Several recent major employment discrimination cases have received considerable attention in the news, including Dukes v. Wal-Mart and Ellis v. Costco Wholesale. These two cases, while they differ in certain aspects from one another, share many common features and suggest that employers need to pay more careful attention to certain human resource (HR) practices. The purpose of this article to provide a brief overview of these two cases and to describe some implications for HR practitioners.

Dukes v. Wal-Mart and Ellis v. Costco Wholesale

Very briefly, Dukes v. Wal-Mart involves charges that women, possibly as many as two million, were promoted less frequently, and paid less, than comparable men. Ellis v. Costco Wholesale contains allegations that women (albeit much smaller in number than Dukes v. Wal-Mart) were promoted less frequently into managerial positions than men. In both cases, the court ruled in favor of class certification, which simply put, would allow each case to proceed with a single, large group of plaintiffs (e.g., in the case of Dukes v. Wal-Mart, the class may involve as many as two million plaintiffs) rather than hundreds and hundreds of separate cases, involving separate trials. From a legal perspective, class certification is viewed as a victory for plaintiffs, and as a significant loss for the defendant company, as it becomes easier for the plaintiffs to prepare for one large trial, than for hundreds of individual trials.

Human Resource Management Issues

While these recent cases are significant from both a legal and an HR perspective, I will focus on the HR issues that were raised.

1. HR practitioners should note that in both cases, the plaintiffs used social scientists and statisticians to testify against the company's practices, indicating the increasing importance of social sciences in general, and other research literature (e.g., stereotyping) in specific. The importance of an understanding of statistics on the part of HR practitioners is also likely to increase.
2. It is noteworthy that both cases challenged promotion practices and in Dukes v. Wal-Mart, the pay practices as well. In the past, many organizations have used relatively subjective promotion practices, with little guidance or direction for the managers making these decisions. Similar practices have often been used for making pay decisions. What these lawsuits suggest is that promotion and pay practices may be the target of allegations of discrimination and that companies need to be more vigilant in terms of how those decisions are made and what documentation exists regarding them.
3. A third, related development is that the courts have criticized the lack of standardization and guidelines for the HR practices in these companies. In other words, the HR practices in both cases have been challenged as using "unwritten, subjective" systems to make promotions and pay decisions. The expert witness for the plaintiffs in the Costco Wholesale case, for example, noted that there was an absence of written guidelines and standardized decision making processes for choosing managers, including a lack of written information regarding the jobs, the qualifications needed to perform those jobs successfully, or the criteria used to assess those qualifications. Competency analyses, structured interview processes, or other well-established HR tools were not used.
4. As a consequence of not using more objective, standardized HR tools, there were indications that stereotyping affected pay and promotion decisions. In each case, the courts examined the likelihood of stereotyping occurring in the workplace, which social science research has demonstrated to be difficult to eliminate. While the existence of workplace stereotyping may also be difficult to pinpoint, organizational documents and statements by organizational representatives may point to the possibility of stereotyping. For example, the CEO at Costco Wholesale testified in pre-trial hearings that he believed that women were offered promotion opportunities for important manager positions at the same rate as men, but he believed that they were more likely to turn them down. This was perceived as an indication of a sex stereotype on the part of the company.
5. Finally, in both cases, statisticians used sophisticated data analyses to argue that women were promoted less frequently compared to men. Although the use of statistics to support plaintiffs' arguments of discrimination is hardly new, their use in this context indicates that HR departments will need to become increasingly sophisticated about how statistics are used and various pitfalls that companies may face when their promotion and pay practices are subjected to those kinds of analyses.

Implications for Organizations

There are several key implications for organizational HR practices that may be gleaned from these cases. First, organizations need to pay more attention to their promotion and pay practices, which may suffer from subjectivity and lack of guidelines. Proper documentation, including job descriptions, work competencies, and the criteria upon which candidates should be assessed, is critical. Organizations should consider developing and using similar documentation for pay decisions. Second, development of standardized assessment procedures will prove helpful. Many organizations, for example, have developed structured interview procedures for promotion decisions that help ensure fair and objective decisions are made. Third, organizations need to more carefully consider statistical analyses of their HR practices to help pinpoint where problems may exist and to avoid discriminatory practices. Organizations need to be cautious here, too, as there are issues of potential discovery by plaintiffs and therefore they should consider whether this work would be considered privileged communication or not.

In sum, HR practitioners must stay tuned to new developments in the social sciences and the law and should be prepared to modify and change their pay and promotion processes to ensure legal compliance. Failure to do so may result in costly litigation that will create poor publicity for organizations.