor board forces drug makers to classify all “drug reps” as non-exempt and pay them hourly, than the drug companies will set the hourly rate to reach the average worth of the job = $100K, versus our current system of $70K base plus $30K bonus at plan to get you to the $100K. What’s the difference whether it is base or bonus or hourly? It’s what the job is worth on the open market that matters. If some pharma companies decide to lower the total compensation you can bet that other pharma companies will slightly raise their total compensation and they will attract the top talent. If that doesn’t happen and the total compensation drops across all companies than the talented people will leave the industry and the not so talented people will be stuck making less money. Pharmaceuticals is the third to fifth most profitable industry so there is no shortage of money to pay people so the likelihood of drug companies ‘messing up a good thing’ is low. My take is the drug companies will shift the job descriptions enough to make the job sound more like an MSL job with bonus paid not on sales, but rather on metrics like how many KOL’s did you see this quarter, how many ad boards did you conduct, how many study site visits did you hit, etc. Like I said in my other post, pharma is already managing mainly by metrics and not sales numbers so this shift would be natural. In my 20 years I have never been at a company where someone gets fired for a bad year or two of numbers. However, I have seen numerous people put on PIP’s and other improvement plans even when they are in the top 5% just because they only are putting 5 calls versus the mandatory 8 calls in the computer, or they are no doing enough dinner programs, or they haven’t drunk enough of the DM’s Kool-Aid.

    Also a company can bonus anyone they please for instance my company always bonuses out our admin’s bi-annually and our executive admins can W2 over $100K a year and they are all non-exempt.

  • galdtobeout

    To All,
    Having been in the pharma industry for over 25 yrs, I can say that it Was a trusted, respected and very satisfying industry. Over the years, it has changed many fold. Management pushes for greater sales, the “patient” and the doctor be damned- pharma is going to make more $ some how. The “reps” are going to find a way to screw up a fantastic career with “entitlements”.
    We were respected (thankfully in the past tense) by docs for our knowledge and help, not a “script regurgitator” that cannot (not allowed if you even knew the answer) even answer a simple question regarding the disease state and your drug. The only reason you are there now is to “get a signature”, ever heard that from a doctor? Do you really deliver any value to occupy the doctor’s time now?
    Unfortunately, the demand for increased profits and a bunch of so-called sales people who want overtime rather than working for your business as it requires is reducing this industry to Crap. Enjoy the mire You have to work in now. Punch a time clock, have a reduced territory size and salary, elimintate bonuses since you do not sell, and do not work over 8 hrs a day. McDonald’s isn’t much different now, UPS is would be utopia for you if this is the way things go.

  • Mildred Marter

    We are already demoralized. So what will be new?With every layoff, they have just piled the work load on us more and more to make up for those laid off. They have NOT adjusted the quotas, increased our territory sizes, and piled the work on. I welcome these changes. My only question is all the modules we get assigned for either learning or legal crap. Are they going to give us time during the work day to complete these? I work full days and come home and usually work 2 more hours to keep up with all the busy work garbage. They either have to assign us less or give us admin days every week which I don’t see them doing that. My company tries to squeeze every drop out of me.

  • Mildred Marter

    Pharma was my life :
    LOL
    This will ruin the life of most reps with the GPS, except many companies now consider drive time to and from the first call personal time, in reality I suspect most reps will not appreciate the monitoring. It is going to be interesting…..can this actually be done…..”big brother” as Mr Orwell described.

    Where have you been? There is already GPS in most cars and have been for the last 5 years at least. Mine is under my driver’s seat. It’s the size of a pack of smokes.

