While the pharmaceutical industry is focused on the Supreme Court’s upcoming decision in Christopher, as to whether the work performed by pharmaceutical sales representatives (PSRs) for GlaxoSmithKline qualified for the outside sales exemption, another circuit court has weighed in on the duties of PSRs and their FLSA status in the context of the administrative exemption. The Seventh Circuit has joined the Third Circuit in finding that the PSRs’ work is administrative because it both qualifies as office or non-manual work related to the business operations of the pharmaceutical company, and requires the customary and regular exercise of discretion and independent judgment. Schaefer-Larose v. Eli Lilly & Co., 2012 U.S. App. LEXIS 9300 (7th Cir. 2012).
In the Seventh Circuit’s view, the work of Eli Lilly’s PSRs is related to the company’s general business operations because they are “the principal ongoing representatives of the company to the professional community that is in a unique position to make, or deny, a viable market for the company’s product. They do not make individual sales of medications, but ensure, on a continuing basis, that the medical community is fully aware of the potential of the company’s pharmaceutical products and that the same community is confident that the company’s products will be effective tools in the practical setting of a medical practice.” Because the company required the PSRs to possess a “solid understanding of the message that they were delivering if they were to fulfill their roles as the company’s representative to the community of practicing physicians,” their work clearly entailed discretion and independent judgment.
This favorable ruling, and the continually expanding body of legal decisions analyzing the exempt status of PSRs provides an interesting case study for both pharmaceutical industry employers as well as employers in other industries analyzing the exempt status of their sales force. Courts however continue to struggle with whether certain categories of sales and marketing work is “sales” work for purposes of the production/administration dichotomy and, if so, whether it can be administrative under DOL regulations. The Seventh Circuit has answered this question in the affirmative Id. at fn. 23.