1
(Slip Opinion) OCTOBER TERM, 2011
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reade r.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
CHRISTOPHER ET AL. v. SMITHKLINE BEECHAM
CORP., DBA GLAXOSMITHKLINE
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE NINTH CIRCUIT
No. 11–204. Argued Apr il 16, 2012—Decided June 18, 2012
The Fair Labor Standards Act (FLSA) requires employers to pay em-
ployees overtime wages, see 29 U. S. C. §207(a), but this requirement
does not apply with respect to workers employed “in the capacity of
outside salesman,” §213(a)(1). Congress did not elaborate on the
meaning of “outside salesman,” but it delegated authority to the De-
partment of Labor (DOL) to issue regulations to define the term.
Three of the DOL’s regulations are relevant to this case. First, 29
CFR §541.500 defines “outside salesman” to mean “any employee . . .
[w]hose primary duty is . . . making sales within the meaning of [29
U. S. C. §203(k)].” §§541.500(a)(1)(2). Section 203(k), in turn, states
that “ ‘[s]ale’ or ‘sell’ includes any sale, exchange, contract to sell,
consignment for sale, shipment for sale, or other disposition.” Se-
cond, §541.501 clarifies that “[s]ales within the meaning of [§203(k)]
include the transfer of title to tangible property.” §541.501(b). Third,
§541.503 provides that promotion work that is “performed incidental
to and in conjunction with an employee’s own outside sales or solici-
tations is exempt work,” whereas promotion work that is “incidental
to sales made, or to be made, by someone else is not.” §541.503(a).
The DOL provided additional guidance in connection with its prom-
ulgation of these regulations, stressing that an employee is an “out-
side salesman” when the employee “in some sense, has made sales.”
69 Fed. Reg. 22162.
The prescription drug industry is subject to extensive federal regu-
lation, including the requirement that prescription drugs be dis-
pensed only upon a physician’s prescription. In light of this require-
ment, pharmaceutical companies have long focused their direct
marketing efforts on physicians. Pharmaceutical companies promote
2 CHRISTOPHER v. SMITHKLINE BEECHAM CORP.
Syllabus
their products to physicians through a process called “detailing,”
whereby employees known as “detailers” or “pharmaceutical sales
representatives” try to persuade physicians to write prescriptions for
the products in appropriate cases.
Petitioners were employed by respondent as pharmaceutical sales
representatives for roughly four years, and during that time their
primary objective was to obtain a nonbinding commitment from phy-
sicians to prescribe respondent’s products in appropriate cases. Each
week, petitioners spent about 40 hours in the field calling on physi-
cians during normal business hours and an additional 10 to 20 hours
attending events and performing other miscellaneous tasks. Peti-
tioners were not required to punch a clock or report their hours, and
they were subject to only minimal supervision. Petitioners were well
compensated for their efforts, and their gross pay included both a
base salary and incentive pay. The amount of incentive pay was de-
termined based on the performance of petitioners’ assigned portfolio
of drugs in their assigned sales territories. It is undisputed that peti-
tioners were not paid time-and-a-half wages when they worked more
than 40 hours per week.
Petitioners filed suit, alleging that respondent violated the FLSA
by failing to compensate them for overtime. Respondent moved for
summary judgment, arguing that petitioners were “employed in the
capacity of outside salesman,” §213(a)(1), and therefore were exempt
from the FLSA’s overtime compensation requirement. The District
Court agreed and granted summary judgment to respondent. Peti-
tioners filed a motion to alter or amend the judgment, contending
that the District Court had erred in failing to accord controlling def-
erence to the DOL’s interpretation of the pertinent regulations, which
the DOL had announced in an amicus brief filed in a similar action.
The District Court rejected this argument and denied the motion.
The Ninth Circuit, agreeing that the DOL’s interpretation was not
entitled to controlling deference, affirmed.
Held: Petitioners qualify as outside salesmen under the most reasona-
ble interpretation of the DOL’s regulations. Pp. 8–25.
(a) The DOL filed amicus briefs in the Second Circuit and the
Ninth Circuit in which it took the view that “a ‘sale’ for the purposes
of the outside sales exemption requires a consummated transaction
directly involving the employee for whom the exemption is sought.”
Brief for Secretary of Labor as Amicus Curiae in In re Novartis Wage
and Hour Litigation, No. 09–0437 (CA2), p. 11. The DOL changed
course after the Court granted certiorari in this case, however, and
now maintains that “[a]n employee does not make a ‘sale’ . . . unless
he actually transfers title to the property at issue.” Brief for United
States as Amicus Curiae 1213. The DOL’s current interpretation of
3 Cite as: 567 U. S. ____ (2012)
Syllabus
its regulations is not entitled to deference under Auer v. Robbins, 519
U. S. 452. Although Auer ordinarily calls for deference to an agency’s
interpretation of its own ambiguous regulation, even when that in-
terpretation is advanced in a legal brief, see, id., at 461462, this
general rule does not apply in all cases. Deference is inappropriate,
for example, when the agency’s interpretation is “ ‘plainly erroneous
or inconsistent with the regulation,’ ” id., at 461, or when there is
reason to suspect that the interpretation “does not reflect the agen-
cy’s fair and considered judgment on the matter,” id., at 462. There
are strong reasons for withholding Auer deference in this case. Peti-
tioners invoke the DOL’s interpretation to impose potentially mas-
sive liability on respondent for conduct that occurred well before the
interpretation was announced. To defer to the DOL’s interpretation
would result in precisely the kind of “unfair surprise” against which
this Court has long warned. See, e.g., Long Island Care at Home,
Ltd. v. Coke, 551 U. S. 158, 170171. Until 2009, the pharmaceutical
industry had little reason to suspect that its longstanding practice of
treating detailers as exempt outside salesmen transgressed the
FLSA. The statute and regulations do not provide clear notice. Even
more important, despite the industry’s decades-long practice, the
DOL never initiated any enforcement actions with respect to detail-
ers or otherwise suggested that it thought the industry was acting
unlawfully. The only plausible explanation for the DOL’s inaction is
acquiescence. Whatever the general merits of Auer deference, it is
unwarranted here. The DOL’s interpretation should instead be given
a measure of deference proportional to its power to persuade. See
United States v. Mead Corp., 533 U. S. 218, 228. Pp. 8–14.
(b) The DOL’s current interpretation—that a sale demands a trans-
fer of title—is quite unpersuasive. It plainly lacks the hallmarks of
thorough consideration. Because the DOL first announced its view
that pharmaceutical sales representatives are not outside salesmen
in a series of amicus briefs, there was no opportunity for public com-
ment, and the interpretation that initially emerged from the DOL’s
internal decisionmaking process proved to be untenable. The inter-
pretation is also flatly inconsistent with the FLSA. The statute de-
fines “sale” to mean, inter alia, a “consignment for sale,” and a “con-
signment for sale” does not involve the transfer of title. The DOL
relies heavily on 29 CFR §541.501, which provides that “[s]ales . . .
include the transfer of title to tangible property,” §541.501(b), but it
is apparent that this regulation does not mean that a sale must in-
clude a transfer of title, only that transactions involving a transfer of
title are included within the term “sale.” The DOL’s “explanation
that obtaining a non-binding commitment to prescribe a drug consti-
tutes promotion, and not sales,” Reply Brief for Petitioners 17, is also
