Walmart Lawsuit Sends Employers a Warning

Watch Out for Trouble: Walmart’s Legal Battle Over Pay

By Bridget Quigg,

Walmart is in hot legal water. Though a nationwide sexual discrimination lawsuit was just settled in their favor by the Supreme Court, it looks like they have similar, though smaller, suits on the way – possibly a lot of them. What do we know about Walmart and what can we learn from this cautionary tale for employers?

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Three of Walmart’s female employees filed a case on behalf of themselves and 1.5 million of their female coworkers nationwide (intended to include all female employees at Sam’s Club and Walmart stores from 1998 to 2001), claiming sexual discrimination in Walmart’s pay and promotion practices.

The Supreme Court did not decide in the female employees’ favor, but the battle does not appear to be over.

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A story published after the verdict quotes one of the plaintiff’s, Christine Kwapnoski, as saying, “When I go back to work tomorrow, I’m going to let them know we are still fighting.” The Supreme Court decided that Walmart did not have a single, nationwide policy that resulted in all of the discrimination claims made and that is why the plaintiffs lost. Next up are cases in local courts that will be filed by individual’s or small groups of female Walmart employees.

This legal mayhem is a nightmare for any company, even one with deep pockets like Walmart. One line from the above-mentioned story is especially interesting to those of us here at Compensation Today. It reads, “Kwapnoski and others pressing their suit claimed they were victimized by Walmart’s practice of letting local managers make subjective decisions about pay and promotions. More than 100 employees had filed sworn statements saying they were paid less and given fewer opportunities for promotion than male colleagues.”

Walmart’s pay practices are being scrutinized for inequity based on gender. Subjective decisions by managers? Those can happen anywhere. The fact that Walmart won the first case suggests that they have been paying close attention to their policy language. It’s hard to say. But it seems that it may be more the practice of the policy that is failing.

Walmart’s situation brings up some important questions for HR professionals. HR leaders play an important role in helping ensure that their company does not end up where Walmart is, in court. Not only are they part of the policy creation, they are essential to it being understood and implemented properly by the management team and other employees.

Here is a checklist of questions to address to ensure you minimize the risk of legal problems at your company:

  • Do you have your compensation philosophy well defined?
  • Have you done market research on what to pay your employees in each position, depending on their level of experience, location, skill level and other factors?
  • Do you maintain a salary structure that rewards employees on legally defensible criteria, such as experience, skills and performance?
  • Can you explain why each employee at your company earns what he or she does?
  • Do your managers understand the company’s pay practices?

It’s always hard to defend pay decisions made by many different managers unless the company can prove that it provides good guidance to managers on how to make pay decisions. That starts with a well-executed compensation structure. How does your company stack up? If it’s time to mitigate this risk in your organization, a well-executed compensation structure is the best route.

For information’s sake, we dug through and found some information in our PayScale database on Walmart’s pay practices and culture, as reported by its employees:

  • Walmart’s gender balance tips towards female employees: 57 percent female and 43 percent male.
  • Women’s hourly pay range bumps up a bit higher than men’s, on average. Women: $8.67 – $12.10 per hour. Men: $8.63 – $11.70 per hour
  • Walmart does not typically offer vision or dental insurance.
  • Opticians, pharmacists and production managers are some of the best-paid Walmart employees.
  • Permanent employees are some of the best paid at Walmart, with part-time employees earning nearly two dollars less per hour on average.
  • Employees with 5-9 years of experience don’t get quite two weeks of vacation per year.
  • Outside of Bentonville, Ark., the best paid Walmart employees are in Dallas, Texas.

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