European Company Pays Huge Price for Violating U.S. Anti-Discrimination Law

The $250 million in punitive damages that Swiss pharmaceutical Novartis has been ordered to pay to plaintiffs in a class action lawsuit is a record for U.S. gender discrimination verdicts, and it may end up being small potatoes compared to the nearly $1 billion the company might eventually have to pay out in total damages. The verdict is a staggering reminder of how non-U.S. companies can get themselves in trouble if they don't fully understand expectations of the U.S. workforce and the legal protections at their disposal.

"Any non-US company that is not paying attention to compliance with U.S. law had better sit up and take notice," warns Liz MacGillivray, co-chair of ORC's Workforce Opportunity Network (WON), which studies equality, diversity, and inclusion developments in the U.S. Not only do employers need to be concerned about the size of awards, but another recent decision by the Ninth Circuit upholding class certification for 500,000 current female Wal-Mart employees in a pay discrimination case is bound to encourage more class action litigation, with the likely outcome of more giant settlements.

Plaintiffs in the Novartis case painted a picture of systemic discrimination and indifference to employee's complaints. They alleged that the company discouraged pregnancies and discriminated against them through its compensation and promotion policies. Further, plaintiffs said that the company had a corporate culture that expected its female employees to be "available and amenable to sexual advances from the doctors they call on" and "looked the other way" when female representatives complained about doctors groping them and making inappropriate comments.

In light of these decisions (not to mention signals of increased vigilance by Obama administration enforcement agencies), WON co-chair Nita Beecher advises that it would be wise for employers to review not only their policies but also managers' behavior and diligence in implementing policies fairly and consistently.