Pharmaceutical companies did not violate federal wage and hour law by classifying their sales representatives as administrative employees ineligible for overtime, the 7th Circuit has ruled.
The decision addresses two class actions, one brought by sales representatives employed by Eli Lilly, and the other by sales representatives employed by Abbott Laboratories. In each case, the plaintiffs alleged they were entitled to overtime under the Fair Labor Standards Act.
Both Eli Lilly and Abbott contended that the plaintiffs fell within the FLSA’s overtime exemption for administrative employees. The district court in the Eli Lilly case determined that the administrative exemption applied, but the district court in the Abbott case decided that the exemption did not apply and that the plaintiffs were entitled to overtime.
Here, the 7th Circuit decided that both employers properly classified their sale representatives as administrative employees exempt from the FLSA’s overtime requirements.
“The representatives neither produce the employers’ products nor generate specific sales, but service the production and sales aspects of the business by communicating the employers’ message to physicians. The goal of their work is to increase market share indirectly or, stated differently, to promote sales. …
“To the maximum extent possible, their work is based on maintaining continuous and regular contact with the physicians to whom they are assigned, anticipating their objections and concerns and addressing them on behalf of their employers. We therefore conclude that 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,” the court said.
It noted a similar decision from the 3rd Circuit, as well as a contrary decision from the 2nd Circuit.
U.S. Court of Appeals, 7th Circuit. Schaefer-LaRose v. Eli-Lilly & Co., No. 10-3855.