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7th Circuit rules Lilly sales reps not entitled to overtime

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Pharmaceutical sales representatives from Eli Lilly & Co. and Abbott Laboratories were properly classified by their employers under the administrative exemption to the overtime requirements of the Fair Labor Standards Act, the 7th Circuit Court of Appeals ruled. The lawsuit brought by employees of both companies raised an issue of first impression for the Circuit court.

The 7th Circuit combined the Indiana case, Susan Schaefer-LaRose v. Eli Lilly & Co., No. 10-3855, with two from Illinois involving Abbott Laboratories Inc., in which current and former sales employees sued, claiming that they were misclassified as exempt employees and denied overtime pay in violation of the FLSA. Lilly and Abbott argued that the administrative exemption and the outside sales exemption, 29 U.S.C. Section 213(a)(1), remove the sales reps from the overtime protections of the FLSA.

U.S. Judge Sarah Evans Barker in the Southern District of Indiana ruled in favor of Lilly; the Illinois cases favored the plaintiffs. The Department of Labor filed an amicus curiae brief in the Indiana case, requesting the court find the plaintiffs are not administrative employees nor outside sales persons under the statute and the DOL’s regulations.

The 7th Circuit focused on just the administrative exemption, noting that the outside sales person exemption issue is before the U.S. Supreme Court from the 9th Circuit Court of Appeals. The plaintiffs believe that they don’t fall within the exemptions because they don’t actually sell the drugs to the physicians, but merely engage in promotional work that results in sales by third parties.

The judges relied on their caselaw, including Haywood v. North American Vans Lines Inc., 121 F.3d 1066 (7th Cir. 1997), and a decision from the 1st Circuit Court of Appeals to find the work done by pharmaceutical sales reps is characterized properly as administrative.

“ … the sales representatives’ primary duty is the performance of work directly related to the general business operations of the employers, which satisfies the second prong of the administrative exemption,” wrote Judge Kenneth Ripple.

The issue of whether pharmaceutical sales employees’ primary duty includes “the exercise of discretion and independent judgment with respect to matters of significance” is one of first impression for the 7th Circuit. But other Circuits have considered this issue with regard to pharmaceutical sales reps, and the judges focused on the 2nd Circuit’s decision in In re Novartis Wage & Hour Litigation, 611 F.3d 141 (2nd. Cir. 2010), and the 3rd Circuit’s Smith v. Johnson & Johnson, 593 F.3d 280 (3d Cir. 2010), which are conflicting decisions.

The 7th Circuit concluded that the sales reps were required to exercise a significant measure of discretion and independent judgment, despite the constraints instituted by the regulatory environment of the pharmaceutical industry. Although they must deliver specific messages to the doctors, the sales reps must tailor their messages to respond to the circumstances, noted Ripple.

“The particular discretion exercised by the representatives before us is within the range of cases in which the exemption has been applied,” he wrote.

The 7th Circuit affirmed the decision by Barker in the Lilly case and ordered the Illinois court to enter judgment in favor of Abbott.


 

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  1. Indianapolis employers harassment among minorities AFRICAN Americans needs to be discussed the metro Indianapolis area is horrible when it comes to harassing African American employees especially in the local healthcare facilities. Racially profiling in the workplace is an major issue. Please make it better because I'm many civil rights leaders would come here and justify that Indiana is a state the WORKS only applies to Caucasian Americans especially in Hamilton county. Indiana targets African Americans in the workplace so when governor pence is trying to convince people to vote for him this would be awesome publicity for the Presidency Elections.

  2. Wishing Mary Willis only God's best, and superhuman strength, as she attempts to right a ship that too often strays far off course. May she never suffer this personal affect, as some do who attempt to change a broken system: https://www.youtube.com/watch?v=QojajMsd2nE

  3. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  4. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  5. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

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