Jan 25 (Reuters) – Novartis Pharmaceuticals Corp has agreed to pay $99 million to settle a lawsuit by current and former sales representatives who claimed they were denied overtime pay despite working more than 40 hours per week.
The settlement resolves a 2006 lawsuit now covering more than 7,000 plaintiffs who have worked for the affiliate of Switzerland-based Novartis AG, the law firm for the plaintiffs said.
It was reached after the 2nd U.S. Circuit Court of Appeals in New York concluded in July 2010 that the workers qualified for overtime under the federal Fair Labor Standards Act.
The U.S. Supreme Court is likely by this summer to address the same issue after another federal appeals court said similarly situated workers at a unit of Britain’s GlaxoSmithKline Plc were not entitled to overtime pay.
Andre Wyss, president of Novartis Pharmaceuticals, in a statement said that while the company believes it pays workers in accordance with applicable federal and state laws, “it is time to resolve these wage and hour claims.”
U.S. District Judge Paul Crotty in Manhattan on Tuesday granted preliminary approval to the settlement, which includes attorneys fees of as much as 30 percent, court records show. A hearing to grant final approval is scheduled for May 31.
Novartis Pharmaceuticals is based in East Hanover, New Jersey.
The Supreme Court agreed in November to review a decision by the 9th U.S. Circuit Court of Appeals in California that classified the Glaxo sales representatives as “outside sales” personnel exempt from the FLSA overtime pay requirement.
If this Supreme Court upheld that February 2011 decision, in the case Christopher v. SmithKlineBeecham Corp, it would mean that no overtime pay was owed.
“The risks of further litigation are great,” David Sanford, a partner at Sanford Wittels & Heisler representing the Novartis plaintiffs, said in a statement explaining the settlement with that company.
Neither Novartis nor Sanford immediately responded to requests for further comment.
According to the law firm, the Novartis plaintiffs included various sales representatives who worked for the company between 2002 and 2007, and from Jan. 25, 2009 to the present.
Sanford’s firm also reached a $175 million settlement with Novartis in July 2010 to resolve claims of bias against 5,600 sales representatives.
The case is In re: Novartis Wage & Hour Litigation, U.S. District Court, Southern District of New York, No. 06-md-01794.
(Reporting by Jonathan Stempel; additional reporting by James Vicini)
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