March 09, 2017

Arbitration has a reputation for being faster and less expensive than traditional litigation in court. And it often is. But as the owner of Kay, Jared and Zales jewelry stores and a class of female workers can attest, the process can also have significant drawbacks. 

Sterling Jewelers Inc. faces classwide claims alleging women lagged behind men in pay and were less likely to be promoted. The case may be particularly large and complicated, but it shows the disadvantages of arbitrating class discrimination claims.

The arbitration trial isn’t expected to begin until the spring of 2018, about 10 years after 15 female employees first filed a lawsuit alleging classwide discrimination. The women involved won’t seek company liability for sexual harassment, but their allegations of male managers’ sexual advances toward female employees put Sterling in an unfavorable media spotlight. 

The focus remains on holding the large jewelry retailer liable for discriminating against female sales employees in pay and promotions, said Kalpana Kotagal, one of the lawyers representing a class of about 69,000 female current and former Sterling employees.

Sexual misconduct allegations are relevant to the equal pay and promotion claims, said Kotagal, a partner with Cohen Milstein Sellers & Toll PLLC in Washington. The women’s statements provide “a shocking window” into how female employees were treated by Sterling’s male executives and managers, who had the power to decide how employees would be paid and promoted, Kotagal told Bloomberg BNA. The statements, which were released with the male employees’ names blacked out, are “quite clearly relevant” to a company practice of “devaluing women” in the workplace, Kotagal said. 

Claims of sexual misconduct toward women could support findings of intentional sex discrimination under Title VII of the 1964 Civil Rights Act and “willful” violations of the Equal Pay Act, Kotagal said. The women could recover liquidated or double damages for willful violations of the federal pay law, she said.

This article originally appeared in Bloomberg BNA.