Novartis settles class-action sex bias suit–for $175 million

Novartis Pharmaceuticals has agreed to settle a class-action lawsuit filed by female sales reps just two months after a federal jury in Manhattan awarded the plaintiffs $250 million in punitive damages.

Novartis challenged that verdict, and the court had scheduled a hearing for November. Under the settlement, Novartis will pay $152.5 million in return for dropping its appeal.

The suit alleged that Novartis discriminated against female sales representatives in pay, promotional opportunities and pregnancy-related situations. The settlement covers all women who worked as Novartis sales reps since 2002.

The federal judge overseeing the settlement required Novartis to pay an additional $22.5 million over the next three years to revamp policies and procedures that contributed to sex discrimination.

Advice: Any employer that sees a pattern of discrimination complaints being made by members of a single class should look deeper to see whether some sort of systemic discrimination is at work. It’s always better to correct problems before litigation.

Note: The sex discrimination suit is only one of Novartis’ legal setbacks. The 2nd Circuit Court of Appeals recently ruled that the company’s sales reps didn’t meet the outside sales representatives exemption under the federal Fair Labor Standards Act. As a result, they are entitled to overtime pay.