Wage and hour lawsuit. Did that phrase just send a chill down your spine? In house counsels face a myriad of legal issues every day. Employment law is one of these thorny subjects. Violations of wage laws can result in costly litigation.
It's a lesson that drugmaker Novartis found out the hard way. The company is now paying $99 million in order to settle a class action lawsuit filed by its sales representatives.
The sales representatives claimed they were entitled to overtime pay. Novartis asserted otherwise. It said the employees should be considered exempt.
It's an issue that will make its way into the Supreme Court. The Ninth Circuit recently ruled that GlaxoSmithKline's sales representatives were "outside sales" personnel. That would mean they are exempt from overtime. The case has been appealed.
The GlaxoSmithKline employees performed similar functions as the Novartis sales representatives. If the Supreme Court affirms the Ninth Circuit's decision, Novartis would have been in a good position.
But it seems that Novartis' attorneys are not willing to take that risk. Losing in litigation might be even more costly.
General counsels might want to take note of this upcoming decision, however. Whatever the Supreme Court rules may end up impacting how you treat your employees.
And it might be a good time to review or ensure your company's employees are classified properly. Do you have independent contractors? Make sure you don't accidentally make them exempt when they are nonexempt.
Wage and hour lawsuits can be costly. It's best to be prudent, lest you end up facing a million-dollar settlement.
- Novartis to pay $99 M to settle overtime lawsuit (AP)
- Exempt Employees vs. Nonexempt Employees (FindLaw)
- Independent Contractors: Beware Worker Misclassification Traps (FindLaw's In House)