When President Obama issued a statement last week marking the 47th anniversary of the Equal Pay Act, the federal legislation that sought to end gender-related wage discrimination, he noted ongoing wage inequities and the fact that women continue to earn only 77 cents for every dollar earned by men. Unfortunately, he failed to mention the recent judgment against Swiss pharmaceutical company Novartis, one so enormous that it could do more to resolve the persistent wage gap than any government measure.
The Novartis verdict, issued late last month, was record breaking by many measures. The jury ruled that the company, which for more than a decade had been listed among the top 100 companies to work for by Working Mother, had discriminated against its female employees in pay and promotions for at least five years, from 2002 through 2007. During the five-week trial, Novartis employees testified about a boss who refused to hire women because, as he said, “first comes love, then comes marriage, then comes flex time and a baby carriage”; a manager who invited his female colleagues to sit on his lap and showed them pornographic pictures; and company trainers who routinely told female employees not to get pregnant. The 12 women who testified were awarded $3.36 million in compensatory damages, while Novartis was held liable for an additional $250 million in punitive damages. Nearly 5,600 other female employees can now file for individual damages that could amount to upward of $200 million. It was far and away the largest penalty ever associated with a gender-discrimination lawsuit—and many were quick to deem it precedent-setting. Within the next year, the Novartis case will be followed by a potentially larger complaint against Walmart. That case has been tied up in court since 2001, but in April a federal appeals court ruled it could proceed as a class action. Walmart has said it will appeal that decision; if it does go to trial, it stands to be the largest civil-rights class-action suit in history.
The experience of the female Novartis employees, though, is not unique. College-educated women make 20 percent less than men from the moment they enter the workforce, according to a 2007 study from the American Association of University Women. Ten years later, full-time working women who haven’t yet had children make 23 percent less than their male colleagues. Inequity persists even among the most highly educated: a recent Catalyst study found that female M.B.A.s make $4,600 less than their male peers in their first jobs out of business school. Discrimination based on race, nationality, and, of course, gender, is illegal, so why does it persist?
For starters, women often don’t even realize they’re making less than their male counterparts, particularly since employees rarely discuss salaries. When female employees do recognize the wage difference, they seldom file class-action suits like the one at Novartis. And under the current legislation, complainants rarely receive anything more than back pay: a paltry sum for companies and an even smaller amount of compensation when you account for legal fees. This gives companies the license to think of gender discrimination as a calculated risk that’s financially often worth taking. “It’s more cost effective for companies to discriminate,” says Portia Wu, vice president of the National Partnership for Women & Families.
The Novartis verdict is deemed precedent setting because it went far beyond simple pay discrimination. Employees alleged discrimination based on pregnancy and motherhood, too—claiming that women were fired when they were on maternity leave and mocked by superiors if they were visibly pregnant. It’s these motherhood-related allegations that may have tipped the scales to the tune of the multimillion-dollar penalty. “Juries tend to react quite strongly to discrimination against mothers,” says Joan Williams, a law professor at the University of California’s Hastings College of Law and the director of the Center for WorkLife Law. “After all, these mothers, assuming they’re doing all that they should at work, are then being penalized at work for trying to live up to the ideals of motherhood; $250 million in damages? You had a jury that appears to have been incensed.”
Williams says that the verdict signals a new era of gender-based discrimination complaints—one that combines the glass ceiling with what she calls “the family wall.” Calls to her center’s hotline have more than doubled since the fall of 2007, she says, an indication that discrimination has only gotten worse. Similarly, complaints to the Equal Employment Opportunity Commission have risen steadily since the start of the recession, from 75,768 in 2006 to 93,277 in 2009. With companies laying employees off, motherhood is often associated with lesser productivity, says Williams, so women may be more likely to get the axe unfairly. Williams says the combination of gender discrimination and discrimination against mothers can be “truly volatile,” leading to higher judgments and an above-average win rate for complainants. A 2010 study found that family-responsibilities discrimination complaints rose by 400 percent in the last decade. The vast majority of those cases were related to motherhood, the average verdict amounted to $500,000, and more than half of the cases were decided in favor of the employee.
The irony is that Novartis has been publicly praised for its policies toward women and families. Last year, Working Mother commended the company’s “impressive” pretax child-care accounts and said its policies strive to make life easier for parents. As employment lawyer William Martucci put it, companies are now going to have to do a great deal of “soul searching” to ensure that internal realities match up to external perceptions. When the verdict was announced, Novartis said that the company was committed to diversity and its policies supporting working families, and that it planned to appeal the verdict. The company declined NEWSWEEK’s request for comment on the long-term implications of the case.
Ultimately, Martucci says that the verdict “will serve as a bellwether for others to speak out.” More important, it raises the stakes. “The notoriety of this verdict is likely to arouse greater interest both in individuals who believe they’ve been victims of discrimination, and in the plaintiff’s bar,” he says. With a judgment this large, more lawyers will be willing to take on similar cases, especially if they know that they can successfully represent a whole class, not just one individual. “It really does mean there’ll be a lot more litigation. The impact will be dramatic.” With more and more women becoming primary or co-breadwinners and the recession claiming more men’s jobs than women’s—to the point that it’s sometimes dubbed the “mancession”—ensuring that women are protected and paid equally isn’t just good for them, it’s good for the whole family.
Find the author on the Web at The Equality Myth.