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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. On a related note, I offered the ICLU my cases against the BLE repeatedly, and sought their amici aid repeatedly as well. Crickets. Usually not even a response. I am guessing they do not do allegations of anti-Christian bias? No matter how glaring? I have posted on other links the amicus brief that did get filed (search this ezine, e.g., Kansas attorney), read the Thomas More Society brief to note what the ACLU ran from like vampires from garlic. An Examiner pledged to advance diversity and inclusion came right out on the record and demanded that I choose Man's law or God's law. I wonder, had I been asked to swear off Allah ... what result then, ICLU? Had I been found of bad character and fitness for advocating sexual deviance, what result then ICLU? Had I been lifetime banned for posting left of center statements denigrating the US Constitution, what result ICLU? Hey, we all know don't we? Rather Biased.

  2. It was mentioned in the article that there have been numerous CLE events to train attorneys on e-filing. I would like someone to provide a list of those events, because I have not seen any such events in east central Indiana, and since Hamilton County is one of the counties where e-filing is mandatory, one would expect some instruction in this area. Come on, people, give some instruction, not just applause!

  3. This law is troubling in two respects: First, why wasn't the law reviewed "with the intention of getting all the facts surrounding the legislation and its actual impact on the marketplace" BEFORE it was passed and signed? Seems a bit backwards to me (even acknowledging that this is the Indiana state legislature we're talking about. Second, what is it with the laws in this state that seem to create artificial monopolies in various industries? Besides this one, the other law that comes to mind is the legislation that governed the granting of licenses to firms that wanted to set up craft distilleries. The licensing was limited to only those entities that were already in the craft beer brewing business. Republicans in this state talk a big game when it comes to being "business friendly". They're friendly alright . . . to certain businesses.

  4. Gretchen, Asia, Roberto, Tonia, Shannon, Cheri, Nicholas, Sondra, Carey, Laura ... my heart breaks for you, reaching out in a forum in which you are ignored by a professional suffering through both compassion fatigue and the love of filthy lucre. Most if not all of you seek a warm blooded Hoosier attorney unafraid to take on the government and plead that government officials have acted unconstitutionally to try to save a family and/or rescue children in need and/or press individual rights against the Leviathan state. I know an attorney from Kansas who has taken such cases across the country, arguing before half of the federal courts of appeal and presenting cases to the US S.Ct. numerous times seeking cert. Unfortunately, due to his zeal for the constitutional rights of peasants and willingness to confront powerful government bureaucrats seemingly violating the same ... he was denied character and fitness certification to join the Indiana bar, even after he was cleared to sit for, and passed, both the bar exam and ethics exam. And was even admitted to the Indiana federal bar! NOW KNOW THIS .... you will face headwinds and difficulties in locating a zealously motivated Hoosier attorney to face off against powerful government agents who violate the constitution, for those who do so tend to end up as marginalized as Paul Odgen, who was driven from the profession. So beware, many are mere expensive lapdogs, the kind of breed who will gladly take a large retainer, but then fail to press against the status quo and powers that be when told to heel to. It is a common belief among some in Indiana that those attorneys who truly fight the power and rigorously confront corruption often end up, actually or metaphorically, in real life or at least as to their careers, as dead as the late, great Gary Welch. All of that said, I wish you the very best in finding a Hoosier attorney with a fighting spirit to press your rights as far as you can, for you do have rights against government actors, no matter what said actors may tell you otherwise. Attorneys outside the elitist camp are often better fighters that those owing the powers that be for their salaries, corner offices and end of year bonuses. So do not be afraid to retain a green horn or unconnected lawyer, many of them are fine men and woman who are yet untainted by the "unique" Hoosier system.

  5. I am not the John below. He is a journalist and talk show host who knows me through my years working in Kansas government. I did no ask John to post the note below ...

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