When 6,202 female employees of Novartis (NVS) get their checks from the $175 million sex discrimination settlement some of them may think, Was it worth it? Remember, this was the case in which a Novartis' HR department threatened to fire a woman who was raped by one of her customers, and where managers worked diligently to fire pregnant employees.
Their lawyers will certainly think it was: They're getting the biggest slice of the pie. For most women at Novartis, the settlement will amount to an average windfall of about $16,173. It's a nice sum, but it covers eight years of disparate pay, or about $2,000 per year. Given that drug reps earn high five-figure or low six-figure salaries, it won't feel like much.
The $16,173 payment is also a lot less than employees thought they might have gotten when a New York federal jury handed down a $250 million verdict in May. On the back of an envelope, that verdict averaged out at about $44,642 for each woman at Novartis on numbers available at the time.
Since then, the plaintiffs lawyers and Novartis' counsel have been negotiating. Novartis has agreed to pay $175 million in total. The plaintiffs took the discount to avoid lengthy appeals of the verdict, which Novartis had a right to do.
Only six women opted out of the settlement, suggesting that virtually all women at Novartis either a) like free money or b) believe they were discriminated against generally or c) both.
Here's how the awards break down:
- 6,206 female Novartis employees past and present are eligible to receive checks.
- Women employed in the eight years from July 15, 2002 to July 14, 2010 are eligible.
- Women will receive back pay as calculated by plaintiffs' expert labor economist, and they could receive additional awards based on their claims for compensatory damages.
- Of the $175 million, $152.5 million will go into a Settlement Fund.
- $60 million of that is committed to back pay for the class (which averages out at $9,674 for each woman).
- Another $40 million is allocated to a compensatory damages fund, which can be accessed by women who submit claim forms (that averages out at another $6,499 for each woman). The maximum payout per person will be $300,000.
- $10 million is committed to the named plaintiffs and women who testified in the trial. They will get $217,391 each on average.
- $164,500 will be split between various women's education, law and rights groups.
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- HR Hell at Novartis: Alleged Rape Victim Threatened With "Disciplinary Action"