While the sex discrimination lawsuit against Wal-Mart may take months -- if not years -- to reach a settlement, the case against the country's largest private employer is
already shaping up to have a dramatic impact within the PR field.
"This is business school without the tuition," says Richard Levick, president of Washington, D.C.-based Levick Strategic Communications, a litigation and crisis PR firm that
has handled media relations for 3,000 cases and matters worldwide. (Levick is also member of PR NEWS' board of contributors.) PR pros "have to pay attention to what's going on in
other sectors [because] what's happening to Wal-Mart is going to eventually happen to you."
The case dates back to June 2001, when six former and current female Wal-Mart employees accused the retail giant of denying women equal pay and opportunities for promotion. On
June 21, 2004, a federal judge in San Francisco ruled that the case can proceed as a class action. By virtue of the judge certifying the class, the case now includes 1.6 million
current and former female employees who worked at Wal-Mart stores in the U.S., according to one of the plaintiffs' attorneys. On July 6, Bentonville, Ark.-based Wal-Mart filed a
request to appeal the decision; the plaintiffs, in turn, filed an opposition to the request.
If the Court of Appeals allows Wal-Mart's appeal to go forward, it could be at least a year before it's decided whether the class-certification decision stands. While most
high-profile civil cases are eventually settled out of court - Morgan Stanley last week settled for $54 million a three-year old sex discrimination case -- Wal-Mart has been known
to litigate cases until the bitter end. So, it is likely to be a long and drawn-out fight - but one that will have significant repercussions for PR pros.
The Wal-Mart case could once again make disparities over pay a hot-button issue. During the 1980s the Equal Employment Opportunity Commission (EEOC) litigated a large number of
cases against companies it accused of discriminating against women. The issue was pushed down during the go-go 1990s but, as the current economy continues to struggle, may be
making a comeback. Indeed, the EEOC charged Morgan Stanley, the nation's second-biggest securities firm, in the (recently-settled) sex suit.
What's more, the Wal-Mart case reflects what happens when companies come of age. Wal-Mart started in the south and in rural areas before moving into suburban and so-called
"exurban" spots. It's probably only a matter of time until there's a Wal-Mart in midtown Manhattan. As the company's tentacles have reached into more and more communities ipso
facto it has become a bigger legal target.
"Wal-Mart's PR department and other major companies, when faced with major litigation, need to know right at the outset what the company's legal and business objectives are,
what the ground rules are, what is and what isn't privileged information and what should and shouldn't be discussed," says Michael D. Karpeles, a principal and head of the labor
and employment group with the Chicago-based law firm Goldberg Kohn, who wrote a piece about the Wal-Mart sex discrimination case that ran in the Wall Street Journal's Manager's
Journal July 6.
He stressed that the only way Wal-Mart and other companies can get their hands around complicated lawsuits is to think in preemptive terms. "Companies have to take proactive
steps before they're hit with a lawsuit." Even if the Wal-Mart case is settled, he adds, questions will linger about whether the company unfairly treats its female employees. "A
case that may involve 1.6 million women is not easily forgotten."
Michael C. Lasky, a partner with the New York-based law firm Davis & Gilbert LLP and co-head of the firm's litigation and employment practices, says the Wal-Mart case
raises serious questions about the effectiveness of employee communications. "The way to look at Wal-Mart and the Morgan Stanley cases is to think about using employee
communications as a tool to prevent the kinds of situations" that have plagued both companies, he says. Lasky, whose firm represents some of the biggest marketing services
holding companies and many mid-size PR firms, adds that for PR execs there's no "quick fix" to statistics that yield disparities in pay. "Companies have to cultivate the field to
bag the harvest."
Although they're deploying different media strategies, both the plaintiffs and Wal-Mart offer tough lessons for PR execs (of all stripes), starting with losing the "No Comment"
stance that's traditionally been used by companies in high-profile cases. But in the current climate, that dog won't hunt.
Mona Williams, a spokeswoman for Wal-Mart, told PR NEWS that the company is taking pains to address the charges of sex discrimination. "We're not trying to dress things up, but
want to be an instrument of change in our business," she says. "We aren't just trying to play a numbers game. We have put specific programs in place to make sure we have a talent
pool of women
who are well-prepared to step into these jobs." Other changes Williams mentioned include:
- Steadily increasing the percentage of female managers throughout Wal-Mart's approximately 3,000 stores; right now women managers account for just under 40% of the total
number of managers. - Promoting women at the same rate they apply for management jobs.
- Creating a Chief Diversity Office in 2003.
- Setting diversity goals for Wal-Mart VPs; if goals are not met on an annual basis, their bonuses will be incrementally reduced.
Wal-Mart has also purchased paid advertising to profile its female managers. "The best way to address the changes is to have women managers tell their own story," Williams
says. "PR will work with the [female managers] and our legal team to help them."
Joseph Sellers, a principal with the Washington, D.C.-based law firm Cohen, Milstein, Hausfeld & Toll, and a lead attorney for the plaintiffs, is confident the case will
eventually go to trial. "The best way we can communicate is through the facts developed in the case," he says, adding that the plaintiffs have two million pages of documents -
along with testimony from dozens of current and former Wal-Mart's female employees - showing "that women were viewed as second-class citizens at Wal-Mart."
Several observers say the case's emotional component -- that Wal-Mart, allegedly, held back women for promotion -- can't be underestimated. Another important element will be
the battle over numbers. "Stats sound good in the press, but in a courtroom they're subject to cross-examination," says David Margulies, president of the Dallas-based Margulies
Communications Group, which specializes in high-profile litigation and crisis management. "There's always going to be third parties who can look at statistics." On the other
hand, jurors may be sympathetic to companies that can show they have taken steps to address problems over pay.
Although Wal-Mart has been hammered in the media lately for its hiring practices and community relations -- even before the sex-discrimination suit was certified, including a
hard-hitting cover story in BusinessWeek last October-- the company continues to weather the storm, landing the number one slot in this year's Delahaye Index, a quarterly
assessment of how news affects the corporate reputation of the 100 largest U.S. companies.
Wal-Mart's communicators have provided insight beyond just "what happened," but "why it happened" and "what Wal-Mart is doing about it," says Mark Weiner, executive VP and
chief executive, Delahaye Medialink (and a member of PR NEWS' Advisory Board). "In Wal-Mart's case, relatively few stories are totally negative because their spokespeople are
working with journalists in providing a level of context which balances the coverage."
That may change, however. A study conducted by CARMA after the case was certified as a class action found that Wal-Mart's messages about increasing diversity had not gotten as
much play as the allegations that the retailer pays women less than men and doesn't promote them as often.
"The pay gap has not been a priority at Wal-Mart, but it's not been an act of maliciousness, but of omission," Levick says. "The company now needs to use [the suit] as an
opportunity to create a model on how corporate America pays its workers...Wal-Mart is a lot like California. Everything starts there and trickles down to the rest of the country,
including the PR and business worlds."
Contacts: Michael Karpeles, 312.201.3910, [email protected]; Michael Lasky, 212.468.4849, [email protected]; Richard Levick, [email protected]; 202.973.1300; David Margulies, 214.368.0909, [email protected]; Joseph Sellers, 202.408.4600, [email protected]; Don Silver, 954.370.8999; [email protected]; Mark Weiner, [email protected], 203.899.1600; Mona
Williams, 479.273.4314 (Main # for Wal-Mart's Corporate Communications).