Organized labor is on the ropes, to put it mildly. Wisconsin, Ohio, and other states are on the brink of taking collective bargaining rights away from state employee unions. That’s why last week’s US Supreme Court action was particularly welcome to employees inside and outside the pharmaceutical industry.
By declining to hear Novartis’s appeal, the US Supreme Court left intact a Second Circuit Court ruling that pharmaceutical sales representatives are entitled to overtime pay. Other companies have taken notice because the Supreme Court’s action will affect the entire pharmaceutical industry.
For years, Novartis and its competitors have argued that sales reps fell under the “Outside Sales” or “Administrative” exemptions to overtime pay under federal, New York, and California law. When sales reps sued Novartis for compensation, the US Department of Labor (DOL) filed an amicus brief on their behalf, saying that the two exemptions did not apply to them. The Second Circuit gave deference to DOL’s opinion, ruling that Novartis must pay retroactive compensation to their sales reps. Novartis is now estimated to owe at least $100 million to 2500 current and former sales reps.
Like Novartis, Merck had a similar case before the Supreme Court and also failed to get a hearing. In its brief, Merck pointed to appellate courts that had not given deference to DOL’s amicus brief, but the Supreme Court’s denial of a hearing essentially nullifies that argument.
The current case reminded me that only four months ago, a US District Court found that Novartis had discriminated against its female employees, paying them less and promoting them less often than their male counterparts. This pair of cases certainly gives the impression that Novartis is not exactly a worker-friendly company.
Perhaps this latest defeat will lead Novartis to consider workers’ rights and labor law more seriously in the future. The outcome of the lawsuit at least provides hope that employees’ grievances ultimately can be redressed. These days, workers need all the hope they can get.