July 7 (Bloomberg) -- For a moment, I wondered if my phone had gone dead.
I was talking to Deondrea Thomas, who works as a sales associate in the shoe department at the Duncanville, Texas, Wal-Mart. She’d been chatting away for 10 minutes when I asked whether she’d ever used Wal-Mart’s “Open Door” policy for employees who have a complaint about their job.
Suddenly, there was dead air. Then, a burst of nervous laughter. “Nobody likes that policy,” she said, her cheerful tone turning abruptly dark. Take a concern to management and “your hours will be cut or there will be some kind of retaliation.”
Wal-Mart women aren’t doing a lot of laughing since the Supreme Court banished their class-action sex discrimination suit to a litigation dumpster. On June 20, the court said that the million-and-a-half women suing for pay and promotion discrimination could not proceed as a single class.
Individual women, 12,000 of whom contacted lawyers after the case was filed in 2001, can still carry on with lawsuits or complaints to the Equal Employment Opportunity Commission. Smaller groups may also band together against a store or a region. But the high impact of a single court case -- a public affair that would shine a spotlight on the grisly anecdotes and the out-of-proportion statistics -- will never happen.
If there was any question that the little gal has been squashed to the benefit of big-company interests, consider the exuberance of Larry Kudlow, the ferocious booster of capitalism at CNBC. “Today’s stock market rally was the Wal-Mart effect,” he wrote of the 76-point rise in the Dow Jones Industrial Average on the day the women lost. Noting that business would save “billions and billions of dollars” as a result, Kudlow declared the decision a “huge defeat for frivolous class action lawsuits.”
It’s a partisan stretch to suggest that the Wal-Mart suit, with its stack of persuasive affidavits and trove of gender-lopsided statistics, was frivolous. But I can’t argue with the notion that it’s a coup for business. Companies, in fact, get a double win. There is the giant reduction in lawsuit risk that’s been the focus of many a headline. Equally important to the corporate bottom line: Employers can continue to tap a huge pool of female labor at a discount to the market price for men.
Here are some of the statistics that the court dismissed as having fallen “well short” of showing that managers were exercising pay and promotion discretion in a common way, which the women needed to prove to proceed as a class. When the suit was filed, women filled 65 percent of the hourly jobs, but only 14 percent of store manager positions. It took 4.4 years for the average woman to advance to assistant manager, while men got there in 2.9 years. Among those in hourly jobs, men made $1,100 a year more than women in similar positions. Among salaried managers, men out-earned women by $14,500 a year.
Along with the tooth fairy, we can now believe in the notion that those “Little Janie Q’s,” as the Wal-Mart women were called by male co-workers, wound up with inferior paychecks by way of some fluky black swan event at the big box store.
Wal-Mart spokesman Greg Rossiter says the anti-discrimination policy is “part of the company’s culture” and breaching the rules can lead to punishments “up to suspension or termination.”
A key Wal-Mart argument was that its individual store managers, bestowed with abundant authority to make pay and promotion decisions without policy guidance from headquarters, couldn’t possibly have all been discriminating against women. Well, don’t be so sure about that.
The court minority of three women and one man referenced social science research that gave a clear example of how male bosses can overlook women during the hiring process. In a footnote, the four offered the example of a study that examined hiring by symphony orchestras. When judges were able to see the musician during an audition, fewer women were hired. When musicians played behind screens, and only musical abilities entered into the decision, suddenly more women made the cut.
Studies like that could have played a part in shaping the court’s thinking, but instead, the majority had its own take on management behavior that must have seemed out-of-touch to any victim of sex discrimination. My personal favorite: That, “left to their own devices most managers in any corporation -- and surely most managers in a corporation that forbids sex discrimination -- would select sex-neutral, performance-based criteria for hiring and promotion that produce no actionable disparity at all.” Float that idea around the water cooler in the morning and stand back for the guffaws from your female co-workers.
If you take the time to flip through the 120 affidavits that accompanied the plaintiffs’ complaint, you will enter a world where a boss’s hunting and fishing buddy gets on the fast track, where multiple complaints about a sexual harasser are received with advice to “grin and bear it,” and where a black woman is advised: “We’re all rednecks here, so you might as well get used to it.”
Katheryn Johnson, who was hired at the Troy, Alabama, Wal-Mart in 1999, couldn’t even get her district manager to read her application for the management training program. She buttonholed him at work one day to ask if he’d read it yet. “Naw, Shug, I sure haven’t,” he said. She quit, and then called the 1-800-WALMART line to complain about how she’d been treated, according to her affidavit.
The ruling makes it difficult to bring class-action discrimination cases in the future, says Melissa Hart, associate professor at the University of Colorado School of Law. “One of the things that’s troubling about the decision is they seem to say you have to prove discrimination occurred in order to get certified,” she says. “It flips the order of things.”
Hart is referring to the part of the decision discussing the need for “significant proof” that an employer had operated under a policy of discrimination. Hart says that language came from the footnote of an earlier ruling that has never been considered a requirement for proving commonality of a class. Knowing that fewer women will be allowed to fight as a class, she predicts companies will monitor their diversity standards less.
Women’s groups and labor unions are mobilizing to promote two politically unpopular fixes that would outrage business: passage of the Paycheck Fairness Act, which would lift the cap on damages in pay discrimination suits and ban companies from penalizing workers who share salary information, and a fresh push for a union at Wal-Mart.
Already, a worker support group, Organization United for Respect at Wal-Mart, or OUR Wal-Mart, has attracted former employees like Dawn Littman, who says she’s ready to assist. If a Wal-Mart woman ran into difficulties at work, “I’d tell them I’m part of an organization, Our Wal-Mart, and if you have problems, here’s my phone number.’’
Ernestine Bassett, an Our Wal-Mart member who works at the Laurel, Maryland, store, said in an e-mail that members pay $5 a month to belong. Although she said the group is not a union recruiting attempt, Our Wal-Mart received seed money -- it won’t disclose how much -- from the United Food and Commercial Workers International Union, and individual members including Bassett have supported unionization. Thomas, the Duncanville, Texas, sales associate, said a union tried to organize at her store several years ago, but didn’t get enough signatures. “I did sign last time,” she said. “And if they came again, I’d sign again.”
‘War on Women’
To bolster the union efforts, National Organization for Women president Terry O’Neill is talking to the UFCW “about going into specific stores and getting community support through NOW chapters.” O’Neill is furious about the Supreme Court decision, which she calls the latest attack in “a war on women that’s absolutely raging at the moment.”
NOW’s 500,000 members will be learning that what happened to Wal-Mart’s Janie Q’s could happen to them, too. If the group gets its way with legislation and a new union push, maybe the joke won’t wind up being on women after all.
(Susan Antilla, who has written about Wall Street and business for three decades and is the author of “Tales From the Boom-Boom Room,” a book about sexual harassment at financial companies, is a Bloomberg View columnist. The opinions expressed are her own.)
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