Thomas Blanchar v. Standard Insurance Company , 736 F.3d 753 ( 2013 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 12-2745
THOMAS BLANCHAR,
Plaintiff-Appellant,
v.
STANDARD INSURANCE COMPANY,
Defendant-Appellee.
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. 1:11-cv-00047-RLY-DKL — Richard L. Young, Chief Judge.
ARGUED NOVEMBER 5, 2013 — DECIDED NOVEMBER 27, 2013
Before BAUER, WILLIAMS, and SYKES, Circuit Judges.
BAUER, Circuit Judge. Thomas Blanchar (“Blanchar”)
brought suit against Standard Insurance Company (“The
Standard”) to recover overtime pursuant to the Fair Labor
Standards Act (“FLSA”). 29 U.S.C. § 201 et seq. The Standard
moved for summary judgment, arguing that Blanchar qualified
as a bona fide administrative employee, and so was exempt
from the FLSA’s overtime requirement. The district court
2 No. 12-2745
granted summary judgment in The Standard’s favor, and
Blanchar now appeals.
I. BACKGROUND
In 2005, The Standard introduced a new product into the
403(b) and 457 markets.1 Shortly thereafter, Blanchar was hired
as The Standard’s Director of Institutional Sales/Product
Manager for its 403(b) and 457 products. Blanchar’s responsi-
bilities included training staff about 403(b) plans, explaining
their differences from 401(k) plans, doing what was needed
to make The Standard’s products competitive, and suggesting
product enhancements. His main duty was to promote the
sales of special markets retirement plans. In 2007, his title
changed to Special Markets Director for The Standard’s
Retirement Plans business unit. Blanchar identified his major
duties as working with the sales team to develop and imple-
ment successful sales strategies, and partnering with the sales
team to provide guidance to clients about special markets
plans. His supervisor, Robert Baumgarten (“Baumgarten”),
identified one of Blanchar’s key goals as “represent[ing] The
Standard in the marketplace as the product manager and
expert on Special Markets,” and noted that Blanchar was
1
Both products are retirement plans: 403(b) plans are offered by public
schools and certain 501(c)(3) tax-exempt organizations, and 457 plans
are offered by state and local governments and 501(c)(3) tax-exempt
organizations. Under both plans, employees can save for retirement by
contributing to their personal accounts; employers can also contribute
to employees' accounts. 403(b) plan, 457 plan, http://www.irs.gov/
Retirement-Plans/IRC-403%28b%29-Tax-Sheltered-Annuity-Plans;
http://www.irs.gov/Retirement-Plans/IRC-457%28b%29-Deferred-
Compensation-Plans (last visited November 14, 2013).
No. 12-2745 3
considered “the 403(b)/457 answer man” by The Standard’s
partners.
Blanchar’s responsibilities included training salespeople on
the differences between 401(k) and 403(b) plans and traveling
to make presentations with salespeople. He often provided
guidance to sales consultants about how to convince clients to
use The Standard’s 403(b) plan and provided talking points to
The Standard’s sales consultants about why The Standard’s
products were better than those of its competitors. Though he
gave advice to sales representatives, Blanchar was not involved
in direct sales of 403(b) or 457 plans. Blanchar conducted
webinars and spoke at conferences as well, representing The
Standard as its 403(b) expert. When conducting webinars or
presenting at conferences, Blanchar used materials that he had
personally created and which had been approved by The
Standard’s legal and marketing departments, and answered
audience questions based on his knowledge and experience.
Additionally, Blanchar made recommendations to his
supervisor, Baumgarten, about products that would be suitable
for sale in the 403(b) marketplace and recommended certain
business opportunities to The Standard. Although Blanchar
had no final decision-making authority, Baumgarten typically
sought advice from Blanchar on 403(b) and 457 plans and
stated that he “routinely relied on [Blanchar’s] advice and
guidance concerning issues related to The Standard’s special
markets products and when making decisions about potential
403(b) opportunities.” He also stated that The Standard
typically followed Blanchar’s recommendations about whether
to pursue potential business opportunities. Blanchar earned a
base salary of $102,000, and could earn incentive-based
4 No. 12-2745
compensation based on the total number of 403(b) and 457
plans sold by The Standard’s salespeople during the year. He
worked from home and met with Baumgarten only about
once a year.
Blanchar claims that he is entitled to overtime compensa-
tion for the hours he worked in excess of forty hours per week
under the FLSA; The Standard, however, contends that
Blanchar qualifies as a bona fide administrative employee and
so is exempt from the overtime requirements of the FLSA.
While the material facts in this case are not in dispute, the
parties disagree as to how Blanchar’s job duties and responsi-
bilities should be classified.
