Gender Discrimination at Dell Inc.

Gender Discrimination at Dell Inc.

In October 2008, Jill Hubley, a former senior strategist in the Dell Americas human resource group, a Dell Inc. division located in Texas, filed a lawsuit against the world’s second-largest maker of personal computers. She alleged that Dell had systematically discriminated against female employees with respect to compensation and promotion. Her contention was that the men at Dell were paid higher wages for equal work and that women were not promoted to senior management positions.1 The company denied the accusation even though there were no women on the top management team at Dell despite the fact that employed approximately 80,000 people worldwide. Ms. Hubley’s lawsuit became a class action suit after four other women filed similar discrimination suits against the company. In July 2009, Dell settled the class action suit with a $9.1 million payment: $4.5 million in back pay, $1.1 million for plaintiff legal costs, and $3.5 million to establish a pay-equity fund designed to adjust certain job grades for current management and nonmanagement personnel. Dell also agreed to establish a panel to ensure internal compliance with the settlement. Furthermore, the company announced it would hire an expert psychologist and a labor economist to review and make recommendations about the company’s employment and compensation practices. Questions 1. What factors contribute to a firm engaging in sexual discrimination? 2. What factors should the Board of Directors consider if there is an internal complaint of sex discrimination on the basis of pay and promotion? 3. What other costs might Dell incur because of its practice of discrimination? 4. How can a firm ensure that it does not engage in sexual discrimination?

Sources: Kirk Ladendorf, “Dell Settles Austin Discrimination Case for $9.1 Million,” Statesman.com, July 24, http://www.statesman.com/business/content/business/ stories/technology/2009/07/24/0724dell.html.

Joel Rosenblatt, “Dell Will Pay $9.1 Million to Settle Gender Discrimination Suit,” Bloomberg, July 25, 2009, http://www.bloomberg.com/apps/news?pid=ne wsarchive&sid=aZtD.RbF.pjY.

CBS News, “Dell Slapped with New Discrimination Suit,” October 31, 2008, http://www.cbsnews.com/stories/2008/10/31/business/main4560135.shtml.

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