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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 . 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

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  1. She Works Hard For The Money Recent class action suits regarding gender pay discrimination ……….. and how to avoid them! November 9, 2005

  2. 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

  3. OUTLINE 1Review Violations 2 Significant Litigation 3 What Are Your Defenses? 4Assessing The Situation


  5. The Struggle for Equal Pay Since 1963 women have struggled to earn as much as their male counterparts!

  6. 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


  8. 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

  9. Wal-Mart’s response in the stores… Dallas Morning News 6/12/04

  10. ….in the Board Room USA Today June13, 2004

  11. 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

  12. 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.

  13. 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.

  14. 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

  15. Elements the Plaintiffs Had to Establish • Numerosity • Commonality • Typicality • Adequacy of representation

  16. 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

  17. 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

  18. 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.

  19. 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

  20. 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

  21. 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

  22. PAST SETTLEMENTSIN FAVOR OF PLAINTIFFS • Morgan Stanley • The Home Depot • Publix Super Markets • Verizon • Boeing

  23. 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

  24. 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

  25. 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

  26. ViolationsEqual Pay Act or Title VII

  27. 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

  28. 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

  29. 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

  30. 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

  31. 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

  32. 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

  33. 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

  34. 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

  35. 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

  36. Assessing The Situation Consider the following as you assess your company…..

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

  38. Review Company Profile Male vs. Female Average Salary by: • Job/Job Family or Profession • Grade • Years of Experience/Education • Performance Rating/% Increase

  39. Example of XYZ Company

  40. Example XYZ Key Department Profiles Examine each professional discipline: • IT - 30% Female 70% Male • Accounting – 75% Female 25% Male • Chemists – 40% Female 60% Male

  41. Staff Accountant Is this explainable?

  42. Accounting Managers What about this?

  43. Scatter Plot - BS ChemistsYear of First Degree or YFD Courtesy of Davis Consulting, “Making Smart Decisions”, 2003


  45. Scatter Plot Analysis by Grade Courtesy of Davis Consulting, “Making Smart Decisions”, 2003

  46. Scatter Plot Performance Rating Courtesy of Davis Consulting, “Making Smart Decisions”, 2003

  47. 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

  48. 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

  49. 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.

  50. 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)

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