Three of the nation's largest warehouse retailers - Wal-Mart, Home Depot and Costco Wholesale Corp. - have much in common: In opening hundreds of new stores, they've hired tens of thousands of hourly employees, many of whom have become managers.
In the past year, the three big box chains also have faced claims of discrimination. Some employees allege they were routinely passed over for promotions due to sex and race discrimination.
Home Depot was the first to resolve one of these lawsuits. On Aug. 25, it agreed to pay $5.5 million to settle a discrimination and retaliation charge brought by the U.S. Equal Employment Opportunity Commission on behalf of dozens of Colorado employees.
Brad Shefrin, an employment law attorney with Denver-based Zupkus & Angell, said the recent spate of lawsuits may be caused by fast-growing retailers not adequately training managers about discrimination.
In the past five years, Wal-Mart has added more than 500 stores and Costco has added 133 stores. Home Depot expects to open 175 stores this year.
"You're dealing with the same formula, which is big, quick growth," said Shefrin. "With these profit centers, the revenue is the bottom line, and they don't want to pay for the kind of training that they need."
John Husband, a labor and employment attorney at the Denver firm Holland & Hart, said he sees a different problem: Stores within a chain are all managed independently.
"When you have as many stores as they have, you have a manager in Denver doing one thing and a manager in Texas doing another," he said.
Husband said another reason for the flood of recent discrimination lawsuits is that they're in vogue.
"Trends happen in employment law," he said. "Once a plaintiff hits up one company, you'll see copycat cases pop up all over. That's what we're seeing right now, and I think we'll see more of it."
In the Home Depot suit, plaintiffs alleged that several stores in Colorado created hostile work environments where employees were discriminated against on the basis of sex, race and national origin and retaliated against if they complained.
Atlanta-based Home Depot did not admit any wrongdoing as part of the settlement, but agreed to train non-supervisory employees, managers and human resource employees in anti-discrimination laws. It also agreed to appoint an ombudsman to oversee employee-discrimination complaints.
"All companies should be doing these things right now," said Husband, who represents employers. "If they're not, they are going to be subject to these suits."
Shefrin said bias lawsuits surged in 1992 after Congress amended the Civil Rights Act of 1964, allowing the use of jury trials for the first time in sexual harassment cases. Congress also said plaintiffs no longer had to prove actual damages.
But the lawsuits were curtailed in 1998 after the Supreme Court ruled that businesses would be protected in discrimination claims as long as they "have good policies in place and allow for investigations and a mechanism where people can protest unlawful harassment and be protected when they bring those protests to management," Shefrin said.
Shirley Ellis of Arvada, Colo., sued Costco in August. The suit claims Costco has denied hundreds of women advancement to high-paying management jobs. Attorneys for Ellis are seeking class-action status.
Costco, based in Issaquah, Wash., has denied the allegations.
Mark Stalwick, director of personnel for Costco, said the company has had a management-training program in place for more than 20 years.
Wal-Mart is the world's largest retailer and creates an average of 230 jobs per day in the United States.
It now finds itself in the hot seat, facing a class-action discrimination lawsuit potentially representing 1.6 million past and current female workers.
The lawsuit claims Wal-Mart often pays female workers less than their male counterparts for comparable jobs and bypasses women for promotions.
Wal-Mart, based in Bentonville, Ark., is fighting the lawsuit. But the company also has made changes to its employment practices. It put in place a pay structure for hourly workers and next month will launch a "career preference system," enabling employees to indicate if they're interested in management jobs.
In the past year, Wal-Mart has created an office of diversity to oversee hiring and promotions.
"Our goal is to make sure that the percentage of qualified minorities and women we promote is equal to the percentage who apply," chief executive Lee Scott said in June. He said the company met that goal in 2003.
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