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Eli Lilly and Co. illegally deducted millions of dollars from employee paychecks to pay for company vehicles and extra time off, a former sales representative claims in a federal lawsuit.
The Indianapolis-based drugmaker is accused of deducting nearly $2,000 a year from paychecks of sales representatives who were required to use company-leased cars to call on customers and of deducting an unspecified amount for additional paid-time-off vacation benefits without signed agreements from workers.
A Lilly spokeswoman denied the lawsuit’s allegations. “Lilly is committed to upholding high standards of corporate conduct, including our employment practices,” spokeswoman Molly McCully told IBJ.
The lawsuit was filed this month in U.S. District Court in Indianapolis by Jennifer M. Probst, who worked as a senior sales representative in Wisconsin for 11 years before resigning in June.
The complaint seeks class-action status on behalf of thousands of employees and former employees of Lilly.
Probst alleges that Lilly required her and other sales representatives to drive a company-leased vehicle for work, for which it deducted $70 from paychecks every two weeks. The company did not have employees sign any agreements to allow for the deductions, she said.
“These deductions were taken by Eli Lilly to cover a portion of Eli Lilly’s own cost of leasing company vehicles, to Eli Lilly’s enrichment and to its sales representatives’ detriment,” the complaint said.
The lawsuit also accuses Lilly of improperly deducting funds for so-called “vacation purchase” programs, which are benefits some companies offer that provide employees with an opportunity to purchase additional time off. The programs can be administered through a Section 125 “cafeteria plan” under Internal Revenue Service rules, which allow employees to use pre-tax dollars and spread out the cost over a full year.
Probst said Lilly deducted $64.12 during each of calendar years 2020, 2021 and 2022 without first obtaining a signed, written authority that complied with Indiana law.
The lawsuit claims that Lilly’s “vacation purchase” program is not a bona fide IRS Code Section 125 cafeteria plan, and said that Lilly did not set up a trust account for the funds into which it deposits or invests the wage deductions.
“Instead, Eli Lilly keeps the ‘vacation purchase’ wage deductions for itself, interest-free,” the complaint said. “Based upon information and belief, Eli Lilly is simply keeping the ‘vacation purchase’ wage deduction amounts in general corporate accounts and is making use of that money for its own benefit and purposes, to the detriment of Probst and putative class members.”
The suit was assigned to Judge Sarah Evans Barker.
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There is more to this: According to IRS rules Infrequent personal usage of company vehicles is typically deducted from an employee’s salary. I wonder if this is somewhere in the employee rules. Seems very reasonable for having a car for commuting and such. Paid Time Off programs are notoriously complex especially for companies in multiple states.
I wish I had use of a company car for $35/week. Ms.Probst did something wrong, was called out for it. Why did she wait 11 years if she had a problem with it?
She only waited until she quit working at Lilly. I suspect she complained before she quit, and because she want to keep her job, never hired a lawyer until now to follow up.
The employee/employer relationship is never a balanced equation. It is too easy for the company to “quit” (fire) the employee, and until you are willing to quit the employer, you are at the companies mercy.
The vacation purchase is something employees voluntarily sign up for each year during annual enrollment. It’s very straightforward — e.g. Do you wish to purchase additional vacation? Yes/No
If Yes, how much additional vacation do you wish to purchase at the following cost/pay check deduction.
Was she expecting to get more paid time off than the benefit plan included? Sounds like an entitlement issue with her.