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A New Jersey federal judge has approved a $2.7 million settlement resolving claims from a group of sales specialists who accused pharmaceutical giant Teva of withholding overtime pay during an extensive training program.

U.S. District Judge Susan D. Wigenton gave the green light to the settlement on Monday, officially closing the lawsuit filed by Barry Kushelowitz and Kerri Baldwin. The plaintiffs argued that Teva violated the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL) by wrongly classifying sales specialists as overtime-exempt during their training.

Teva $2.7M Unpaid OT Deal : Court Finds Settlement Fair

"The court finds that the parties' settlement is fair, reasonable, and just in all respects," Judge Wigenton noted in her ruling.

Under the settlement terms, $900,000 will be allocated to cover attorney fees for the workers, represented by Paolo Meireles and Tamra Givens of Shavitz Law Group PA. Kushelowitz and Baldwin will each receive $10,000 as service awards for their role in the lawsuit.

The remainder of the settlement will be distributed among approximately 585 sales specialists who were affected by Teva’s classification of them as overtime-exempt during the company's four-week training period. Each worker will receive roughly $4,600 for the unpaid overtime they missed during this period.

Training Program and Lawsuit Background

Kushelowitz and Baldwin filed their lawsuit against Teva in December 2022, claiming that the company’s training program for sales specialists required them to work more than 40 hours a week without receiving proper overtime compensation. They alleged that, in addition to regular training, they were expected to complete training exams and study coursework, all while being classified as exempt from overtime.

Teva attempted to dismiss the suit in January 2023, arguing that their sales specialists qualified for exemptions under the FLSA and NYLL for itinerant salespeople. However, Judge Wigenton denied Teva’s motion in June 2023, finding that the workers sufficiently showed they were not primarily engaged in exempt activities during their training.

Legal Exemptions Under Scrutiny

Judge Wigenton emphasized that both federal and state labor laws focus on the actual duties of workers, rather than their job titles, when determining eligibility for overtime pay. While sales specialists might eventually be classified as exempt once in the field, the judge found that the tasks performed during the training—coursework, study, and exams—did not meet the criteria for an overtime exemption.

In April, Kushelowitz and Baldwin achieved conditional collective certification, allowing the case to move forward as a group action. Despite the sales specialists working in different markets and handling various products, the evidence demonstrated that all were subjected to the same training without receiving overtime pay, which supported the certification.

Teva $2.7M Unpaid OT Deal : Parties' Responses

Representatives for both the workers and Teva, including Michael Greenfield of Stevens & Lee PC, have not yet provided comments on the settlement.