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She Works Hard For The Money. Recent class action suits regarding gender pay discrimination ……….. and how to avoid them! November 9, 2005 . Karen Fitzgerald, Attorney Kleiman Lawrence Baskind Fitzgerald LLP 8750 North Central Expressway, Suite 777 Dallas, TX 75231 Tel: 214-265-9958

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she works hard for the money

She Works Hard For The Money

Recent class action suits regarding gender pay discrimination ……….. and how to avoid them!

November 9, 2005

presented by
Karen Fitzgerald, Attorney

Kleiman Lawrence Baskind Fitzgerald LLP

8750 North Central Expressway, Suite 777Dallas, TX 75231

Tel: 214-265-9958

Email: karen@klbf.com

www.klbf.com

Presented by:

Janet F. Koechel, CCP

JFK Consulting, Inc.

4020 N. MacArthur Blvd. #122

Irving, Texas 75038

Tel 214-492-1082

Email:janet@jfkconsulting.net

www.jfkconsulting.net

outline
OUTLINE

1Review Violations

2 Significant Litigation

3 What Are Your Defenses?

4Assessing The Situation

timeline
TIMELINE

WOMEN EARN THE RIGHT TO VOTE

FAIR LABOR

STANDARDS ACT

EPA

Title VII

1920

1938

1963 - 64

THEN WHAT HAPPENED?

the struggle for equal pay
The Struggle for Equal Pay

Since 1963 women have struggled to earn as much as their male counterparts!

rising litigation class action suits
Rising LitigationClass Action Suits
  • In 1991 changes in discrimination law increased the potential financial payout and allowed plaintiffs to seek jury trial
  • Changes made it more attractive for larger law firms to take these types of cases
  • Experts were hired to conduct statistical analysis of pay data
  • New legal theories were applied
  • For some attorneys, business judgment and moral convictions were reasons for accepting these potential class-action cases
betty dukes vs wal mart
Betty Dukes vs. Wal-Mart
  • Largest “Equal Pay” class action suit
  • Would cover 1.5 million current/former employees of Wal-Mart and Sam’s Club
  • The class action has been certified making it a landmark case
wal mart s response in the stores
Wal-Mart’s response in the stores…

Dallas Morning News 6/12/04

in the board room
….in the Board Room

USA Today June13, 2004

women versus wal mart
Women Versus Wal-Mart

6 Plaintiffs sued Wal-Mart claiming that women are:

  • Received fewer promotions to management positions than men (and had to wait longer for promotions)
  • Paid less than men in comparable positions despite higher performance ratings and seniority
class certified to cover
Class Certified to Cover
  • All women employed at any Wal-Mart domestic retail store at any time since December 26, 1998
  • Who may have been or may be subjected to Wal-Mart’s challenged pay and management track promotions policies.
salient court notes
Salient Court Notes
  • Title VII contains no exception for large employers
  • 50th Anniversary of Brown v. Board of Education
  • Anniversary serves as a reminder of the importance of the courts in addressing the “denial of equal treatment under the law” wherever and by whomever it occurs.
court s rulings so far
Court’s Rulings So Far
  • Granted the motion to certify the class in part and denied in part
  • Granted the motion for class certification on the equal pay claims
  • Granted the motion to certify the class on the last promotions claims as to liability, injunctive and declaratory relief
  • Denied motion for class certification on lost promotion claims for lost pay damages where there is no documentation
elements the plaintiffs had to establish
Elements the Plaintiffs Had to Establish
  • Numerosity
  • Commonality
  • Typicality
  • Adequacy of representation
plaintiffs evidence
Plaintiffs Evidence
  • Company-wide policies governing compensation and promotions were consistent among stores
  • Common feature of excessive subjectivity in pay and promotion decisions
  • Common policy of failing to post promotional opportunities
  • Strong centralized corporate cultures
statistical evidence of discrimination
Statistical Evidence of Discrimination*
  • Women are paid less than men in every region
  • Pay disparities exist in most job categories
  • Salary gap widens over time, even for women and men hired into the same job at the same time
  • Women take longer to enter management jobs
  • The higher the level in the organization – the lower the percentage of women represented

*Uncontested

examples of disparity
Examples of Disparity
  • Total earnings paid to women are 5 – 15% less than total earnings paid to men
  • It takes women 4.38 years to be promoted to Asst Manager versus 2.86 years for men
  • It takes women 10.12 years to reach the level of Store Manager versus 8.64 years for men
  • When comparing Wal-Mart to 20 other retailers –there is a shortfall of female managers in 80% of stores.
slide19

Largest civil rights class action suit in history….

