How OT Pay Issues Cost a Company $99 Million
Swiss drug company Novartis AG has settled its overtime lawsuit for $99 million. The Novartis settlement comes after 6 years of litigation.
The settlement will cover more than 7,700 of the company's former and current sales representatives.
The plaintiffs alleged the company denied them overtime pay. Novartis, meanwhile, said their sales representatives should be considered "exempt" employees.
These employees met with physicians in order to promote the company's drugs.
Classifying employees as "exempt" or "non-exempt" is vitally important for an employer. No business wants to end up on the other side of a wage-and-hour litigation like Novartis.
The rights employees are entitled to can vary depending on their classification.
Nonexempt employees must be paid minimum wage. They must also receive overtime pay for hours in addition to their 40-hour work week. Many workers are considered nonexempt. This is especially true for those who get paid by the hour.
Exempt employees are not entitled to overtime pay. Some professions are exempt under the law. This includes some outside sales staff and airline employees. Jobs that require advanced education or training are also often exempt. This includes physicians, lawyers, teachers, and nurses. Executives are also considered exempt.
Classification rules can be tricky. That may be why Novartis decided to settle. Losing in litigation would ultimately be much more costly.
A similar issue is already reaching the Supreme Court by way of another drug company, GlaxoSmithKline. In April the court is set to decide whether representatives are exempt or nonexempt, according to the AP.
Violations of wage and hour laws can end up hurting a business. The Novartis settlement will cost the company $99 million. You might want to consult with an employment attorney to avoid a potential overtime lawsuit.
Related Resources:
- Novartis to Cough Up $99 Million to Settle Overtime Lawsuit (Reuters)
- Exempt Employees vs. Nonexempt Employees (FindLaw)
- Ca. Overtime Laws Apply to Nonresident Workers (FindLaw's Free Enterprise)
- New IRS Tax Preparer Rules for 2012 (FindLaw's Free Enterprise)