Monday, July 20, 2009

Avoiding Sex-Discrimination Lawsuits

(Required reading for Organization Management Ethics students.)

In May 2005, Boeing agreed to pay $72.5 million to settle a class-action lawsuit brought by female employees who asserted that the company paid them less than male employees and promoted them less quickly.

In June 2005, Wal-Mart faced similar charges.

One month later, Morgan Stanley announced a $54 million settlement to a class-action suit alleging similar charges.

These are not stupid companies, so how did they get into this kind of trouble? All three companies had gender disparity in pay and promotions that weren't obvious but rather subtle, so it was easy for management to think there wasn't a problem.

How can a company avoid sex-discrimination lawsuits? Here are some ways to avoid vulnerability:
  • Always post all job openings.
  • Set up formal systems for selection of employees and their promotion.
  • Define required job competencies.
  • Establish guidelines for how pay is determined and raises granted.
  • Require that the guidelines be applied consistently.
  • Be prepared to justify situations that may appear to be discriminatory.
  • Avoid what may appear to be 'secrets' when it comes to evaluation of performance.
  • When an employee is fired or denied promotion, provide a reasonable explanation.

Can you think of other recommendations?


Unknown said...

I think the best way to avoid situations like those Boening and Wal-Mart have faced are to create and enforce fair and realistic guidelines. These guidelines should cover areas such as hiring practices, pay guidelines, etc. As an employee, I personally think that the best way to stay out of situations such as these is to follow the guidelines set by your company to the best of your ability. If no clear guidelines are set, it is wise to communicate with a manager or someone in human resources to be sure you understand the company's policies.

Alice C. Linsley said...

Very wise, Kim.