Outten & Golden: Empowering Employees in the Workplace

Posts Tagged ‘Piper Hoffman’

Court in Costco Discrimination Case to Employers: Don’t Fight Discrimination

Friday, September 23rd, 2011

Piper HoffmanPlaintiffs suing Costco for sex discrimination face another round of litigation thanks to the Supreme Court’s recent dismissal of the Wal-Mart sex discrimination case. Because of the Supreme Court’s decision, the Ninth Circuit Court of Appeals ruled on Friday that the Costco trial court must reconsider whether the plaintiffs can prove that the company should be liable for sex discrimination in store-level promotions. On this question the Court of Appeals, like the Supreme Court before it, ruled the wrong way, discouraging companies from implementing measures that would prevent discrimination.

When companies leave employment decisions like promotions to individual decision-makers without giving them clear, relevant criteria to guide their decisions, those decisions are often discriminatory, albeit sometimes unintentionally. Many corporations, including Costco, provide no uniform criteria – or any guidance at all – for making promotion decisions. This leaves each individual manager (the vast majority of whom are male at Costco) to make promotion decisions as he sees fit. When making decisions with unfettered discretion, people tend to rely on stereotypes and to promote those they are most comfortable with and who are most like them – in short, in the absence of clear criteria, men usually promote men. Witness Costco’s demographics: female lower-level managers at Costco are less likely to be promoted than their male counterparts. It appears that only two of Costco’s top 34 executives are women. The problem is not a shortage of interested or qualified women: Costco’s competitors have a much higher proportion of women in management than Costco does.

Companies can prevent this kind of discrimination. Sociological research shows that holding top management responsible for establishing and enforcing uniform, unbiased promotion criteria goes a long way. When companies provide managers with performance-related criteria for promotion decisions, managers can evaluate whether a candidate satisfies those criteria instead of making a gut-level decision based on personal relationship or other irrelevant factors.

Companies can also prevent sex discrimination in promotions by increasing the pool of candidates. When employees don’t know promotions are available, managers may not even consider qualified women for the positions – they may not know them well, or may rely on stereotypes to conclude that they don’t want promotions. The Costco case illustrates these consequences: the three women who sued desperately wanted promotions, but none of them ever applied for one – they couldn’t, because Costco did not accept applications, and they never knew when promotions were available anyway. An easy fix is to inform employees of promotion opportunities and invite applications. Interested women will throw their hats in the ring and managers will evaluate them based on the relevant criteria, resulting in more promotions of women.

The courts in Costco and Wal-Mart ruled the wrong way because they discouraged companies from adopting these measures. They held that corporations are not liable in class actions for the discretionary decisions of individual managers, creating an incentive for companies to wash their hands of preventing discrimination in their ranks. The more anarchic the system for decisions about promotions and other perks – raises, bonuses, etc. – the more insulation the company has from discrimination class actions. The Costco decision quoted the Supreme Court’s Wal-Mart ruling on this point: “demonstrating the invalidity of one manager’s use of discretion will do nothing to demonstrate the invalidity of another’s. A party seeking to [bring] a nationwide class [action] will be unable to show that all the employees’ Title VII claims will in fact depend on the answers to common questions.” In other words, if the only thing promotion decisions have in common is that managers make those decisions however they want, the company as a whole is not liable for resulting discrimination. In contrast, if the company disseminates guidelines for making promotion decisions that result in discrimination, the company can be held liable.

Smart companies will adopt best practices like enforcing uniform criteria for promotion decisions, both to retain and get the benefit of employing talented people and to avoid discrimination suits by individuals, which are not affected by the Wal-Mart and Costco decisions.

The Court of Appeals sent the Costco class action case back to the trial court for reconsideration, giving the plaintiffs another chance. But the trial court will labor under the higher court’s instruction (again, quoting the Wal-Mart decision) that it “must determine whether there was ‘significant proof that [Costco] operated under a general policy of discrimination.’” Proving that Costco operated under a general policy of laissez faire will not suffice to save this sex discrimination case.

This post originally appeared on Piper Hoffman-Rock the Boat: Law, Society, and Social Justice on September 22, 2011. Reprinted with permission.

About the Author: Piper Hoffman is a writer and employee-side employment lawyer. She holds degrees with honors from Harvard Law School and Brown University. Hoffman blogs regularly on law and social justice issues at piperhoffman.com.

