Cases & Deals

Abbott wins significant victory in Seventh Circuit over whether its pharmaceutical sales representatives are exempt from FLSA's overtime requirements

Clients Abbott Laboratories

On May 8, 2012, the United States Court of Appeals for the Seventh Circuit decided a significant case under the Fair Labor Standards Act, ruling in favor of Jones Day client Abbott Laboratories, Inc., in a collective action lawsuit brought against it by current and former pharmaceutical sales representatives. The Court held that the pharmaceutical sales representatives before it fell within the administrative exemption to the FLSA's overtime requirements as a matter of law, reversing the contrary holding of the district court and a $3.5 million judgment against Abbott Laboratories. Jones Day briefed and argued the case on the merits in the Seventh Circuit on behalf of Abbott Laboratories.

The plaintiffs had argued that they did not fall within the administrative exemption because, among other things, they did not exercise the necessary discretion. The district court agreed, and granted summary judgment to the plaintiffs on the issue of whether they fell within the exemption. Reversing, the Seventh Circuit concluded that "the representatives . . . are sent into physicians’ offices with minimal supervision to engage in conversation with the prescribing physicians who, as a practical matter, are in the most direct position to determine whether their companies’ products have a viable market." The court also found that the pharmaceutical sales representatives' discretion fell "within the range of cases in which the exemption has been applied." Accordingly, the Seventh Circuit directed the district court to enter judgment in Abbott Laboratories' favor.

Jirak, et al. v. Abbott Laboratories, Case Nos. 11-1980, 11-2131 (7th Cir.)

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