ON MOTION FOR PARTIAL SUMMARY JUDGMENT
NORDBERG, District Judge.
This matter is before the court on the motion of plaintiff Equal Employment Opportunity Commission ("EEOC") for partial summary judgment. For reasons set forth below, the EEOC's motion is denied.
Facts
In its motion, the EEOC moved the court to grant partial summary judgment against defendant Sears, Roebuck and Co. ("Sears") as to liability on the following claims:
The period of liability for all of these claims commenced on August 30, 1971, two years prior to the filing of EEOC's charge against Sears. See infra n. 10.
The EEOC contended in its motion that there was no genuine issue of material fact as to Sears' liability on each of the above five claims. The EEOC submitted, in support of its motion, a summary of Sears' responses to the EEOC's First Request for Information
In its Response to the EEOC's motion for partial summary judgment, Sears asserted that: (1) each of the EEOC's five claims was based upon a long-discontinued policy; (2) material issues of fact existed with respect to each claim; (3) the EEOC was not entitled to summary judgment as a matter of law, because it failed to meet its initial burden of demonstrating that unlawful discrimination had been a regular procedure or policy followed by Sears; and (4) the injunctive relief sought by the EEOC was moot and the monetary relief barred by the doctrine of laches. Sears attached to its Response various documents refuting the
The EEOC, in its Reply to Sears' Response, asserted that the fact that all of the alleged discriminatory policies had ceased was not a defense. The EEOC also asserted that it need not produce the number and identity of the persons affected by the policies in the Personnel Manual because, absent evidence by Sears that the policies were not implemented, the necessary presumption is that the policies were implemented and did affect individuals. In addition, the EEOC contended that both injunctive and monetary relief were appropriate, and that there was no genuine issue of material fact as to Sears' liability on each of the claims, except for the claim that Sears violated Title VII by limiting the working hours of women pursuant to state protective laws.
After the EEOC filed its Reply Brief,
Memorandum Opinion and Order of January 27, 1984, p. 3. Thus, the court invalidated those portions of the October 15, 1982 Statement of Issues which added claims not included in the April 7, 1982 Statement. However, the court did not invalidate the portions of the October 15, 1982 Statement of Issues which withdrew claims included in the April 7, 1982 Statement. Therefore, the EEOC's withdrawal stands, and the court denies the EEOC's motion for partial summary judgment as to these two claims, because they have been withdrawn by the EEOC.
The remaining claims on which the EEOC seeks partial summary judgment are that Sears violated Title VII by: (1) maintaining a policy whereby women absent due to pregnancy-related disabilities were guaranteed less protection from reductions in force than employees receiving disability benefits; (2) maintaining a policy of involuntary transfer of pregnant women; and (3) maintaining a policy of granting to a male employee a day of paid absence when the employee's wife gave birth, but not granting a day of paid absence to a female employee when she gave birth.
Summary Judgment In a Title VII Disparate Treatment Action
The EEOC has moved for partial summary judgment as to Sears' liability on these three claims. On a motion for summary judgment, the moving party has the burden of establishing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Cedillo v. International Association of Bridge and Structural Iron Workers, 603 F.2d 7, 10 (7th Cir.1979). The non-moving party is entitled to all reasonable inferences that can be made in its favor. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962) (per curiam); Matthews v. Allis-Chalmers, 769 F.2d 1215 (7th Cir.1985) (per curiam). However, the non-moving party may not merely rely on conclusory pleadings to withstand summary judgment. In responding to a motion for summary judgment, a non-moving party must set forth specific facts in affidavits or otherwise show that there are genuine issues that must be decided at trial. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968), reh. denied, 393 U.S. 901, 89 S.Ct. 63, 21 L.Ed.2d 188 (1968); Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.1983), cert. denied, 464 U.S. 960, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983); Fed. R.Civ.P. 56(e).
