Pharmaceutical giant Novartis has agreed to pay $99 million to resolve a class action brought by a group of sales representatives for unpaid overtime. The lawsuit had been making its way through the federal courts since 2006; the settlement agreement affects more than 7,000 former and current sales reps.
The case centered on the outside sales exemption, and whether the sales reps were "exempt" from overtime or entitled to it. The Second Circuit, which includes Connecticut, had ruled that the outside sales exemption did not apply because the sales reps did not actually sell any drugs. They simply pitched the products to doctors, said the court, who in turn prescribed them to patients.
The decision was a jolt to the pharmaceutical industry, which has generally treated its sales reps as exempt employees. The U.S. Supreme Court declined to review the Novartis case, but will decide an Arizona case involving the very same issue later in the year, with possible implications for salespeople nationwide.