Novartis Agrees to $99M Settlement in Sales Rep Wage Dispute

Novartis Pharmaceuticals Corp. and plaintiffs law firm Sanford Wittels & Heisler L.L.P. have agreed to a $99 million settlement to resolve a wage-and-hour class action lawsuit originally filed in March 2006.

In July 2010, the 2nd U.S. Circuit Court of Appeals in New York ruled in In re Novartis Wage and Hour Litigation that pharmaceutical sales representatives are not exempt from overtime.

In February 2011, the U.S. Supreme Court refused East Hanover, New Jersey-based Novartis’ application to review the appellate decision, allowing that decision to stand, according to New York-based Sanford Wittels.

The $99 million settlement resolves the wage-and-hour claims brought in 2006, as well as additional wage-and-hour claims covering a more recent time period, according to the joint announcement by Novartis and Sanford Wittels.

According to the law firm, the settlement affects more than 7,000 current and former Novartis sales representatives. The agreement remains subject to final court approval, which may take several months, according to the joint statement.

Novartis President André Wyss said in the statement that the settlement is in the best interest of the firm’s employees and the company.

“We have been litigating this case for nearly six years, and the company has determined that it is time to resolve these wage-and-hour claims,” Wyss said.

“We consistently compensate all employees fairly in accordance with the U.S. Fair Labor Standards Act and applicable state laws. We remain confident that sales representatives should continue to be classified as exempt from overtime because their autonomy and incentive compensation are typical of exempt employees as defined by U.S. law,” said Wyss.

Late last year, the U.S. Supreme Court agreed to consider the February 2011 decision by the 9th U.S. Circuit Court of Appeals in Michael Christopher et al. vs. SmithKline Beecham Corp., in which the San Francisco-based appeals court ruled pharmaceutical sales reps of the GlaxoSmithKline P.L.C. unit are outside sales employees under the Fair Labor Standards Act of 1938 and are exempt from being paid overtime.

Referring to this, Sanford Wittels attorney David Sanford, who is lead counsel in the Novartis case, said in the statement, “While we remain confident that the United States Supreme Court later this year will uphold the Department of Labor’s interpretation of wage-and-hour law, the risks of further litigation are great.”

Sanford said, “It is a fair and equitable result and can serve as an exemplar for companies around the United States that face wage-and-hour litigation.”

Judy Greenwald writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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