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.