According to the terms of the Settlement as ordered by the Court, the monetary awards for backpay (or lost wages) were subject to all applicable tax withholdings. Monetary awards for compensatory damages were not treated as lost wages and therefore were subject to reporting on IRS Form 1099.
We cannot provide tax advice regarding Class Members’ settlement awards or how to handle any dollars reported on a 1099. Please contact your accountant or a tax lawyer for tax advice.
Please note that the settlement check and corresponding tax forms were sent to eligible Class Members by the third party Claims Administrator, RUST Consulting, in May/June 2011. If you misplaced those tax forms, you can reach a RUST Representative at 866-208-5285 to request that a copy be re-sent to you.
The settlement that Sanford Heisler negotiated as Class Counsel on behalf of the class of approximately 6,200 female sales employees in the Velez v. Novartis case included $60,000,000 for backpay awards to class members and $40,000,000 for compensatory awards to class members. The settlement we negotiated on behalf of the class was praised by the Judge as being “exceptional” and “one of a kind” because the terms for the women at Novartis were so good. In fact, we believe there is only one larger settlement ever negotiated in the history of American employment discrimination litigation – and that award was for a much larger group of plaintiffs.
The backpay amount represented 100% of the actual backpay damages to the class, and every class member received a backpay check automatically. Class members did not have to complete any paperwork in order to receive their check. In other words, the women in the class are getting every penny they were owed by the Company.
Sanford Heisler was not actually involved in the distribution of the award. The backpay fund was distributed to class members by the Claims Administrator. The Claims Administrator distributed the backpay fund to those eligible class members based on the number of months worked during the class period. The class period ran from July 15, 2002 through July 14, 2010, and months were calculated only for the months where a class member was in a class eligible job. Approximately 6,200 current and former employees automatically received backpay awards. Standard payroll deductions were withheld from these backpay awards. Please note that any time worked before the beginning of the class period or after the end of the class period was not considered in these calculations. In addition, any time worked at Novartis during the class period but for non-eligible jobs was also not considered.
In addition to these automatic backpay awards, class members were eligible to submit claims for compensatory awards out of a $40,000,000 fund. Over 2,500 class members submitted claims for compensatory damages. Some class members submitted only a Claim Form, while over 1,000 class members submitted a Claim Form and a Rider. In order to receive compensatory awards, class members were required to show that they experienced gender discrimination during the class period and that the gender discrimination caused pain and suffering.
Again, although we as Class Counsel did provide assistance to some claimants in completing their paperwork, we were not allowed to be involved in the distribution of the compensatory awards. These materials were reviewed by the Claims Adjudicator, a former judge, who made careful determinations regarding whether each claim met the criteria outlined in the Settlement Agreement. Those class members that the Claims Adjudicator decided should receive a compensatory award received that payment at the same time that the backpay award was issued. The amount of the compensatory award is controlled by the number of months in the class period that a class member worked in an eligible job and by the Claims Adjudicator’s assessment of the strength of the class member’s claims when compared against the other claimants. The decisions of the Claims Adjudicator are final and non-appealable. Sanford Heisler does not have any information or influence with respect to which claims were granted or denied and why.
We at Sanford Heisler understand that no amount of money can undo the harm that our class members experienced. We also recognize that a settlement requires both parties to make concessions. Although it is not perfect justice, this settlement is one of the best results our legal system has ever produced. The settlement has required Novartis to acknowledge its wrongdoing, compensate its female employees, and overhaul the broken policies and practices that allowed discrimination to occur in the first place. The monetary and nonmonetary terms of the settlement have tremendous implications for gender equality not only at Novartis but at workplaces across America.
Anyone with additional questions or concerns regarding the individual settlement awards (including whether the Claims Administrator received claim materials and whether the payment accurately reflects a class member’s dates of employment) should contact the Claims Administrator at 866-208-5285.
Please also remember that it is a violation of the Settlement Agreement to discuss the specific amounts you receive as a class member. Talking about your individual settlement amount or the individual settlement amounts of others may jeopardize your recovery.