On a motion for summary judgment in a Title VII case, consideration of whether the moving party has shown that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law necessarily involves an examination and application of the Title VII burden of proof analytical framework. In a recent case, Coates v. Johnson & Johnson, 756 F.2d 524 (7th Cir.1985), the Seventh Circuit outlined the Title VII burden of proof framework for a government or class action alleging a pattern or practice of disparate treatment. The Seventh Circuit first stated that the general Title VII burden of proof framework in government or class disparate treatment cases is "essentially comparable" to the framework for individual disparate treatment actions, as outlined in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973) and Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981), but "the content of the specific stages of that framework will be different." Coates, 756 F.2d at 532.
The general Title VII burden of proof framework for disparate treatment cases, as set out in McDonnell and Burdine, consists of the following stages: (1)
On motions for summary judgment in Title VII disparate treatment cases, the courts have defined the burdens of the moving and non-moving parties in terms of the plaintiff's establishment of a prima facie case, the defendant's articulation of a nondiscriminatory reason, and the plaintiff's demonstration of pretext. In other words, courts have defined the burdens of parties on motions for summary judgment in terms of the general Title VII disparate treatment burden of proof framework. For example, in cases where defendant-employers have moved for summary judgment, the Seventh Circuit has held that a plaintiff-employee, in order to defeat the summary judgment motion, must present facts sufficient to establish a prima facie case, and, if the defendant-employer presents some legitimate reason for its action, the plaintiff-employee must also present evidence that the legitimate reason is a pretext for discrimination in order to defeat the summary judgment motion. Parker v. Federal National Mortgage Association, 741 F.2d 975 (7th Cir.1984); Kephart v. Institute of Gas Technology, 630 F.2d 1217 (7th Cir.1980), cert. denied, 450 U.S. 959, 101 S.Ct. 1418, 67 L.Ed.2d 383 (1981). See also Trembath v. St. Regis Paper Company, 753 F.2d 603 (7th Cir. 1985); Herman v. National Broadcasting Company, Inc., 744 F.2d 604 (7th Cir.1984), cert. denied, ___ U.S. ___, 105 S.Ct. 1393, 84 L.Ed.2d 782 (1985); Huhn v. Koehring Company, 718 F.2d 239 (7th Cir.1983).
In Weahkee v. Perry, 587 F.2d 1256 (D.C. Cir.1978), a Title VII disparate treatment action, the plaintiff-employee moved for summary judgment, and the District of Columbia District Court entered judgment for the plaintiff-employee. However, the Court of Appeals reversed, holding, inter alia, that there were genuine issues of material fact precluding summary judgment. The Court of Appeals stated:
Weahkee, 587 F.2d at 1265 (citations omitted). Thus, the Court of Appeals found that a plaintiff-employee must at least present a prima facie case of discrimination in order to prevail on a motion for summary judgment.
Applying the above analysis to the present case, the court finds that the EEOC must at least establish a prima facie case of discrimination in order to prevail on its motion for summary judgment. Under Coates, that prima facie case consists of a demonstration that discrimination was
Establishment of a Title VII Pattern or Practice Prima Facie Case
The EEOC has established that, as to each of the three claims still remaining in its motion for summary judgment, there were included in Sears' written materials allegedly discriminatory policy statements which were in existence during the relevant time period.
In Durant v. Owens-Illinois Glass Co., Inc., 517 F.Supp. 710 (E.D.La.1980), aff'd, 656 F.2d 89 (5th Cir.1981) (per curiam), the plaintiffs similarly contended that they need not identify victims of a maternity leave policy in order to prove liability under Title VII, because the policy was explicitly set out in their Production and Maintenance Contract and was clearly discriminatory. In that case, the Special Master had concluded that, even if the maternity leave provision did not comport with Title VII, the plaintiffs still had no claim under Title VII, because there was no evidence that the provision had ever been enforced against or adversely affected anyone in the class. The plaintiffs challenged the Special Master's interpretation of their burden of proof in the District Court. The plaintiffs contended that all they need to prove in the liability stage of the litigation is the existence of a discriminatory policy, and that identification of those harmed by the policy should be postponed until the relief stage. The District Court held:
Durant, 517 F.Supp. at 723.
