A common issue in wage and overtime cases is whether or not the employees should be considered exempt from overtime. As this blog has previously pointed out, employees can be considered exempt from overtime pay only if they earn a salary of $23,600 or higher, or if their job function is of the executive, administrative, or professional variety. Employees working in sales are often classified as exempt from overtime because the position is generally considered to fit into the professional category. However, numerous class actions have gone to court against companies that don’t pay their sales representatives overtime wages.
In the case of Novartis, a pharmaceutical company, a class of 7,000 current and former sales representatives alleges that they do not qualify as exempt because they are not allowed to actually sell drugs. Instead, their job is to promote the drugs, provide information, and coordinate events.
Sanford, Wittles, & Heisler, the law firm representing the plaintiffs, is the first law firm in the United States to bring a class-action suit alleging wage and hour violations on behalf of pharmaceutical representatives against a pharmaceutical company. Since they initially filed the suit in March 2006, several other firms across the country have brought similar cases to court against other pharmaceutical companies.
The U.S. Department of Labor has issued its opinion that pharmaceutical sales representatives should not be exempt from overtime due to the fact that their job is to promote the company’s product rather than to make final sales. However, many state and federal courts have decided otherwise and frequently side with the defendants in these cases. The issue is now before the U.S. Supreme Court which will definitively decide the matter.
Rather than waiting for that decision however, the parties in the Novartis case have decided to settle the matter for $99 million. In addition to unpaid overtime, the settlement covers failure to: provide itemized wage statements; maintain accurate records; timely pay employees during or at the conclusion of their employment; and unpaid meal and rest breaks. Since the Supreme Court decision could go either way, both parties have something to lose if they decide to continue litigation. The judge has given preliminary approval for the settlement but it still requires final approval before it can move forward.
Because a settlement has been reached and the court has not issued a decision in favor of one party over the other, Novartis is able to, and does, maintain that they are not guilty of any wrongdoing. They retain their assertion that the sales representatives should be classified as exempt from overtime, as provided by the Fair Labor Standards Act.
The attorneys at Chicago Overtime Law Center have decades of experience litigating wage and hour cases including overtime, vacation pay, meal breaks, and tips. The Chicago Overtime Law Center has offices conveniently located in both Oak Brook Terrace and Chicago, Illinois. If you live in Illinois and have a wage and hour dispute, contact an Urbana overtime attorney today at 312-869-4095 or fill out our online form.