Why it matters

As both states and the federal government amp up their efforts to enforce the Equal Pay Act (EPA)—with the Equal Employment Opportunity Commission (EEOC) set to collect pay data from employers and states passing their own versions of the statute—a federal court judge in California granted final approval to an $8.2 million deal for a class of about 1,500 female pharmaceutical reps in an EPA lawsuit. The case involved allegations that although half of the company's sales representatives were female, just one-third of the district managers were female and the upper-level management positions were almost entirely filled by men. The complaint referenced a "high number" of harassment and discrimination complaints against the employer, adding that the mostly male management made final pay decisions that favored men and disfavored women in violation of the EPA. After the court conditionally certified a collective action for the female reps, the employer agreed to pay $4.6 million to the women and retain a consultant to review its employment policies and practices, including criteria in promotions and career development. The settlement fund will be paid proportionately between the class members as back pay, based upon the number of workweeks during the damages period. The employer also agreed to cover the costs of settlement administration, incentive awards for class representatives (ranging from $1,000 to $25,000), and about $3 million in attorneys' fees and costs.

Detailed discussion

The Equal Pay Act (EPA) has been making headlines across the country in recent months, with states passing their own versions of the legislation from California to New York. In addition, the Equal Employment Opportunity Commission (EEOC) announced in January that in an effort to ensure fair pay, employers will be required to provide information about pay data beginning in September 2017.

The statute is also appearing in the courtroom. A federal court judge in California recently granted final approval to a deal between a class of female pharmaceutical sale representatives and Daiichi Sankyo.

Sara Wellens and her fellow female sales reps filed suit alleging violation of the EPA as well as Title VII and California's Fair Employment and Housing Act (FEHA). The plaintiffs alleged that upper-level management at Sankyo consisted of almost entirely male workers, even though half of the sales reps were female. An intermediary level of management only had one-third representation by women and a "high number" of harassment and discrimination complaints were made against the employer, demonstrating a hostile working environment for women, the plaintiffs contended.

In May 2014, the court granted conditional certification in the case and the parties began to negotiate. Preliminary approval of the settlement agreement was granted last October, and U.S. District Court Judge William H. Orrick signed off on the deal in February.

Sankyo agreed to pay a total of $8.2 million, of which $4.6 million will be divided among approximately 1,500 plaintiffs, broken down into two classes: a California settlement class employed as female sales representatives between April 16, 2011, and October 16, 2015, and a similar group of those outside the state. The bulk of the settlement fund – $3.7 million – will be paid on a proportionate basis to the class members as back pay based on the number of weeks worked during the relevant time period.

The remaining $926,200 will be paid to those plaintiffs with related claims for gender, pregnancy, and caregiver discrimination. To determine the appropriate payment, an independent claims expert will review claim submissions from the class members, allocate points, and then assign a share of the money. Cy pres recipients include the Legal Aid Society Employment Law Center and the Justice and Diversity Center of the Bar Association of San Francisco.

Sankyo also agreed to make changes to its practices and hire an independent human resources consultant to review its employment policies, reserving $200,000 for its costs. The HR consultant will consider issues such as the criteria used in promotions, career development, breastfeeding accommodations, and flexible work arrangements. The company promised that going forward, all district manager positions would be posted and the processes related to maternity leave and mothers returning to work would be tweaked. Additional training on Equal Employment Opportunity policies will be provided.

The remaining money paid by the company will cover attorneys' fees and costs (about $3 million), settlement administration, and service payments to class representatives ranging from $25,000 (for six plaintiffs) to $6,000 for five class members, $5,000 awards for three plaintiffs and $1,000 payments to 20 representatives.

With no objections filed by any class members (and just three electing to opt out), "[t]he Court finds that the terms of the Agreement are fair, reasonable, and adequate in all respects," Judge Orrick concluded.

To read the order granting final approval of the settlement in Wellens v. Daiichi Sankyo, click here.