COSTCO SUED FOR GENDER BIAS

SAN FRANCISCO -- Costco Wholesale Corp., Issaquah, Wash., was slapped with a gender discrimination lawsuit last week that alleges it denies women promotions to general manager and assistant manager positions at its warehouse clubs.

The complaint, which seeks class certification, was filed in U.S. District Court here on behalf of Shirley "Rae" Ellis, an assistant manager at a Costco in Colorado. It was filed by The Impact Fund, the firm that recently filed a class-action suit against Wal-Mart Stores, Bentonville, Ark., on similar charges.

Costco said last week it hadn't seen a copy of the lawsuit, but added, "We strongly disagree with any claim that Costco has discriminated against any individual or group of employees. We will respond to this particular claim in the proper forum."

An industry analyst contacted by SN said the legal action against Costco follows a pattern of gender discrimination lawsuits that hit companies not affiliated with the United Food and Commercial Workers Union, including Publix, Food Lion, certain divisions of Albertsons, and now Costco, whose employees are affiliated with the Teamsters Union rather than the UFCW. "The companies that get sued are disproportionately skewed to non-UFCW operators," he said.

"These kinds of suits are a way to persecute companies that are taking business away from unionized operations, [and] a way for law firms to get extremely rich if they can turn them into class actions," the analyst said.

According to the complaint, Costco operates about 320 U.S. stores, employing more than 78,000 workers, of whom nearly 50% are female. Yet only one in six of the company's senior store managers are female.

The suit seeks unspecified amounts of lost pay and benefits, damages and injunctive relief for all current and former female Costco workers subjected to alleged gender discrimination, a class that could include up to 650 current and former female employees who may have been passed over for promotion over the past three years.

According to Brad Seligman, executive director of The Impact Fund, "There is no promotion system at Costco. Women must rely on the subjective and arbitrary decisions of Costco's all-male senior management. Not surprisingly, the men at Costco get a better deal when it comes to promotions."

Ellis, the plaintiff in the lawsuit, is identified in the complaint as an assistant manager at Costco's Douglas County, Colo., warehouse who left a job as general manager at a Sam's Club in 1998 based on Costco's promise she would be eligible for promotion to general manager within a year.

According to the complaint, after Ellis filed charges of discrimination with the Equal Employment Opportunity Commission and the California Department of Fair Employment and Housing in late 2002, she was moved from a Costco in Aurora, Colo., to the Douglas County store.