On Tuesday , when the Supreme Court opens for oral arguments, employees across the country — especially women — should be very interested. The high court is hearing arguments on a long-running gender discrimination lawsuit against Wal-Mart, the nation's largest retailer. At issue: whether women who have worked at the company will be granted class-action status to sue the company for discrimination (Led by Wal-Mart veterans Betty Dukes and Christine Kwapnoski, this would be the largest class-action suit in history, with between 600,000 and 1.5 million potential plaintiffs).
In litigation that started a decade ago, female Wal-Mart employees are charging that they've been overlooked when it comes to hiring and promotion at the nation's largest private-sector employer. For its part, the company argues that it has strong anti-discrimination policies in place at the corporate level, and that hiring and promotion are decentralized. The case, Dukes vs. Walmart, could be used to set a new precedent for such litigation, which is one of the reasons many business groups have chimed in on the side of Wal-Mart.
Wal-Mart has to like its chances. The Supreme Court under Chief Justice John Roberts has generally been pro-business and hostile to the cause of workers. In 2009, it threw out on a minor technicality the compelling case of Lilly Ledbetter, who had fought Goodyear Tire over sexual harassment and discrimination for a decade. Despite the presence of three women on the court for the first time in history, the plaintiffs shouldn't expect a sympathetic hearing.
As Aaron Task and I discuss in the accompanying video, regardless of the outcome, the case raises a dilemma for the company, and for the economy at large. Yes, women have made great strides in corporate America, with female CEOs at blue-chip companies such as Pepsico, Kraft and Archer Daniels Midland. But despite such gains, it's clear that women aren't treated equally in all workplaces. Women have recently filed a lawsuit against Goldman Sachs and Bayer. Wells Fargo last month settled a class-action lawsuit filed by female financial advisers.
A study from the American Association of University Women points out: "One year out of college, women working fulltime earn only 80 percent as much as their male colleagues earn. Ten years after graduation, women fall farther behind, earning only 69 percent as much as men earn. Controlling for hours, occupation, parenthood, and other factors normally associated with pay, college-educated women still earn less than their male peers earn."
But the fair treatment of women in the workplace isn't just a matter of equity or justice. It's one of competitiveness. As the Bureau of Labor Statistics notes, women hold 49.6 percent of all payroll jobs in the U.S. As Hanna Rosin wrote in the Atlantic : "Women dominate today's colleges and professional schools —for every two men who will receive a B.A. this year, three women will do the same." Companies that can't figure out how to make the most of all human resources will lag. And if the nation's largest private employer has a poor record in this regard, that's troubling.
For Wal-Mart, the lawsuit represents an unwelcome return to the spotlight. A drawn-out class-action lawsuit would make it the poster company for gender equity issues. For much of the past decade, Wal-Mart was seen as responsible for all sorts of societal woes — the decline of mom-and-pop retailers in small-town America, low wages in retailing and other industries, the exporting of the nation's manufacturing capabilities to China, and the decline in companies providing health insurance.
But in recent years, Wal-Mart has gone from unstoppable juggernaut to wounded giant. The company's image has improved somewhat, in part due to efforts to address criticism. It has significantly expanded the provision of health insurance to workers, upgraded the fuel efficiency of its fleet, and pushed to reduce packaging and waste. In addition, Wal-Mart has lost a good deal of its business swagger and menace. Wal-Mart has basically saturated the U.S. market. It has essentially the same number of units in the U.S. that it did last year. In the most recent quarter, Wal-Mart's same-store sales in the U.S. fell 1.8 percent from the prior year. The stock hasn't moved much in the past 10 years. In short, while Wal-Mart still has immense size and power, it is no longer the relentlessly expanding, unstoppable borg it was five or 10 years ago.
While not quite a sympathetic character, Wal-Mart has invested a great deal of time and effort to improving its public image. The certification of a massive class-action lawsuit in which a huge chunk of its employees accuse it of maltreatment would represent a significant hit. And for women and all employees across the country, it would mean a significant victory, easing the ability to prove job discrimination for a variety of reasons — from gender and race to pregnancy or disability.