As in Durant, the EEOC has failed to show that Sears ever enforced
The court notes that the holding of the Durant court is in accord with Teamsters, the leading Supreme Court case dealing with the burden of proof framework in a government or class Title VII action alleging a pattern or practice of disparate treatment, and Coates, the recent Seventh Circuit case following Teamsters. In Teamsters, the Supreme Court held:
Teamsters, 431 U.S. at 360, 97 S.Ct. at 1867. The Supreme Court went on to hold that the Government's evidence, statistics and testimony by forty individuals of specific instances of discrimination, was sufficient to establish a prima facie case that a racially discriminatory policy existed in fact.
Although Teamsters and Coates did not involve written discriminatory policies, as did Durant and the present case, the Supreme Court in Teamsters and the Seventh Circuit in Coates did not in any way indicate that the requirement of establishing the existence of a discriminatory policy would differ in a case where such a policy was referred to in an employment contract or a personnel manual. The court finds no basis in Teamsters, Coates, or any other case, for the EEOC's theory that the existence of written discriminatory policy language creates a presumption that the policy was enforced and did affect individuals.
Conclusion
For the reasons stated above, the court finds that the EEOC has failed to establish a prima facie case that the three allegedly discriminatory policies in fact existed during the relevant time period.
Since the EEOC has previously stated that it wishes to dismiss these claims with prejudice should its motion for summary judgment be denied, the court hereby dismisses these claims with prejudice.
MEMORANDUM OPINION AND ORDER TABLE OF CONTENTS I. Introduction 1278 A. Jurisdiction 1279 B. Legal Standards 1279 1. Disparate Treatment 1279 2. Disparate Impact 1281 C. Statistics 1285 1. In General 1285 2. Statistical Significance 1286 3. Multiple Regression 1287 II. Hiring and Promotion Into Commission Sales 1288 A. General Background 1288 1. Commission Sales at Sears 1289 2. Qualifications for Commission Sales Positions 1290 3. The Hiring Process 1291 4. Affirmative Action at Sears 1292 B. EEOC's Evidence: Hiring Into Commission Sales 1294 1. Data Bases 1294 2. Statistical Analyses - Unadjusted Analysis 1295 3. Adjusted Analyses 1296 4. Possible Biases 1298 5. Other Statistical Evidence 1299 6. Nonstatistical Evidence 1300 C. EEOC's Evidence: Promotions Into Commission Sales 1300 1. Year-end Store Pool Analysis 1300 2. Year-end Division Pool Analysis 1301 D. Analysis of EEOC's Evidence: Hiring 1301 1. Inadequacies in Data and Variables Analyzed by EEOC 1301 a. Data Analyzed 1301 b. Omission and Inadequate Coding of Important Variables 1302 c. Coding Errors 1304 2. Faulty Basic Assumptions 1305 a. Assumption of Equal Interest 1305 (1) Store Witnesses 1306 (2) Survey Evidence 1308 (3) Comparing Sears to National Data 1312 (4) Other Evidence of Interest 1314 b. Assumption of Equal Qualifications 1315 3. Other Deficiencies in EEOC's Statistical Analysis 1315 4. EEOC's Applicant Interview Guide Analysis 1317 5. EEOC's Nonstatistical Evidence 1317 E. Sears' Commission Sales Analyses: Hiring 1318 1. Hiring and Promotion Figures at Sears 1319 2. Characteristics of Commission Salespersons 1319 3. Sales Performance Data 1320 4. Applicant Interview Guides 1322 F. Conclusions Regarding Commission Sales Claim: Hiring 1324 G. Promotion Claim 1324 1. EEOC's Promotion Analysis 1325 2. Sears' Evidence Regarding Promotions 1326 H. Conclusions Regarding Commission Sales Claim: Promotions 1327 III. Checklist Compensation 1328 A. Legal Standards 1328 1. Elements and Burdens of Proof 1328 2. "Similar" Work Standard 1332
B. Background 1334 1. Pre-1976 Organization and Compensation 1335 2. New Executive Compensation Program 1336 C. EEOC Evidence 1337 1. Persons and Jobs Analyzed 1338 2. Statistical Analyses 1340 D. Deficiencies in EEOC's Evidence 1340 1. 1973-1975 Analysis 1340 2. 1976-1980: Equality of Jobs 1341 3. Overall Statistical Analyses 1342 a. Data Base 1343 b. Omitted Variables 1343 c. Other Flaws in EEOC Models 1345 E. Sears' Evidence 1346 1. Regression Analysis 1346 2. Cohort Analysis 1350 3. Sears' Witnesses 1352 F. Conclusion: Checklist Compensation 1352 ORDER 1353
I. Introduction
This opinion marks the culmination of a lengthy dispute between the Equal Employment Opportunity Commission ("EEOC") and Sears, Roebuck & Co. ("Sears"), the world's largest retail seller of general merchandise. In 1973, an EEOC commissioner's charge was filed. After an extensive investigation and extensive conciliation discussions, EEOC filed this suit in 1979, alleging nationwide discrimination by Sears against women in virtually all aspects of its business, in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. ("Title VII"), and the Equal Pay Act, 29 U.S.C. § 206(d).
