Wal-Mart hit by lawsuit on gender bias

A sex-discrimination lawsuit against Wal-Mart Stores Inc. won class-action status Tuesday, allowing it to include up to 1.6 million current and former female employees in the largest private civil rights case in U.S. history.

The case, Dukes v. Wal-Mart Stores Inc., covers store employees and charges the retail giant with discrimination in both pay and promotions. The class covers all women who have worked at Wal-Mart stores since Dec. 26, 1998.

The decision by U.S. District Court Judge Martin Jenkins in San Francisco does not weigh whether discrimination actually occurred.

But his decision sends a clear message that he believes the alleged discrimination is a company-wide issue and not, as Wal-Mart had argued, the experience of a few isolated individuals.

Wal-Mart, the nation's largest private employer with more than 1.3 million employees worldwide, said it would seek an appeal of the judge's ruling, adding "we strongly disagree with his decision."

A company spokeswoman downplayed the significance of the ruling and promised an appeal.

"Today's ruling has absolutely nothing to do with the merits of the case," spokeswoman Mona Williams said. "Judge Jenkins is simply saying he thinks it meets the legal requirements necessary to move forward as a class action."

Jocelyn Larkin, a lawyer with the Impact Fund, a not-for-profit legal group that is representing the six California women who brought the suit in June 2001, said, "We think we can prove it, definitely."

Betty Dukes, one of the women spearheading the suit, said she was paid just $8.44 per hour during her first nine years working at a variety of positions at Wal-Mart's store in Pittsburg, Calif., while several men holding similar jobs but less seniority earned $9 per hour.

Among other issues, Wal-Mart "was leaving it to local store managers to set pay and then not taking any steps to make sure that was done fairly," Larkin said. "This was occurring across the country." Jenkins called the case "historic in nature," representing the largest civil rights class action ever certified against a private employer.

Shares of Bentonville, Ark.-based Wal-Mart fell Tuesday about 1.6 percent to close at $54.06.

In his decision, Jenkins cited the plaintiffs' evidence showing that "women working at Wal-Mart stores are paid less than men in every region, that pay disparities exist in most job categories, that the salary gap widens over time, that women take longer to enter management positions, and that the higher one looks in the organization the lower the percentage of women."

According to the Impact Fund, 65 percent of Wal-Mart's hourly employees are female but only 33 percent of the company's management is female.

Adam Klein, a Manhattan employment lawyer with Outten & Golden who is suing Wal-Mart in an unrelated labor relations case, said the retailer could end up paying billions of dollars if it is found guilty of systemic gender discrimination in the Dukes suit. If it loses the case, Wal-Mart would be liable not only for back wages the women should have earned had there been gender parity -- a figure Klein said might be near $1 billion -- but also for punitive damages.

Wal-Mart has significant protection, though, in its massive cash reserves. At the end of last year, the company had $5.2 billion in cash and cash equivalents.

The case may not even get to trial. Historically, the vast majority of class-action discrimination suits are settled before reaching the trial stage, said Robert Lipman, a partner in Jericho, N.Y.-based law firm Lipman & Plesur.

Tuesday"Wal-Mart is the largest employer in the U.S., so any class action against Wal-Mart is like a bellwether of things to come with respect to other retail employers," Lipman said.

The case also strikes another blow at Wal-Mart's reputation, which has been accused in recent years of everything from destroying local economies by putting local stores out of business to exploiting illegal immigrant workers to censoring record covers and lyrics.

Wal-Mart has begun to respond with television ads trumpeting its philanthropy and job creation in low-income neighborhoods. Some spots show female employees cheerfully describing how much they enjoy their jobs.

The notoriously anti-union company also has started taking steps to reform its labor practices.

Earlier this month, Wal-Mart announced new job classifications and pay scales to help standardize wages for hourly workers. Chief executive Lee Scott also outlined a goal to promote women and non-white workers in the same proportion that they apply for management positions. He said executives will lose a portion of their bonus pay if the goals are not met.