II. DISCUSSION
We review a district court’s grant of summary judgment
de novo, viewing the facts in the light most favorable to the
nonmoving party. Musch v. Domtar Indus. Inc., 587 F.3d 857, 859
(7th Cir. 2009). The evaluation of a FLSA claim requires a
“thorough, fact-intensive analysis of the employee’s employ-
ment duties and responsibilities.” Schaefer-LaRose v. Eli Lilly &
Co., 679 F.3d 560, 572 (7th Cir. 2012); see also Roe-Midgett v. CC
Servs., Inc., 512 F.3d 865, 870 (7th Cir. 2008). The burden is on
the employer to establish that an employee is covered by a
FLSA exemption. Corning Glass Works v. Brennan, 417 U.S. 188,
196–97 (1974).
Under the FLSA, employees are entitled to overtime pay for
any hours worked over forty hours per week, unless they fall
within a certain exemption set forth by the FLSA. 29 U.S.C.
§§ 207, 213. One such exemption includes employees who are
employed in a “bona fide executive, administrative, or profes-
No. 12-2745 5
sional capacity.” 29 U.S.C. § 213(a)(1). The Secretary of Labor
has issued regulations defining this exemption and delineating
its scope. 29 C.F.R. § 541.200(a) states:
The term “employee employed in a bona fide ad-
ministrative capacity” in section 213(a)(1) of the Act
shall mean any employee: (1) compensated on a
salary or fee basis at a rate of not less than $455 per
week … exclusive of board, lodging, or other facili-
ties; (2) whose primary duty is the performance of
office or nonmanual work directly related to the
management or general business operations of the
employer or the employer’s customers; and (3)
whose primary duty includes the exercise of discre-
tion and independent judgment with respect to
matters of significance.
The parties agree that Blanchar makes more than $455 per
week and so qualifies for the administrative employee exemp-
tion under its first prong. Blanchar, however, denies that his
primary duty is the performance of work directly related to the
management or general business operations of the employer
and that his primary duty includes the exercise of discretion
and independent judgment with respect to matters of signifi-
cance.
A. Work Directly Related to the Management or General
Business Operations of the Employer
To satisfy the “directly related” prong of the test, an
employee “must perform work directly related to assisting
with the running or servicing of the business, as distinguished,
for example, from working on a manufacturing production line
6 No. 12-2745
or selling a product in a retail or service establishment.” 29
C.F.R. § 541.201(a). “[E]mployees acting as advisers or consul-
tants to their employer’s clients or customers (as tax experts
of financial consultants, for example) may be exempt.”
§ 541.201(c). “Employees in the financial services industry
generally meet the duties requirements for the administrative
exemption if their duties include … determining which
financial products best meet the customer’s needs and financial
circumstances; advising the customer regarding the advan-
tages and disadvantages of different financial products; and
marketing, servicing, or promoting the employer’s financial
products. However, an employee whose primary duty is
selling financial products does not qualify for the administra-
tive exemption.” § 541.203(b).
To determine whether Blanchar’s activities satisfy the
“directly related” prong of the administrative exemption, we
look to our recent decision in Schaefer-LaRose v. Eli Lilly & Co.,
679 F.3d 560 (7th Cir. 2012). In Schaefer-LaRose, we were asked
to determine whether pharmaceutical sales representatives
satisfied the administrative employee exemption to the
FLSA’s overtime requirement. Id. at 562. We concluded that
the sales representatives satisfied the “directly related” prong
of the administrative exemption even though they were
involved with sales. Id. at 577. We noted that they did not
actually sell any pharmaceuticals to physicians, but instead
worked “to promote sales.” Id. We reasoned that since pharma-
ceutical sales representatives spend the majority of their time
preparing for and making sales calls with the goal of influenc-
ing physicians’ preferences for their product, their “primary
duty is the performance of work directly related to the general
No. 12-2745 7
business of the employers, which satisfies the second prong of
the administrative exemption.” Id.Our sister circuit’s decision in Reich v. John Alden Life Ins.
Co., 126 F.3d 1 (1st Cir. 1997), provides guidance as well. In
John Alden, the court was asked to determine whether market-
ing representatives were exempt from recovering overtime pay
under the FLSA. Id. at 3. The court noted that the marketing
representatives engaged in no direct sales of products;
instead, they discussed how the company’s products would
meet the needs of prospective customers, recommended
products to customers, educated insurance agents regarding
products, and gave group presentations to prospective
customers. Id. at 3–4. The court concluded that since the
marketing representatives’ duties were “aimed at promoting
… customer sales generally,” their duties were directly related
to the management and general business operations of the
company. Id. at 10.
The duties of the pharmaceutical salespeople in Schaefer-
LaRose and the marketing representatives in John Alden bear a
striking resemblance to those of Blanchar in the instant case.