  • Mildred Marter

    galdtobeout :
    To All,
    Having been in the pharma industry for over 25 yrs, I can say that it Was a trusted, respected and very satisfying industry. Over the years, it has changed many fold. Management pushes for greater sales, the “patient” and the doctor be damned- pharma is going to make more $ some how. The “reps” are going to find a way to screw up a fantastic career with “entitlements”.
    We were respected (thankfully in the past tense) by docs for our knowledge and help, not a “script regurgitator” that cannot (not allowed if you even knew the answer) even answer a simple question regarding the disease state and your drug. The only reason you are there now is to “get a signature”, ever heard that from a doctor? Do you really deliver any value to occupy the doctor’s time now?
    Unfortunately, the demand for increased profits and a bunch of so-called sales people who want overtime rather than working for your business as it requires is reducing this industry to Crap. Enjoy the mire You have to work in now. Punch a time clock, have a reduced territory size and salary, elimintate bonuses since you do not sell, and do not work over 8 hrs a day. McDonald’s isn’t much different now, UPS is would be utopia for you if this is the way things go.

    The companies/lawyers ruined the industry. Not the reps. My former company put out the brass ring. They got it. I would bust my ass for 12 plus hours a day and produced results. I was happy to do this because I got out of it what I put into it. That doesn’t exist anymore.

  • YeahRight

    Mildred Marter :

    Pharma was my life :LOLThis will ruin the life of most reps with the GPS, except many companies now consider drive time to and from the first call personal time, in reality I suspect most reps will not appreciate the monitoring. It is going to be interesting…..can this actually be done…..”big brother” as Mr Orwell described.

    Where have you been? There is already GPS in most cars and have been for the last 5 years at least. Mine is under my driver’s seat. It’s the size of a pack of smokes.

    No, there is not Company GPS tracking in most cars as you are implying. Many cars have the ability to track where you are all day long, but few if any pharma companies GPS-track their reps. But just keep wearing your foil hat, OK?

  • Regretto infom

    pharmvet :Mike, if drug reps wish to be considered as non-exempt employees, that’s fine, as long as they realize that they will miss out on the biggest perk of all: the company bonus plan. Such plans are generally restricted to exempt employees, and only a subset at that. Any extra they make up in OT will likely pale in comparison to what they could have made in bonus money.

    I don’t agree, I have several colleagues in other businesses who get overtime and bonuses.

  • me

    @Pharma was my life
    Many reps do not understand this, but previous posters are absolutely correct, your drive to your first call is called a commute, and does NOT start the clock. You are supposed to be MAKING CALLS between 9 and 5. If a rep is doing their job, as outlined when they were hired, “big brother” should not be a problem. Maybe the days of big money for little pay are coming to an end.

  • me

    @Pharma was my life
    Many reps do not understand this, but previous posters are absolutely correct, your drive to your first call is called a commute, and does NOT start the clock. You are supposed to be MAKING CALLS between 9 and 5. If a rep is doing their job, as outlined when they were hired, “big brother” should not be a problem. Maybe the days of big money for little pay are coming to an end.

    @aliveone
    You cant compare pharma”Sales” to medical device sales because pharma “sales” really is not SALES. Its more like lobbying or promotion. Reps are like walking live commercials or advertisements. A pharma rep in a 3 million$ territory is not GENERATING 3 million$, since much of the business would exist whether the rep was there or not, especially on mature products. A medical device rep generates every dollar that is in the territory. The definition of sales is that a product or service is provided in exchange for money. In medical devices/equipment the sales rep delivers their product to the doctor, and the doctor ultimately writes a check, this is sales. In pharma sales, the sales representative encourages the doctor to prescribe their product to the patient, who in turn purchases the product from the drug store. No where in this scenario does the pharma rep provide a good or service, and no where does the “customer” pay for anything. This is simply lobbying, and is a real waste in the healthcare system.

  • pharmvet

    Call me old fashioned. I have a PhD in pharmacology and have been doing clinical resdearch in pharma for almosgt 30 years. When I started in 1983, we were required to fill out weekly time sheets, since our time was expensed back to the project cost. Management could then figure out if their money was being well spent. There was no big brotherism, just do the darn sheets so that the accountants could play with the numbers. On occasion we might round up a number or two to make the total come out correctly, but that was the extent of fudging.

    I worked in Phase 4 with marketing and sales reps who had to do the same thing. No one would ever have dreamed of falsifying calls or trying to enter such data since the data itself served a purpose. In contrast, many drug reps overtly brag about how many calls they fake/day and how they think they’re pulling a fast one on management. Thus with the GPS thing, they have created their own mess, dishonoring the industry in the process, and now let them lie in the bed they have created.

