As I'm sure you've heard by now, last Monday the Supreme Court announced that it will hear Wal-Mart's appeal in a class action lawsuit brought on behalf of 1.5 million female employees. The case, Dukes v. Wal-Mart, began back in 2001 when Betty Dukes and five other women claimed gender discrimination in pay and promotions.This case is the largest workplace class action ever certified, and plaintiffs' counsel believes the economic value of the case is in the billions of dollars.
When the Supreme Court announced they would hear the appeal, the media went crazy. Everyone was blogging about it, and for many, the Wal-Mart dispute instantly became one of the most important cases of the Supreme Court's term.
What's interesting about this media frenzy is that the Supreme Court isn't going to decide if Wal-Mart wrongly paid women less than men in comparable positions. They'll be addressing whether the six women who began the case can represent the entire class of 1.5 million women who worked in Wal-Mart's 3,400 stores over the course of the last decade.
Now that you know the Supreme Court will be addressing a legal procedure question and not a juicy merits question, it doesn't seem quite as exciting anymore, does it?
Even if the issue is not as sexy as you thought it was, the Supreme Court's decision in Dukes v. Wal-Mart will still be important. As noted by Jonathan Hyman, an affirmation of the class would greatly increase the risk to employers in defending employment decisions involving dissimilar groups of employees who work in different facilities, report to different managers, etc. Mr. Hyman predicts that if the Supreme Court affirms the class, that decision would result in larger classes with a higher potential for recovery.
Daniel Schwartz thinks that "the publicity that this case is likely to generate will far exceed its actual importance to most employers." Ho notes, however, that HR pros and operations managers should stay on top of case developments so that they can respond to any questions that may arise from this publicity.
Regardless of the Supreme Court's decision on the class certification issue, there are some important take-aways about managing the risks of compensation discrimination claims:
- The importance of document retention can't be stressed enough - the time frame in the Wal-Mart claim is ten years. This is a good reminder to revisit your document retention policies. Without proper documentation, your're going to have a difficult time explaining how your compensation decisions last year were made. Going back ten years is near impossible without documentation. It's better to err on the side of caution; retain more than you think you'll need. It's better to have it and not need it, than to need it and not have it.
- Think about how much discretion is built in to your compensation decisions - one of the judges in the case noted that while subjectivity is inherent in, and if fact a useful part of, personnel decisions, "deliberate and routine use of excessive subjectivity" may lead to discrimination. Make sure you're basing your compensation decisions on measurable and objective criteria.
- Don't underestimate the power of proactive statistical analyses - formally reviewing your compensation decisions will help you to identify potential problems - before someone else does and you end up in court. Your proactive analyses should always be done under the auspices of legal counsel. Involving the legal department, and ideally outside counsel, is the best way to protect the interests of everyone involved.
We'll be watching Dukes v. Wal-Mart over the coming months, and as soon as the Supreme Court renders a decision (expected at the end of June 2011), we'll update you with what the decision means for employers.
Stephanie R. Thomas is an economic and statistical consultant specializing in EEO issues and employment litigation risk management. For more than a decade, she's been working with businesses and government agencies providing expert EEO analysis. Stephanie has published several articles on examining compensation systems with respect to equity, and was recently featured on NPR discussing the gender pay gap. She is the host of The Proactive Employer, and is the owner of Thomas Econometrics. Follow her on Twitter at @ProactiveStats.
Comments