  • The mother of all class action law suits
  • It’s as important socially as “Brown vs. The Board of Education” 1964
  • It’s likely they’ll settle rather than go to trial
  • “It could cost Wal-Mart up to $8 billion!”

Fortune July 12, 2004

latest developments
Latest Developments..

Now that Wal-Mart is facing billions of dollars in

damages they want the class action“decertified”

  • Wal-Mart denies any pattern of discrimination
  • They have appealed the decision calling the case “gargantuan” -- too big to prosecute

They maintain:

  • They are being denied due process
  • Conventional rules of class action should not apply because their stores operate autonomously
newest case costco wholesale corp
And in this corner the latest defendant in the Title VII/EPA gender discrimination charge

Sam’s Club’s fiercest rival

Accused of the same practices as Sam’s/Wal-Mart

Alleges men are given a “tap on the shoulder” for promotions

No promotional policies are in place therefore jobs typically go to males

Newest Case Costco Wholesale Corp.

VERSUS

past settlements in favor of plaintiffs
PAST SETTLEMENTSIN FAVOR OF PLAINTIFFS
  • Morgan Stanley
  • The Home Depot
  • Publix Super Markets
  • Verizon
  • Boeing
boeing class action gender discrimination case
Boeing Class Action Gender Discrimination Case
  • What would “Rosie the Riveter” think?
  • 29,000 women were included in latest class action
  • Settlement estimate-

From $40 and 72 million

  • The 8th largest settlement of a gender discrimination case in history
boeing class action settlement details
Boeing Class Action Settlement Details
  • Covers women employed from 1997 –2000
  • This case covers the Puget Sound area employees but others are pending
  • An internal analysis by Boeing conducted in 2000 confirmed inequities
  • Company spent $22 million to rectify -- but it wasn’t enough
  • Plaintiffs demanded $450 million in back pay and $1 billion in punitive damages
  • Case also alleged sexual harassment among other charges
boeing prior offenses
Boeing Prior Offenses
  • In 1995 internal analysis found inequities existed – women paid less than men by 2.5%
  • 1999 OFCCP found pay inequities and Boeing agreed to make across the board increases - a $4.5 million pool was established for females and minorities
overlap between title vii and the equal pay act
Overlap Between Title VII and the Equal Pay Act

1.Both prohibit sex based wage discrimination

2.EPA only covers discrimination in wages

3.TITLE VII requires a person to go through EEOC

4.EPA does not cover applicants for employment

………TITLE VII does.

EPA

Title VII

the equal pay prima facie case
The Equal Pay Prima Facie Case

Plaintiff must show the employer:

  • Pays different wages to opposite sex
  • The employees perform equal work on jobs requiring equal
      • Skill
      • Effort
      • Responsibility
      • Under similar working conditions
defenses to equal pay claim
Defenses to Equal Pay Claim

Employer must prove the wage differential is justified by a:

  • Seniority system
  • Merit system
  • System pegging earnings to quality/quantity of production
  • Any factor other than gender
what are your defenses
What Are Your Defenses?
  • Wage differences are not always illegal
  • Review your differences and make sure they are within the four allowable defenses
  • Monitor policies and procedures to ensure they do not perpetuate discriminatory practices
  • Review statistics annually and research
final defense
Final Defense

Any factor other than gender:

  • The great “catch all” defense
  • Most litigation involves trying to determine if the differences in wagesreally are based on factors other than gender/sex
  • Practical examples - discuss
what s not a good defense
What’s Not A Good Defense?
  • Salary history
  • “We’re too big” claimed Wal-Mart
  • Our stores are autonomous (also Wal-Mart) so we don’t have broad policies
  • Violations weren’t intentional
  • But we do have women in management positions
  • We don’t tolerate discrimination of any kind
penalties for violating the equal pay laws
Penalties For Violating the Equal Pay Laws
  • Employers are subject to the FLSA criminal and civil sanctions
  • Willful violations can lead to a fine of up to $10,000 … and on a second conviction, a fine of $10,000 and 6 months imprisonment
individual liability
Individual Liability

For purposes of FLSA and Equal Pay Act claims, “employer” includes:

