The worst-case scenario for a large company with operations in many locations: A class-action lawsuit alleging discrimination against an entire class of employees.
Such a lawsuit could easily take the claims of one or two employees and add hundreds or thousands of others to the litigation. That can mean astronomical damage awards.
One way to discourage such massive lawsuits is to let managers at separate locations keep substantial control over setting salaries and raises.
Recent case: Adrianne Cronas and several other women who worked for Willis Group, a risk- firm with 46 offices nationwide, claimed their employer intentionally discriminated against women.
They sued on behalf of themselves and all of the company’s female employees.
Willis told the court it allowed each location to suggest starting salaries and raises based on local conditions. Senior execs testified that they almost never vetoed the recommendations of local managers.
The court refused to expand the lawsuit to a nationwide class of all female Willis employees. It reasoned that there were no central policies decreeing how women were paid. Therefore, there was no way all the locations could have been involved in the same type of discrimination the women alleged their local managers were practicing. (Cronas, et al., v. Willis Group, No. 06-cv-15295, SD NY, 2008)
Final note: You want to avoid class-action lawsuits because they can magnify small cases with minor damages into huge cases with millions of dollars in damages.
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