  • me

    @pharmvet
    From a former rep, you are spot on. Reps only brag about lax work ethic, then get angry when management “plays big brother”. The fact is offical HR policy in virtually all companies is “first doc at 8:30 and last doc at 5pm. Then reps routinely brag on cafe pharma etc, how most work Tues to thurs from 10-2. The bottomline is that if they thought that they werent doing anything wrong, they would not lie in their computers.

  • Been here before

    In a different industry, we were found to be non-exempt employees. Contrary to Bubba’s comment, the sales day may begin when you start calls, but if you are required to answer emails, do administrative (expense reports, special projects, etc.) they are required to calculate this into your “work time”… It was all documented in my previous position, and compensated. Hence going home after a day in the field, and needing to generate a report that takes a couple of hours will need to be accounted for… So this much-needed admin day that reps have been screaming for WILL be a reality…

  • Mildred Marter

    YeahRight :

    Mildred Marter :

    Pharma was my life :LOLThis will ruin the life of most reps with the GPS, except many companies now consider drive time to and from the first call personal time, in reality I suspect most reps will not appreciate the monitoring. It is going to be interesting…..can this actually be done…..”big brother” as Mr Orwell described.

    Where have you been? There is already GPS in most cars and have been for the last 5 years at least. Mine is under my driver’s seat. It’s the size of a pack of smokes.

    No, there is not Company GPS tracking in most cars as you are implying. Many cars have the ability to track where you are all day long, but few if any pharma companies GPS-track their reps. But just keep wearing your foil hat, OK?

    I have a teenage son and we installed GPS in his car. When I was there I asked the guy to look at what was under my seat. He confirmed it was GPS and I work for one of the big pharma companies. Go to the PHH website. You can click on an area that is advertising to employers. It says, “Get the most productivity out of your employees.” It talks all about GPS. Well guess what? My company uses PHH.

  • Kerry

    The presumption in here is that pharma jobs will still be considered to be as worthy financially as they are now. Why does everyone assume that this is a job that will always be a $70K – $100K salary? I can see pharma also cutting salaries accordingly. And if you don’t think what they are paying is enough, then you won’t take the job. But there are certainly enough people out there, young and old, beginner or veteran, that will take a $50K/yr job, especially in today’s economy, and given the number of sales rep jobs that have disappeared permanently.

  • Game is over

    The salient phrase in the orginal post is this: “not sales people or professionals exercising discretion or independent judgment”.

    When pharma reps became “sample droppers” and learned to read off a script they ceased exercising professional judgment. The legal departments, scared of lawsuits for off-label use, have limited the exercise of professional discretion. When your discretion is reduced to deciding which catering service to use for a physician office lunch, the game has fundamentally changed forever. Sad but true.

  • Yeoh

    This kind of regulations will greatly reduce the morale & productivity of Pharma Companies – trust & empowerment are two of the great factors in motivating an employee to churn out productivity & creativity in line with the Pharma code of ethics. A certain amount of freedom which is not abused, can boost up the morale & figthing spirit of field sales force rather than close scrutinity.

  • http://www.pharmareform.com Mike Wokasch

    Yeoh,
    Thank you for your comment. This is not about how to manage and motivate employees but rather the realities of the magnitude of change to expect if pharmaceutical sales representatives are classified as “non-exempt hourly ” employees. Trust and empowerment are important in an employer-employee relationship but from what I have read there is little flexibility in the law when it comes to making sure hourly employees accurately record their time on the job and are paid accordingly. mike@pharmareform.com

  • Vipin Garg

    In India pharma Rep are in the worst condition. No 8 hour working, no over time even MER, LTA is included in the package. Overburdened by paper work which is of no use and the job has lost the attraction. Lowest salaries amongst any industry. How to over come?

  • http://www.pharmareform.com Mike Wokasch

    Vipin,
    I’m not sure how you overcome your work situation, especially if it is the industry norm. If it is not the industry norm, you can always look to work for a company that will provide a better work situation for you. mike@pharmareform.com