Employee accuses Costco of gender bias

650 women overlooked for promotions, suit says

August 18, 2004|By BLOOMBERG NEWS

SAN FRANCISCO - An assistant manager at Costco Wholesale Corp., the largest U.S. warehouse-club chain, accused the company of discriminating against female workers by failing to promote as many as 650 women to high-paying management jobs.

Shirley "Rae" Ellis said in a lawsuit filed yesterday in U.S. District Court in San Francisco that Costco doesn't post or advertise store manager jobs. She is seeking class action status for the lawsuit, which would enable all 650 workers to sue as a group.

"We generally post all positions," said Bob Nelson, a spokesman for Costco. "That's not to say that every single job gets posted."

Issaquah, Wash.-based Costco, which has 78,000 U.S. employees, joins Wal-Mart Stores Inc. in facing allegations that it doesn't promote women for some management jobs.

Wal-Mart, the world's largest retailer, is defending a sex-bias lawsuit accusing it of paying women less than men and offering female workers fewer promotions. Wal-Mart has 1.2 million U.S. employees.

"There is no clearer example of a glass ceiling than how Costco promotes workers into assistant manager and general manager positions," Brad Seligman, an attorney for Ellis, said in an e-mailed statement. Seligman also represents workers in the Wal-Mart lawsuit.

Costco's shares rose 44 cents to close at $41.26 yesterday. They have increased 33 percent in the past 12 months. Increased sales of gasoline and food helped boost third-quarter earnings 29 percent to $198.7 million from $153.8 million a year ago, the company reported in May.

Ellis is an assistant manager at a Costco warehouse in Colorado. She said she was denied a promotion to general manager, the highest store position, though she has worked for the company since 1998.

The complaint says that at least 650 current and former Costco female employees were eligible for store management positions, which typically pay as much as $100,000 a year plus stock options.

The lawsuit was filed in California because some of the positions Ellis says she was denied were at stores in that state.

The complaint alleges that promotions to senior store management jobs are based on a "tap on the shoulder" by Costco's operations vice presidents, who all are male. About half of Costco's U.S. employees are women; fewer than 12 percent of all general managers are female, the suit says.

Ellis is seeking back pay and benefits, plus damages. Should employees win class action certification, Costco may be liable for millions of dollars in pay and damages, Seligman said.

Wal-Mart has denied the claims filed against it in 2001. This week, the company won the right to appeal a ruling that gave 1.6 million workers class action status.

Class action certification is more efficient for plaintiffs and provides leverage for negotiating a settlement.

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