Novartis agrees to pay $152.5 million to female workers to settle NY discrimination claims

Novartis agrees to pay $152.5M to settle claims

NEW YORK — Novartis will pay up to $152.5 million to potentially thousands of women after a jury found it discriminated against them by paying them less than men, the pharmaceutical company and plaintiffs’ lawyers announced Wednesday after a deal was struck.

The agreement, which still must be approved by a federal judge in Manhattan, also calls for an additional $22.5 million to be paid for company programs to eliminate discrimination.

The settlement covers claims by 5,600 women at the drug company who were part of the class-action lawsuit that resulted in a six-week trial earlier this year.

A jury in May found Novartis discriminated against women by paying them less than men, promoting fewer of them and allowing a hostile workplace.

It awarded $250 million in punitive damages for the class as well as $3.3 million in compensatory damages to a dozen women. The $152.5 million will replace the jury award, eliminating the inevitable appeals that would have followed and allowing for payouts to occur as early as the first quarter of next year. A fairness hearing was expected to be set for November.

A claims process for women was spelled out in court papers filed Wednesday.

Joe Jimenez, chief executive officer for Novartis, headquartered in Basel, Switzerland, said in a release that the company still believes systemic discrimination did not occur at the company.

But he added: “The trial revealed that some of our associates had experiences influenced by managerial behavior inconsistent with our values.”

He said the company was even more determined “to ensure that all our employees act and behave in accordance with our corporate values.”

David Sanford, lead attorney for the plaintiffs, said the deal will provide fair compensation for former and current female sales force employees who worked at Novartis over the last eight years. He called the deal “a momentous settlement.”

In the deal, the company agreed to strengthen its sexual harassment policy and training, to enhance its complaint process for employees claiming mistreatment and to revise its process for evaluating managers.

At the May trial, nine women who were among 17 named plaintiffs testified about their efforts to advance in a company that favored men.

One witness said her district manager became so abusive toward female employees that he showed them pornographic images and invited women to sit on his lap.

Other witnesses described an “old boys’ network” that punished women who became pregnant, finding ways to spoil their careers, pressure them to take shorter leaves or to work while they were on leave.

The amount of the settlement that women ultimately receive will be reduced by attorney fees, which will be set at a later date. The financial impact of the settlement on the company was likely to be minimal. Novartis recorded $9.5 billion in revenues in 2009.