In a consolidated decision in three actions against Bayer Corporation, Wyeth Pharmaceuticals, and Roche Laboratories, the Ninth Circuit Court of Appeals affirmed summary judgment for the pharmaceutical companies, holding that their pharmaceutical sales representatives (PSRs) were properly classified as administratively exempt under California law.

Specifically, the court found that:

  • The employees’ duties involved “the performance of . . . non-manual work directly related to management policies or general business operations” of their employers, in that they were involved in representing their respective employers and “promoting sales of prescription drugs within their assigned territories.”
  • In terms of the so-called “administrative/production worker dichotomy,” the court found that the sales representatives were not involved in developing or manufacturing pharmaceuticals and therefore fell squarely on the administrative side of the dichotomy.
  • The duties they performed, which included improving market share and generating a large amount of business for the company, were of “substantial importance to the management or operations of the business.” The court found it “not determinative” that the PSRs did not participate in the formulation of their employers’ sales and promotional policies at the corporate level.
  • he PSRs “customarily and regularly” exercised “discretion and independent judgment,” in applying their training, customizing their messages based on their knowledge of individual physicians, and distinguishing their products from those of their competitors.
  • The sales representatives performed their functions under only general supervision, controlling how they spent their time, and the work they did required specialized sales training.

As the plaintiffs did not contest the fact that they earned more than twice the California minimum wage, the Ninth Circuit concluded that they satisfied each aspect of the administrative exemption.