Novartis To Pay $99M in Employment Misclassification Lawsuit Settlement

January 26, 2012

According to recent employee misclassification news that our Anaheim, California labor and employment lawyers have been following, a unit of Novartis AG, the Swiss pharmaceutical company, received preliminary approval from a New York U.S. District Judge this week, for a $99 million settlement--to resolve the wage and hour lawsuit brought by 7,700 sales former and current sales representatives who claimed they experienced employee misclassification and were denied overtime payment.

The settlement follows a July 2010 ruling by New York's 2nd U.S. Circuit Court of Appeals, that Vincent Howard discussed in a related Costa Mesa employment lawyers blog. The ruling decided that the sales representatives, who meet with physicians to encourage them to prescribe the drug company's medicine, were qualified for overtime under the U.S. Fair Labor Standards Act (FLSA), and should not be classified as "exempt" from state and federal overtime laws.

In April, the Supreme Court will hear arguments on a similar case involving employee misclassification, with a GlaxoSmithKline lawsuit--where the nation's highest court will rule on whether the outside sales employees are subject to exemptions under state and federal labor law, or if they are promoters or marketers who should receive overtime payment.

As Vincent Howard has reported in a previous Carson, California employment lawyer blog, under California law and the FLSA, most non-exempt employees are entitled to overtime compensation, which by law equals time and one half their normal rate of payment for every hour worked beyond forty in a workweek.

The FLSA provides exemptions, however, from both minimum wage and overtime payment for outside sales representatives, administrative, executive, computer and professional employees.

For outside sales employee exemptions, the employee's main responsibilities must involve making sales or getting orders or contracts for the company--for which a consideration will be paid by the client or customer. The outside sales employee's work must also be regularly engaged away from the employer's establishment of business. Also, in order to qualify for an FSLA exemption, the employee's specific work responsibilities must be considered, and not just their job title.

Although Novartis Pharmaceuticals Corp claimed the company was ready to resolve the long running wage and hour claims, the company reportedly believes it pays workers in accordance with the current federal and state laws, and that sales representatives should receive exempt classification because their independent job responsibilities along with their incentive compensation are normal for exempt employees.

In Irvine, La Habra and Mission Viejo, and other cities in Orange County, California, contact Howard Law's managing partner Vincent Howard today, so we can find a solution to your employment misclassification issue. Contact us online or call us toll-free at 1-800-872-5925, for a free consultation about your employment rights.

Novartis Will Pay $99 Million to Settle Overtime Suit With Sales Workers, Bloomberg, January 25, 2012

Novartis to Cough Up $99 Million to Settle Overtime Lawsuit, Fox Business, January 25, 2012

Novartis to pay $99 M to settle overtime lawsuit, Huffington Post, January 25, 2012

Related Web Resources:

U.S. Department of Labor: Wage and Hour Division (WHD), Fair Labor Standards Act (FLSA)

Department of Labor (DOL): Wage and Hour Division (WHD)

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