Settling Gender Discrimination Class Actions (Part I)

Wednesday, July 28th, 2010

Piper HoffmanEight- or nine-figure settlements of gender discrimination class action lawsuits regularly make news. It seems like discrimination this pervasive – essentially, discrimination as corporate policy – should be a relic of the Mad Men past. To the contrary, in countless companies and even entire industries, discrimination against women is business as usual. The latest example is Novartis, a pharmaceutical company, which settled a gender discrimination class action for up to $175 million last week. (Note that the first legal step in this case was taken seven years ago – keep that in mind before you run out to sue your boss.)

As a lawyer, I spent several years bringing and settling discrimination lawsuits against large employers. I talked with female employees who told similar stories of discrimination derailing their careers and sometimes even damaging their health. I learned that it will take an awful lot to eradicate gender discrimination against women at work.

Company-wide discrimination looks pretty much the same no matter the employer’s industry, region, or public image. Managers deny women opportunities for management training. They deny women in sales the best accounts and territories. When a woman succeeds in building up a previously lackluster account, management takes it away and gives it to a man. Managers exclude women from networking opportunities, management training, and promotions. They deny their female employees awards and recognition that they have earned. Managers penalize women who take legally-mandated leave to give birth or to bond with an adopted child. Offending companies pay men more than their female peers.

Then there is sexual harassment, which can include public humiliation, wildly inappropriate comments, even more wildly inappropriate touching, sexual propositions, public discussions among male employees and managers about their female colleagues’ and clients’ physical appearances or sexual proclivities, you name it. I know of a male manager instructing a female subordinate to unbutton her blouse more before meeting with a male client to increase her chances of making a sale. I know of a male manager raping a female subordinate. And everything in between.

Woe betide the woman who dares to complain about discrimination to Human Resources or to the government agencies responsible for enforcing anti-discrimination laws. The traditional next step is for the company to retaliate against her – never mind that retaliating against someone who complains about employment discrimination violates federal law. Retaliation means not only more of the same for the complaining employee, but worse. A manager who had not been in the habit of humiliating women in front of male colleagues and clients will take it up as a new hobby. Any raises, bonuses, promotions, training opportunities, etc. that management had promised to the woman vanish, never to reappear.

The Novartis complaint includes the detailed allegations of Novartis’s discrimination against 22 women. Combined, their stories cover pretty much all of these bases. One recurring theme is the utter pointlessness of complaining through official channels about discrimination or retaliation. Woman after woman reports that she submitted a complaint to Human Resources, and Human Resources ignored it.

This is not surprising. Human resources originated as a corporate response to the labor movement: companies discouraged employees from organizing unions by offering them newfangled personnel management or human resources departments to address their needs, assuring workers that their employers would take better care of them than unions would. From the beginning human resources was corporate CYA, tasked primarily with protecting the company from threats including unions and legal liability, and only secondarily (if at all) with helping employees. Some companies have moved past that history and created human resource departments that actually support employees, but that is far from the norm.

The Novartis settlement agreement, like many other class action discrimination settlements, focuses on reforming human resources and the complaint process so that it works for employees and not against them. The settlement agreement devotes page after page to detailing the coming reforms.

If all goes according to plan these reforms will be a welcome improvement for Novartis’s women, even if they are only partially successful. Theoretically they will serve three goals: (1) ending ongoing discrimination against individuals who file complaints (“complainants”); (2) preventing retaliation against individual complainants; and (3) deterring discrimination at Novartis. These are all ambitious goals, and perhaps not entirely reachable, but the most implausible is the second. Imagine the scenario: a woman files a complaint with her employer about her male supervisor’s discriminatory behavior. Human resources can warn him not to retaliate; his own bosses can warn him not to retaliate; the company’s lawyers can warn him that retaliation is illegal; but still, realistically, he will retaliate. Maybe he will be smart and it will be subtle. He won’t pal around with the complainant. His performance evaluation of her will be less than stellar. When he has the opportunity to promote somebody, if there is someone else with credentials reasonably similar to hers, guess who will get the promotion. And all this is the best case scenario. A less smart, less subtle supervisor will make the woman’s work life a living hell.

Reforming the human resources department at a company rife with gender discrimination is both necessary and laudable, but it is not sufficient (nor is it all the Novartis settlement agreement provides for – that document is 68 pages long). Ending discrimination can only happen before discrimination starts. Stay tuned for the details in Part II.

About The Author: Piper Hofman is a writer and attorney living in Brooklyn with a B.A. magna cum laude from Brown University and a J.D. cum laude from Harvard Law School.  She has professional experience with the laws related to employment, animal rights, poverty, homelessness, and women’s rights.

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