Costco Settles Gender-Discrimination Lawsuit for $8 Million

Giant wholesale retailer Costco has tentatively settled a gender-discrimination class-action lawsuit for $8 million, the Seattle Times reports.  The settlement will become finalized if the court approves it at a hearing in February.

The core of the complaint is that Costco’s promotion practices disadvantaged women in the company: rather than posting positions internally and letting qualified candidates apply, candidates were hand-picked for promotions to managerial positions.  The result was that the farther up the managerial chain you went, the smaller a percentage of employees were women.

Had this resulted from a non-biased application process, there would not have been a discrimination problem; however, because there was no clear process in place, women were unable even to put themselves forward for potential promotions.  A site maintained by one of the law firms involved breaks down the case:

The suit specifically claims that Costco has pursued policies and practices on a continuing basis which result in the denial of equal job opportunities to qualified women. Such policies and practices include:

  • Relying upon subjective, gender-based and/or arbitrary criteria utilized by a nearly all male managerial workers in making promotion and compensation decisions;
  • Failing to follow a uniform job posting procedure to guarantee that all employees have notice of openings;
  • Discouraging females from applying for senior level management positions;
  • Failing and refusing to consider females for promotion on the same basis as males are considered;
  • Failing and refusing to promote females on the same basis as males are promoted and compensated;
  • Failing to provide females with accurate and timely notice of promotional opportunities; and
  • Maintaining and fostering a reputation for discriminatory conduct which deters females from pursuing promotion opportunities with Costco.

If the lawsuit doesn’t immediately ring a bell, it is perhaps not surprising: the first complaint was filed in 2002, and the lawsuit filed in 2004.  The case wound through the legal process for the past decade before the class in the class action was certified in September 2012, and the process began to more forward again.

The $8 million settlement includes compensation for current and former employees who were incorrectly denied promotions.  Claimants still with the company who were improperly denied promotions can receive up to $50,000, and former employees can receive up to $300,000, depending on the position.  Costco also promises to reform its internal promotion process, to allow employees equal opportunity to apply for management jobs going forward.

Costco settles promotion lawsuit for $8M, vows reforms [Seattle Times]

Read Comments2

Edit Your Comment

  1. CommonC3nts says:

    I would not call this a “discrimination case”, but a “we got you with a loop hole lawyer tactic to make money.”
    Basically no discrimination took place, but because they did not have a formal application to submit process for promotions/open manager positions now they have to pay out a lot of money for no good reason.

    Sorry, but the act of taking in applications from everyone does not change how people are hired so this whole lawsuit is just one big money scam.

    • PhillyDom says:

      What part of

      The result was that the farther up the managerial chain you went, the smaller a percentage of employees were women.

      do you not understand?

      A practice that has a discriminatory effect is discrimination.