Blanchar’s primary duty was to work with salespeople to
promote the sales of The Standard’s financial products. He
fielded calls from salespeople, recommended marketing
materials and plans for certain customers, and educated The
Standard’s salespeople on the different types of plans. He did
not directly engage in the sales of any 403(b) or 457 plans; he
merely assisted salespeople with those sales. He frequently
provided talking points and advice to pension salespeople,
spoke at industry conferences and seminars, and educated
firms about 403(b) plans. Since Blanchar was involved in
8 No. 12-2745
advising salespeople and promoting the sales of 403(b) and 457
plans generally, we find that his duties and responsibilities
satisfy the “directly related” prong of the administrative
exemption.
B. Work Involving Discretion and Independent Judg-
ment with Respect to Matters of Significance
Blanchar also contends he does not meet the requirements
for the “discretion and independent judgment” prong of the
administrative exemption. “Factors to consider when deter-
mining whether an employee exercises discretion and inde-
pendent judgment with respect to matters of significance
include, but are not limited to … whether the employee
provides consultation or expert advice to management; [and]
whether the employee is involved in planning long- or short-
term business objectives.” 29 C.F.R. § 541.202(b). The phrase
“work involving discretion and independent judgment”
implies that an employee “has authority to make an independ-
ent choice, free from immediate direction or supervision.”
§ 541.202(c). “The term ‘discretion and independent judgment’
does not require that the decisions made by an employee have
a finality that goes with unlimited authority and a complete
absence of review. … The fact that an employee’s decision may
be subject to review … does not mean that the employee is not
exercising discretion and independent judgment.” Id. Courts
will also consider:
[T]he employee’s freedom from direct supervision,
personnel responsibilities, troubleshooting or
problem-solving activities on behalf of management,
use of personalized communication techniques …
No. 12-2745 9
responsibility for assessing customer needs, primary
contact to public or customers on behalf of the
employer, the duty to anticipate competitive prod-
ucts or services and distinguish them from competi-
tor’s products or services, advertising or promotion
work, and coordination of departments, require-
ments, or other activities for or on behalf of em-
ployer or employer’s clients or customers.
Defining and Delimiting the Exemption for Executive, Admin-
istrative, Professional, Outside Sales, and Computer Employ-
ees, 69 Fed. Reg. 22,144 (Apr. 23, 2004).
In Schaefer-LaRose, we found that the pharmaceutical sales
representatives satisfied the discretion and independent
judgment prong of the administrative exemption. 679 F.3d at
583. We noted that while the sales representatives worked
within the confines of tightly controlled messages, their calls
were not scripted. Id. at 565. The “representatives’ ability to be
responsive to physicians’ needs require[d] significant discre-
tion in the manner and mode of the delivery of that message
and in the details emphasized.” Id. In addition, we relied on
the fact that the sales representatives structured their own
days, worked largely alone, and were not subject to strict
oversight and control in the performance of their duties. Id. at
581–82. We concluded that since their work involved a “great
deal of judgment,” and required far more than “applying well-
established techniques, procedures or specific standards
described in manuals,” 29 C.F.R. § 541.202(e), the sales repre-
sentatives were properly characterized as exempt administra-
tive employees. Id. at 583.
10 No. 12-2745
In John Alden, the court determined that the marketing
representatives exercised discretion and independent judg-
ment when carrying out their duties, satisfying the administra-
tive employee exemption. 126 F.3d at 13. The court highlighted
the fact that the employees did not use prepared scripts or
sales pitches and were not “merely ‘skilled’ workers who
operate[d] within a strict set of rules.” Id. at 14.
Blanchar’s duties—promoting sales, advising sales staff,
and fielding questions—required the exercise of discretion and
independent judgment. He scripted talking points for consul-
tants to further the sales of 403(b) and 457 plans. He used his
knowledge and experience to develop presentation materials
and to answer questions from pension consultants. When
presenting or speaking at conferences, Blanchar used materials
he himself had prepared, which were later approved by The
Standard’s legal and marketing departments. He worked
largely alone and met with his supervisor only once a year.
Blanchar’s supervisor, Baumgarten, often looked to Blanchar
for recommendations about products that would be suitable
for sale in the 403(b) marketplace, and stated that The Standard
often followed Blanchar’s recommendations. Though Blanchar
lacked final decision-making authority, his work involved a
great deal of discretion and independent judgment. Therefore,
we find that Blanchar qualifies as an exempt administrative
employee under this prong as well.
III. CONCLUSION
Even when the facts are taken in the light most favorable to
Blanchar, The Standard is entitled to summary judgment.
Under the applicable regulations as well as case law,
No. 12-2745 11
Blanchar’s work for The Standard satisfies the requirements of
the administrative employee exemption, so he is not entitled to
overtime compensation under the FLSA. We AFFIRM the
decision of the district court.