This is a case of claimed statistical disparities. As originally filed, this suit involved 42 distinct claims of nationwide sex discrimination by Sears. By the time of trial, EEOC had abandoned all of its Equal Pay Act claims, and all but two of its claims under Title VII. The two allegations EEOC sought to prove at trial were that Sears engaged in a nationwide pattern or practice of sex discrimination: (1) by failing to hire female applicants for commission selling on the same basis as male applicants, and by failing to promote female noncommission salespersons into commission sales on the same basis as it promoted male noncommission salespersons into commission sales (commission sales claim); and (2) by paying female checklist management employees in certain job categories lower compensation than similarly situated male checklist management employees (checklist compensation claim).
A trial before the court was held lasting 10 months. The court observed each witness, made extensive contemporaneous trial notes of the testimony of each witness, and made specific determinations of the credibility of each witness and the weight to be given to the testimony as the witness testified.
Based on all of the testimony presented, the credibility of the witnesses and the weight to be given their testimony, the exhibits received in evidence, and the law governing this case, the court concludes that the EEOC has failed to prove its case on either claim of discrimination and finds that Sears has not discriminated against women in hiring, promotion, or pay, as claimed. The court makes the following findings of fact and conclusions of law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure:
A. Jurisdiction
The court finds that it has subject matter as well as personal jurisdiction, pursuant to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. The court adheres to the prior decisions in this case, including Equal Employment Opportunity Commission v. Sears, Roebuck & Co., 504 F.Supp. 241 (D.C.Ill.1980). The EEOC has presented sufficient evidence to support this court's finding that EEOC has met all the minimum statutory preconditions to this suit.
B. Legal Standards
The court must first determine the legal standards to apply to this case. Two separate legal analyses are applied to Title VII cases, disparate treatment and disparate impact. Each has its distinct elements and burdens of proof.
In this case, the EEOC relies principally on the disparate treatment theory. (Plaintiff's Final Argument.) However, the EEOC has also made a number of vague references to the disparate impact theory. The EEOC failed to specify this legal theory of its case prior to trial. Even at the close of trial, the extent of its reliance on the disparate impact theory was unclear. EEOC stated in its trial brief and on several other occasions that, although it contends that the disparate impact model should be applied to "subjective" hiring systems such as Sears', "the characterization of the alleged discrimination as disparate impact or disparate treatment ought not affect the outcome here." (Plaintiff's Final Argument at 2.) However, the choice of theory can make a difference, since intent to discriminate need be proved only under the disparate treatment theory, not under the disparate impact theory. Despite EEOC's contention that the choice of theory is unimportant, and its decision to discuss all the evidence in terms of disparate treatment analysis only, EEOC apparently now seeks application of both theories to its case. Therefore, both the disparate treatment and disparate impact theories must be discussed.
1. Disparate Treatment
The disparate treatment theory evolved under § 703(a)(1) of Title VII, 42 U.S.C. § 2000e-2(a)(1).
