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Nike Inc. is accused in a new lawsuit of discriminating against 500 or more women, including by relying on their salary history in setting their starting pay, marginalizing their performance to stifle their career growth, and largely ignoring sexual harassment.
The class lawsuit was filed Aug. 9 in Oregon federal court by Kelly Cahill and Sara Johnston, two former Nike employees. lf their allegations about the use of prior salary are substantiated, Nike could be in a sticky legal situation as the U.S. Court of Appeals for the Ninth Circuit recently held that relying on an employee’s prior pay when setting her starting salary violates federal law. The circuit’s rulings are binding in federal court on employers in Oregon, California, eight other western states, and two U.S. territories.
Nationally, the federal Equal Employment Opportunity Commission has published guidance reaffirming the rights of workers to be free from discrimination in pay and separate guidance on how employees may challenge suspected pay bias. The agency, which enforces federal anti-discrimination laws against private employers, weighed in on the Ninth Circuit’s look at the legality of salary history inquiries, telling the court that allowing an employer to rely on prior pay undermines the purpose of the Equal Pay Act by institutionalizing gender pay disparities.
In addition, countless state and local governments have outlawed questions about prior salary at various stages of the hiring process. These laws are seen by some as a partial salve on the Trump administration’s abandonment of several measures put in place by President Barack Obama to level the pay playing field for women and other minorities.
Other companies currently facing allegations of systemic discrimination against women include John Varvatos Enterprises Inc. and Merck & Co. Several employers have paid big bucks to settle similar allegations against them, including Daiichi Sankyo Inc. ($8.2 million), Publicis Groupe SA ($2.9 million), and the University of Denver ($2.6 million).
Nike didn’t immediately respond Aug. 10 to Bloomberg Law’s request for comment.
Nike recently announced that in the wake of a review of its pay structure, including pay equity, it was increasing the salaries of about 7,400 workers worldwide.
Two other women have already joined the lawsuit. Together with Cahill and Johnston, they allege that the sex-based inequities occur “because of specific employment policies or practices that are developed and carried out in a workplace that is hostile towards women and where the ultimate arbiters of these policies or practices are a small group of high-level executives who are majority male.”
The women say the discriminatory scheme means that fewer and fewer women will be found the further one looks up Nike’s corporate ladder. It wasn’t “until March 2018 at the earliest” that Nike conducted regular employee training at its Beaverton, Ore., headquarters that was specifically focused on sexual harassment, the lawsuit asserts.
Numerous women have complained to Nike about its sexually hostile work environment, but the company has always dismissed their allegations as “unsubstantiated,” according to the complaint.
Nike’s budgeting system for setting annual salaries and bonuses also is unfair to women, as is the “talent planning system” it uses to determine who might be promoted, the lawsuit charges. The company has a practice of pushing women into jobs and assignments that similarly hurt their chances to get ahead and earn more, the lawsuit says.
The use by Nike of a “forced ranking system” during its annual employee review process is another major contributing factor to the systemic sex bias, the women allege.
“Stack” or forced ranking performance-evaluation systems are frequently challenged by groups of workers as having a discriminatory impact based on sex or another protected trait. Similar to the “bell curves” teachers sometimes use, such ranking systems require that only a fixed percentage of workers may be assigned higher rankings. Other employers that have been sued over their use or alleged use of forced ranking include Sandia Corp., Uber Technologies, Microsoft Corp., and Fiat-Chrysler’s U.S. subsidiary FCA US LLC. Uber settled two cases against it for $10 million.
Markowitz Herbold P.C.; Goldstein, Borgen, Dardarian & Ho; Ackermann & Tilajef P.C., and India Lin Bodien represent the women. No attorney had filed an appearance yet for Nike.
The case is Cahill v. Nike, Inc., D. Or., No. 3:18-cv-01477, class complaint filed 8/9/18.
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