Costco settles lawsuit for $8 million

Retail giant promises reforms to its promotion procedures and tools

By

Published:

 

Costco Wholesale has tentatively agreed to pay $8 million and change its promotion procedures to settle a long-running lawsuit that alleges it failed to give female employees an equal shot at management jobs.

In the proposed settlement, the Issaquah-based retailer agreed to establish an $8 million fund to compensate women in the lawsuit, which received class-action status in 2007. It also will overhaul its promotion procedures and tools.

The company also agreed to have an industrial organizational psychologist evaluate its methods to promote assistant general managers and general managers. The company will also create a posting process for assistant general manager promotions, and a system to register interest in promotions to general manager roles.

The details of the settlement, which was the result of five months of negotiations, were first made available in documents filed late Tuesday with a federal court in San Francisco. The final settlement agreement needs court approval, and a hearing is set for February.

The deal ends a legal saga that began more than a decade ago, when Shirley Ellis filed a discrimination complaint with the U.S. Equal Employment Opportunity Commission in 2002. She later filed a lawsuit in 2004.

A lawyer for the plaintiffs declined to comment, citing the terms of the settlement. An attorney for Costco didn't immediately respond to a request for comment.

The settlement says claimants who were improperly denied promotion to assistant general manager can get up to $150,000 from the fund. Those with a claim of being wronged on a general manager promotion can receive up to $300,000.

Current Costco employees can also pursue claims through a confidential process, which would give claimants who were improperly denied assistant general manager promotions up to $25,000 and those wronged in a general manager promotion up to $50,000.

"I believe this to be a fair settlement to both parties," Ellis said in a document filed with the court. "Even though this process has taken much longer than anticipated initially, I'm encouraged by Costco's efforts to welcome women and all they have to offer in the ranks of GM and AGM companywide."