The Supreme Court has provided an analytical framework for disparate treatment cases "progressively to sharpen" the inquiry into the defendant's intent. Burdine, 450 U.S. at 255 n. 8, 101 S.Ct. at 1094 n. 8. To establish a prima facie case of intentional discrimination, the plaintiff must prove that he
The defendant must then offer evidence that "raises a genuine issue of fact as to whether the defendant discriminated against the plaintiff." Id. This burden may be met by articulating a legitimate, nondiscriminatory reason for the defendant's employment action. Burdine, 450 U.S. at 254, 101 S.Ct. at 1094; McDonnell Douglas, 411 U.S. at 802, 93 S.Ct. at 1824. If the explanation provided by the defendant is "legally sufficient to justify a judgment for the defendant," then "the presumption raised by the prima facie case is rebutted, and the factual inquiry proceeds to a new level of specificity." Burdine, 450 U.S. at 255, 101 S.Ct. at 1094-95 (footnote omitted). The plaintiff then must persuade the court that the defendant's explanation is unworthy of credence, or that a discriminatory reason more likely motivated the defendant. Id. at 256, 101 S.Ct. at 1095. Importantly, the plaintiff always retains the ultimate burden of persuasion. Id.
This analytical framework is applied, in modified form, to government or class actions alleging a pattern or practice of discrimination. The burden of proof is "essentially comparable" to that applied in individual disparate treatment cases, but "the content of the specific stages of that framework will be different." Coates, 758 F.2d at 532. In a pattern or practice class claim, the plaintiff has the initial burden of demonstrating that unlawful discrimination has been the regular policy of the employer, that "discrimination was the company's standard operating procedure—the regular rather than the unusual practice." International Brotherhood of Teamsters v. United States, 431 U.S. 324, 336, 360, 97 S.Ct. 1843, 1854, 1867, 52 L.Ed.2d 396 (1977); Coates, 756 F.2d at 532. The focus often is on a pattern of discriminatory decisionmaking, not on individual employment decisions. Teamsters, 431 U.S. at 360 n. 46, 97 S.Ct. at 1867 n. 46. The plaintiff's prima facie case in a pattern or practice case usually consists of statistical evidence of substantial disparities between the protected group and the unprotected group, buttressed by evidence of general discriminatory policies or specific instances of discrimination. Coates, 756 F.2d at 532.
2. Disparate Impact
The disparate impact theory evolved under Section 703(a)(2) of Title VII, 42 U.S.C. § 2000e-2(a)(2).
To establish a prima facie case under the disparate impact theory, the plaintiff must show that a facially neutral standard for hiring excludes a disproportionate number of members of a protected class. The burden of proof then shifts to the defendant to show that the job requirement has a manifest relationship to the job in question. If the employer demonstrates that the challenged requirements are job related, the plaintiff may then show that other selection devices would also serve the employer's legitimate interest in efficient and trustworthy workmanship. Dothard, 433 U.S. at 329, 97 S.Ct. at 2727.
In this case, EEOC has admitted that it cannot identify any specific employment practice of Sears which has a discriminatory impact on women. Instead, EEOC contends that there is "something in the process" at Sears which causes the disparities shown in EEOC's statistical evidence. It asserts that the hiring and promotion "process" at Sears is highly subjective, and that the disparate impact analysis should be applied to such subjective systems.
EEOC relies on a number of cases in which courts applied the Griggs disparate impact analysis to overall hiring processes which are subjective in nature. For example, in Rowe v. General Motors Corp., 457 F.2d 348 (5th Cir.1972), decided shortly after the Griggs decision, the court applied the impact analysis to a "subjective" promotion system. However, the court made no mention of the disparate treatment theory, did not compare the two theories or discuss which should apply, and did not discuss why the disparate impact analysis would apply when a specific facially neutral employment policy had not been identified.
In all of its decisions under the disparate impact theory, the Supreme Court has applied the theory only to specific facially neutral employment policies, and has implicitly indicated that the theory should be applied only to specific neutral policies.
The Supreme Court first recognized the disparate impact theory in Griggs, supra. In Griggs, the Court found that the defendant's policy of requiring a high school diploma or a passing score on a standardized intelligence test, although neutral on its face, had the effect of disproportionately excluding black employees from promotions. The court held that proof of the disparate impact of the test or diploma requirement was enough alone, without proof of the defendant's motive, to establish a violation of Title VII under § 703(a)(2), 42 U.S.C. § 2000e-2(a)(2). The court reasoned that Congress intended to eliminate such "artificial, arbitrary and unnecessary barriers to employment." 401 U.S. at 431, 91 S.Ct. at 853.
