On January 25, 2012, U.S. District Judge Paul Crotty issued a preliminary approval of a $99 million settlement agreement between Novartis Pharmaceuticals Corp. and a class of more than 7,000 pharmaceutical sales representatives who allege that the company misclassified them as exempt from overtime pay.
Final approval of the settlement deal awaits the U.S. Supreme Court’s determination of the overtime status of the drug sales representatives involved in another suit. Final approval of the settlement would resolve the wage-and-hour claims that the sales representatives initially brought in 2006, in addition to later claims pertaining to a more recent period. The final approval hearing is slated to take place on May 31, 2012.
Pharmaceutical companies have often classified drug sales representatives as being exempt from the overtime protections of the Fair Labor Standards Act (FLSA); however, in recent years many FLSA cases have challenged this policy.
In the present case, In Re: Novartis Wage and Hour Litigation, the U.S. Court of Appeals for the Second Circuit held in July 2010 that the Novartis sales representatives were entitled to receive overtime pay. The Court relied on an amicus brief filed by the Department of Labor (DOL) that urged the Court to interpret FLSA regulations in a manner that would find sales representatives not exempt from overtime protection.
Last February the Ninth Circuit ruled in a similar class action lawsuit against GlaxoSmithKline that sales representatives are considered ‘outside sales employees’ under FLSA and are therefore exempt from overtime benefits.
The Supreme Court denied Novartis’ petition for certiorari but agreed to review the GlaxoSmithKline decision. The Supreme Court’s decision on whether drug sales representatives are covered by federal overtime protections is expected later this year.
The Employment Law Group® law firm has an extensive nationwide wage and hour practice representing employees whose rights under the Fair Labor Standards Act (FLSA) have been violated.