Of all the complicated and controversial issues involving the pharmaceutical industry, here’s one that, at first blush, may seem pedestrian – should sales reps be paid overtime if they work extra hours persuading doctors to write certain prescriptions?

Disputes about overtime pay don’t normally make headline news or captivate an entire industry. And on the surface, there’s no reason to think such a battle between several big drug makers and their sales reps would be any different.

Yet the struggle that pits some very big names – including Novartis, Merck, Pfizer and Lilly – against thousands of their employees might very well garner some significant buzz for one simple reason: untold millions of dollars in back pay.

“There is a lot at stake here for a lot of people,” said David Sanford, an attorney who represents about 2,500 sales reps taking part in a class-action lawsuit involving some 6,000 pharmaceutical reps nationwide. “Our litigation will determine the way the pharmaceutical industry has to pay its people.”

At its heart, the litigation centers on answering this basic but thorny legal question: are sales reps really outside salespeople? Do they knock on doors peddling product like the legendary Bible and encyclopedia salesmen of yore? Or are sales reps actually something else – merely marketers who convey an important message to necessary intermediaries, but not to the real customers?

If sales reps are, indeed, outside salespeople, they would be exempt from overtime requirements of the Fair Labor Standards Act, which governs compensation for certain types of employees. The law defines outside salespeople as exempt from being paid overtime. And historically, many reps say they do, indeed, log long hours, sometimes as many as 70 hours a week.

Sales reps, however, maintain they don’t actually sell anything. Instead, they insist that all they really do is influence doctors to prescribe certain medications and therefore shouldn’t be exempt from overtime requirements. As a result, they’re seeking oodles of back pay.

Beth Amendola of Coconut Creek, FL, was at Bristol-Myers Squibb from 1998 until 2006, and won top regional sales awards five of the eight years she worked there. “We would be in the field from 8 a.m. until 5 p.m., and then have three to four hours of paperwork to complete at night. I was always at their beck and call,” she told me when she filed her lawsuit in 2007. “I felt like the Sorcerer’s Apprentice where all the pails and buckets kept coming, no matter how much work I did. Overtime was mandatory; overtime pay was not an option.”

Drug makers, of course, want their reps working long hours, but not surprisingly, they argue that their reps are very much outside salespeople. And by the way, the drug makers involved in litigation include just about every big name you can think of; besides those cited above, there’s also Abbott Laboratories, AstraZeneca, Johnson & Johnson, Amgen, Roche, GlaxoSmithKline, Bayer, Boehringer-Ingelheim, Schering-Plough and Sanofi-Aventis.

The problem is that there have been very contradictory federal court rulings so far. Some rulings sided with sales reps. Others sided with drug makers. For instance, a California federal judge two years ago refused to buy the argument that sales reps don’t do any selling to doctors when he agreed with Wyeth in one lawsuit.

“Nothing in the language of the outside salesperson exemption requires an exempted employee to engage in direct as opposed to indirect sales,” wrote U.S. District Court Judge Stephen Wilson in his November 2007 decision. “Though it is true physicians never actually buy Wyeth’s prescription products, it is clearly they who control the product’s ultimate purchase.”

The sales reps’ “contrary analysis would produce the absurd conclusion that Wyeth does not engage in any sales activity regarding the prescription products, merely because its efforts are rationally aimed at those determining the product’s purchase rather than the directed buyers of the product,” he concluded.

In other words, Judge Wilson agreed with Wyeth that the doctor is very much an intended sales target, much more so than the patient who receives a prescription after seeing a doctor. As he viewed it, the patient never sees a sales rep; well, they can be seen in those busy waiting rooms, but the sales rep and patient have no interaction. Reps and patients don’t conduct business. Instead, patients are exposed to pharmaceutical commercials and other marketing pitches on television, the Internet and in print publications.

“The line between exempt and non-exempt is blurry and the courts have been divided for years on whether a given job classification is one side of the line or another,” Richard Bales, an employment law professor and director of the Center for Excellence in Advocacy at Northern Kentucky University’s Chase College of Law, wrote me earlier this year. “If you’re on the wrong side of the line, though, you’re going to get socked. These are big dollar cases. If you owe 100,000 reps for two or three years’ of overtime, plus punitive damages, you’re talking about lots of money.

“Some companies play it safe. If it’s questionable what side of the line somebody falls on, you pay them overtime. Or you structure the job to make the person look a lot more like someone who is exempt,” he continued. “Most courts will look at what people actually do rather than the title you slap on them. But I don’t see a resolution (in this dispute) in the future.”

Yet a resolution may actually be getting closer. In October, the U.S. Department of Labor surprised just about everybody involved in the long-running and sprawling litigation and decided to side with the sales reps. In a brief filed with the U.S. Court of Appeals for the Second Circuit, the department wrote that a federal district court “committed legal error” by deciding sales reps are outside salespeople and, therefore, exempt from overtime requirements of the Fair Labor Standards Act.

“Because the reps do not sell any drugs or obtain any orders for drugs, and can at most obtain from the physicians a non-binding commitment to prescribe [Novartis’] drugs to their patients when appropriate, the reps do not meet the regulation’s plain and unmistakable requirement that their primary duty must be ‘making sales,'” the department stated in its brief.

What’s more, the Labor Department also rejected a lower court finding that sales reps are exempt from overtime as administrative employees, which is a separate designation. To qualify for this exemption, employees must exercise discretion and independent judgment “with respect to matters of significance.” The administration exemption is designed for relatively high-level employees whose main job is to keep a business running. The department said sales reps don’t have that kind of independence at all, since they must visit lists of physicians and generally deliver scripted messages.

In simple terms, the Labor Department brief is a big deal. That’s because the appeals court must give deference to the department’s regulations and briefs that are submitted on issues involving the “construction” and application of department regulations. And so it’s easy to understand why Mr. Sanford and other attorneys who represent the sales reps are thrilled.

“The Second Circuit isn’t bound by what the Department of Labor does, but (the court) gives it controlling deference,” he says. “And that’s key language – deferring to the department. And the department’s interpretation is that outside sales exemptions don’t apply to the sales reps – the drugmaker can’t say sales reps sell. The department clearly disagrees with the pharmaceutical industry. It’s pretty clear, to me, that the decisions by various judges around the country need to be overturned.”

Does this mean the reps will finally win? There’s no guarantee. But Mr. Bales said the department brief is “very helpful to the case filed by the sales reps. It’s relatively unusual for the Department of Labor or other administrative agencies to file amicus briefs (friend of the court) with courts of appeal. Amicus briefs are much more common at the Supreme Court level, so this may get the Second Circuit’s attention.”

Of course, further appeals are almost certain. But by filing its brief, the Department of Labor is putting the pharmaceutical industry on notice that its employment practices are being watched. Perhaps this explains why some drug makers no longer use the sales rep designation.

Ed Silverman is a prize-winning journalist who has covered the pharmaceutical industry for The Star-Ledger of New Jersey, one of the nation’s largest daily newspapers, for more than 12 years. During that time, he has closely followed a variety of topics of concern to those who work for, and with, pharmaceutical manufacturers – drug development, mergers and acquisitions, regulatory oversight, safety and pricing controversies, and marketing issues. Prior to joining The Star-Ledger, Ed spent six years at New York Newsday and previously worked at Investor’s Business Daily. Ed blogs about the drug industry at Pharmalot.