As the Court later noted in Connecticut v. Teal, 457 U.S. 440, 102 S.Ct. 2525, 73 L.Ed.2d 130 (1982), the focus of the Griggs analysis is on "procedures and testing mechanisms that operate as `built-in headwinds' for minority groups." 457 U.S. at 448, 102 S.Ct. at 2531 (quoting Griggs, 401 U.S. at 432, 91 S.Ct. at 854). When summarizing the elements and burdens of proof of a Griggs disparate impact case in Dothard, the Court stated, "[Griggs and Albermarle Paper Co. v. Moody, 422 U.S. 405, 95 S.Ct. 2362, 45 L.Ed.2d 280 (1975) ] make clear that to establish a prima facie case of discrimination, a plaintiff need only show that the facially neutral standards in question select applicants for hire in a significantly discriminatory pattern." 433 U.S. at 329, 97 S.Ct. at 2726-27 (emphasis added). By specifically referring to "facially neutral standards," the Court indicated that the impact theory would apply only to such facially neutral policies.
Similarly, in Teamsters, supra, the Court defined the two theories as follows:
431 U.S. at 335 n. 15, 97 S.Ct. at 1854 n. 15. By once again defining disparate impact
In Griggs, Dothard, and indeed in all cases decided by the Supreme Court under the disparate impact theory, the Court has applied the theory only to specific employment practices that were neutral on their face, but had the effect of disproportionately excluding members of a protected class from employment opportunities. E.g., Albermarle, supra (employment test); Connecticut, supra (ability test); Dothard, supra (height and weight requirements); New York City Transit Authority v. Beazer, 440 U.S. 568, 99 S.Ct. 1355, 59 L.Ed.2d 587 (1979) (employer's refusal to employ persons who use methadone).
Moreover, in McDonnell Douglas, supra, the Court refused to apply the disparate impact analysis to the plaintiff's claim because he could not identify a specific employment practice of the defendant which disproportionately excluded blacks. The Court distinguished the plaintiff's claim from Griggs because the employer did not seek to exclude the plaintiff "on the basis of a testing device which overstates what is necessary for competent performance," or through some "sweeping disqualification" of all applicants on the basis of a particular characteristic. 411 U.S. at 806, 93 S.Ct. at 1826. The Court concluded that the plaintiff had not presented the kind of "artificial, arbitrary and unnecessary barriers to employment" that violated Title VII under Griggs. The Court therefore refused to apply the impact theory when no specific policy had been identified.
All of the Supreme Court's discussions of the disparate impact theory indicate that it should be applied only to specific employment practices which are neutral on their face, but disproportionately exclude members of protected groups from employment opportunities. The Court has applied the theory only in these circumstances, and has never stated or suggested that the theory should be applied in other circumstances. Thus, there is no basis in Supreme Court decisions for applying the disparate impact theory to cases where the employer merely uses a "subjective" hiring system, as most employers do.
Several Courts of Appeals have specifically rejected the extension of the Griggs analysis to "subjective" hiring decisions. For example, in Pouncy v. Prudential Insurance Company of America, 668 F.2d 795 (5th Cir.1982), the same court which ten years earlier decided Rowe v. General Motors Corp., supra, rejected application of the disparate impact theory to a wide-ranged attack on a company's hiring system. In Pouncy, the plaintiff alleged that the defendant systematically failed to promote blacks within its workforce and otherwise afford them the same conditions of employment given to whites. He pointed to a number of employment policies which he alleged resulted in the discrimination, including the failure to post job openings, the selection of employees for promotion using minimal objective criteria, and the use of subjective criteria in employee performance evaluations. 688 F.2d at 799. He sought to apply the disparate impact analysis of Griggs to his challenge of the defendant's company-wide system of "subjective" employment decisions.
