Judge Grants 1.6 Million Women Class Action Status to Sue Wal-Mart

by Madeleine Baran

Jun 23 - A federal judge yesterday allowed a historic class-action sex discrimination lawsuit against Wal-Mart to proceed. With 1.6 million female plaintiffs, it is the largest employment discrimination lawsuit against a company in U.S. history, The New York Times reports.

According to US District Court Judge Martin Jenkins’ ruling, all 1.6 million women who have worked for Wal-Mart’s US stores since December 26, 1998 and who choose not to opt out will participate in the suit. The judge’s order, which marks the latest step in the three-year-old lawsuit, was not a ruling on the case itself.

The plaintiffs’ lawyers allege that Wal-Mart, the nation’s largest private-sector employer, discriminated against female employees by denying them equal pay and opportunities for promotion. According to two studies conducted by a sociologist and a statistician hired by the plaintiffs, 65 percent of Wal-Mart’s hourly employees are women, but women make up only 33 percent of all management positions. One study found the gender gap is even more striking when employment categories are further broken down: almost 90 percent of Wal-Mart’s cashiers are women compared to only 15 percent of store managers, the top in-store management position.

The studies also found that women who work as full-time hourly employees for at least 45 weeks at the retail giant earned about $1,150 less per year than their male counterparts, and the yearly salaries of female store managers fall $16,400 short of men who hold the same position.

Wal-Mart officials argue that the differences are due to general differences in working preferences for men and women and are not the result of any systematic employer discrimination, reports The New York Times.

In his written order, Judge Jenkins wrote that Wal-Mart allows store managers a fair amount of flexibility and subjectivity in hiring and promotion decisions. At the same time, he wrote, “Plaintiffs also present evidence that Wal-Mart has developed and continually reinforces a strong, centralized corporate culture.” As evidence of that culture, Judge Jenkins noted that the “Home Office” in Arkansas controls the temperature and music in each store.

As the case makes its way through the courts, lawyers for the plaintiffs are expected to argue that this subjectivity was part of a system designed to encourage gender discrimination. The plaintiffs’ lawyers have already released extensive anecdotal evidence of sex discrimination, including the charge that a male store manager told an employee, “[M]en are here to make a career and women aren’t. Retail is for housewives who just need to earn extra money.”

Lawyers for Wal-Mart had argued that the massive class-action suit would be too large to administer. In his written order, Judge Jenkins rejected that argument, noting that Title VII, which prohibits gender and race-based discrimination in the workplace, was enacted in 1964 during the civil rights movement. The act, he wrote, “contains no special exception for large employers…Insulating our nation’s largest employers from allegations that they have engaged in a pattern and practice of gender or racial discrimination -- simply because they are large -- would seriously undermine these imperatives.”

Judge Jenkins then added, “Indeed, it is interesting to note, as a matter of historical perspective, that Plaintiff’s request for class certification is being ruled upon in a year that marks the 50th anniversary of the Supreme Court’s decision in Brown v. Board of Education…This anniversary serves as a reminder of the importance of the courts in addressing the denial of equal treatment under the law whenever and by whomever it occurs.”

However, proving sex discrimination could be difficult for the plaintiffs. Wal-Mart did not post or document most available promotions over the past six years. The company documented less than one percent of assistant manager vacancies, and less than three percent of co-manager vacancies. There is no data about how many employees, male or female, applied for most of these promotions.

Still, the lawsuit could have huge repercussions for the Bentonville, Arkansas based retailer. A similar sex discrimination lawsuit filed against Home Depot in 1997, was settled for $104 million -- about $4,000 each for the 25,000 plaintiffs, reports Reuters . If a similar settlement was reached, it would cost Wal-Mart $6.4 billion, more than three quarters of the company’s profit in 2003.

The company already appeared to suffer some negative shockwaves from the judge’s order. At the New York Stock Exchange this morning, Wal-Mart’s stock was down 2.1 percent.

Wal-Mart officials said they plan to appeal the ruling, reports The New York Times.