  • “Any person acting directly or indirectly in the interest of an employer in relation to an employee.”
  • Courts interpret this very broadly
  • Individual supervisors could be sued for Equal Pay (or FLSA) claims
slide35

Factors Driving Pay

SHOULD NOT AFFECT PAY

FACTORS AFFECTING PAY

Gender

Pay

Benefits

Education/

Experience

Performance

Race

$

RELIGION

Market Price

Age

SKILL

Job Value

Development

WorkEnvironment

DISCRIMINATION

INTERNAL EQUITY

slide36

Assessing The Situation

Consider the following

as you assess

your

company…..

the accidental inequity
The Accidental Inequity
  • Do companies intentionally discriminate? No
  • Is there statistical evidence of bias? Yes
  • Using statistics you can illustrate bias to managers
slide38

Review Company Profile Male vs. Female

Average Salary by:

  • Job/Job Family or Profession
  • Grade
  • Years of Experience/Education
  • Performance Rating/% Increase
example xyz key department profiles
Example XYZ Key Department Profiles

Examine each professional discipline:

  • IT - 30% Female 70% Male
  • Accounting – 75% Female 25% Male
  • Chemists – 40% Female 60% Male
slide41

Staff Accountant

Is this explainable?

slide42

Accounting Managers

What about this?

scatter plot bs chemists year of first degree or yfd
Scatter Plot - BS ChemistsYear of First Degree or YFD

Courtesy of Davis Consulting, “Making Smart Decisions”, 2003

scatter plot analysis by grade
Scatter Plot Analysis by Grade

Courtesy of Davis Consulting, “Making Smart Decisions”, 2003

scatter plot performance rating
Scatter Plot Performance Rating

Courtesy of Davis Consulting, “Making Smart Decisions”, 2003

gender pay gap issues areas of vulnerability

organization

Issues

Remedies

  • Salary history defense doesn’t work
  • Pay for experience
  • Pay raise inconsistencies
  • Hiring inconsistencies
  • Promotional inconsistencies
  • New college grads
  • Develop hiring pay guidelines
  • Revamp promotional increase guidelines
  • Review merit increase guidelines/administration
  • Conduct compensation training for managers
  • Expand professional development programs
Gender Pay Gap Issues Areas Of Vulnerability
wal mart s response
Wal-Mart’s Response

Once the lawsuit was certified as “class action”, Wal-Mart took notice - the CEO announced the following:

  • New “fair pay goals”
  • New market based pay structures will be put in place along with new job classifications
  • Hourly employees received wage increases
  • New corporate compliance team will oversee new policy implementation
slide49
more….
  • Executive pay going forward, will be tied to meeting diversity goals
  • New SVP in charge of diversity was named
  • Employee diversity training will be conducted
  • New promotional policies are being implemented
  • Other issues involve relocation, professional development, succession planning, etc.
wal mart in the news october 2005
Wal-Mart in the NewsOctober 2005
  • Wal-Mart has called on Congress to raise the minimum wage
  • Wake Up Wal-Mart – a union backed action group (UFCW) has called it a publicity stunt
  • Currently more than ½ of employees are not currently covered by their health plan
  • Wal-Mart announces launch of cheaper health plan by reducing monthly premiums 40-60%
  • Offering employee wellness programs and tax deductible Health Savings Accounts (HSAs)
scandalous memo to board leaked to the press
Scandalous Memo to Board Leaked to the Press

According The New York Times a memo to the Board said:

  • Growing benefits costs are unacceptable at 15% increase per year
  • Root cause for increase in benefits costs is due to aging workforce and increasing tenure
  • Recommends redesign of all jobs to include more physical activities in order to “dissuade unhealthy from joining workforce”
  • Wal-Mart memo discloses the least healthy employees are the least productive yet most satisfied.

What are the implications?

public reaction to the memo
Public Reaction to the “Memo”
  • Board memo has serious ADA, ADEA and ERISA implications
  • Former Congressman, and author of ADA, Tony Cuehlo calls it a sad day and says-

No company should be able to discriminate against employee on the basis of :

          • Age
          • Fitness
          • Disability status
          • Potential cost to the company
how to protect your company
How to protect yourcompany!
  • Know the laws, i.e. EPA and Title VII
  • Conduct a thorough analysis of your policies
  • Conduct an in-depth statistical analysis of your company profile
  • Put all managers through rigorous training on equitable treatment
  • Explain to managers that they may bepersonally liable for violations!