https://www.cnn.com/2024/11/26/media/disney-equal-pay-settlement/index.html

According to the article, Disney recently agreed to pay $43 million to settle a lawsuit that it paid female employees less than their male counterparts in similar roles for nearly a decade.

The recent settlement agreement stems from a 2019 lawsuit filed by LaRonda Rasmussen.

Ms. Rasmussen claims she learned that six men with the same job title earned substantially more than her, including one man with several years less experience, who was earning $20,000 a year more than she did.

9,000 Women Joined the Lawsuit

About 9,000 women, who were both former and current employees, joined the lawsuit.

Disney disputed the allegations and did not admit fault.

“We have always been committed to paying our employees fairly and have demonstrated that commitment throughout this case, and we are pleased to have resolved this matter,” a Disney spokesperson said.

As part of the settlement, Disney must hire a labor economist to analyze pay equity among full-time, non-union California employees below the vice president level for three years, and fix the differences, the three law firms representing the plaintiffs said.

“I strongly commend Ms. Rasmussen and the women who brought this discrimination suit against Disney, one of the largest entertainment companies in the world. They risked their careers to raise pay disparity at Disney,” Lori Andrus, a partner at Andrus Anderson, said in a statement.

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The plaintiffs accused Disney of paying female employees less than their male counterparts when they started at the company because their pay was lower at previous companies. Disney did not factor in their gender pay disparities, according to the media.

Disney said that a 2022 review of its pay policies revealed that women earned 99.4 percent of what men earned and that it the case should not be classified as a class action because pay is determined by hundreds of managers across several divisions at the sprawling company.

The settlement agreement still requires approval by a judge.

 

Discussion Questions

1. According to the article, the plaintiffs accused Disney of paying female employees less than their male counterparts when they started at the company because their pay was lower at previous companies, and that Disney did not factor in their gender pay disparities. Assume this is true. Would this constitute gender-based pay discrimination? Why should Disney “bid against itself” by paying the female workers more than what the “market” would otherwise bear?

It Disney continues the practice of supporting pay disparities between men and women, this would constitute gender-based pay discrimination. The fact that other employers have engaged in gender-based pay discrimination in the past does not justify Disney’s (or any other employer’s) current practice of it. Instead, employers must monitor their own policies and practices to ensure that men and women receive “equal pay for equal work.”

 

2. As noted in the article, despite the subject settlement agreement, Disney still disputes the plaintiffs’ allegations and does not admit fault. Why would Disney agree to settle the case despite its denial of the plaintiffs’ allegations and its refusal to admit fault?

This is standard practice for any settlement agreement. In reaching a settlement with the plaintiff, the defendant typically agrees to pay a stipulated sum, without admitting fault, in return for the plaintiff’s promise to dismiss the complaint and refrain from pursuing further litigation regarding the matter.

 

3. As noted in the article, the subject settlement agreement still requires approval by a judge. Why does an “arm’s length transaction” between Disney and the plaintiffs require approval by a judge? Should it?

As indicated in the article, this litigation does not just involve the initial plaintiff, LaRonda Rasmussen—It is a class action lawsuit that involves approximately 9,000 plaintiffs. In exercising oversight regarding the case, the judge will seek to ensure that the settlement is fair and reasonable to the entire class. That could include rejecting the proposed settlement amount and requesting that the parties renegotiate a higher amount.