The court rejected the plaintiff's attempt to fit his case within the disparate impact model by listing specific "practices" of the defendant. It reviewed a number of Supreme Court decisions on disparate impact. Relying on Supreme Court precedent, the Court concluded that a prima facie case under the disparate impact model is shown by "identification of a neutral employment practice coupled with proof of its discriminatory impact on the employer's work force." 668 F.2d at 800. The court rejected use of the disparate impact model of proof for a wide-ranging attack on the cumulative effects of a company's employment practices, stating that, "The disparate impact model applies only when an employer has instituted a specific procedure, usually a selection criterion for employment, that can be shown to have a causal
The court reasoned that proof of such a specific employment policy is required under the disparate impact model to fairly allocate the parties' respective burdens of proof at trial. Id. The plaintiff must first prove a disparate impact due to the selection procedure. Id. The employer then has the burden of proving that the selection procedure is justified by a legitimate business reason. Id. Identification of the specific practice is necessary so that the employer can respond with proof of its legitimacy. 668 F.2d at 801. A plaintiff cannot challenge an entire range of employment practices under the impact model merely because the employer's workforce reflects a racial imbalance that might be related to any one or more of several practices, because to do so "would allow the disparate impact of one element to require validation of other elements having no adverse effects." Id. (quoting Rivera v. City of Wichita Falls, 665 F.2d 531, 539 (5th Cir.1982)).
The court found that none of the employment practices singled out by the plaintiff—failure to post job openings, use of a "level" system, and evaluating employees with subjective criteria—were akin to the facially neutral employment practices the disparate impact model was designed to test. Id. The court therefore applied the disparate treatment model to the plaintiff's claims.
A number of other Courts of Appeals have reached the same conclusion. For example, in EEOC v. Federal Reserve Bank of Richmond, 698 F.2d 633, 638-39 (4th Cir.1983), rev'd on other grounds sub nom., Cooper v. Federal Reserve Bank of Richmond, 467 U.S. 867, 104 S.Ct. 2794, 81 L.Ed.2d 718 (1984), the court refused to apply the disparate impact model where the plaintiff offered no evidence of any "objective standard, applied evenly and automatically." 698 F.2d at 639 (quoting Statsny v. Southern Bell Tel. & Tel. Co., 628 F.2d 267, 274 n. 10 (4th Cir.1980)). The plaintiff alleged only that the employer practiced discrimination against an entire group. The court found the disparate treatment model was appropriate for "subjectively based practices." Id. (quoting Statsny, 628 F.2d at 274 n. 10). See also Talley v. U.S. Postal Service, 720 F.2d 505, 507 (8th Cir.1983), cert. denied, 466 U.S. 952, 104 S.Ct. 2155, 80 L.Ed.2d 541 (1984); Mortensen v. Callaway, 672 F.2d 822, 824 (10th Cir.1982); Heagney v. University of Washington, 642 F.2d 1157 (9th Cir.1981). But see Hung Ping Wang v. Hoffman, 694 F.2d 1146, 1148 (9th Cir.1982) (court held without citation of any authority, that to prevail on disparate impact claim, plaintiff need only demonstrate lack of objective criteria and a disparity); and Moore v. Hughes Helicopters, Inc., 708 F.2d 475, 481-82 (9th Cir.1983) (court noted division within circuit on this issue, and then assumed without deciding that impact analysis applies to subjective hiring process, because plaintiff failed to make case under either analysis).
In Coates, supra, the Seventh Circuit addressed this issue. The plaintiffs in Coates alleged racial discrimination in the defendant's pattern and practice of employee discharges. No specific neutral policy of the defendant was identified by the plaintiff. The plaintiffs asserted on appeal that, although they tried their case primarily on the theory of disparate treatment, they also alleged disparate impact. They argued that the district court erred in ignoring this theory. 756 F.2d at 530 n. 7.
The Coates court distinguished between the two theories, quoting the Teamster's decision set forth above, which defines the disparate impact model as applying to facially neutral employment policies. The court noted that plaintiffs had alleged facts appropriate for disparate treatment analysis, but that they never argued that there were facially neutral termination rules that had a disproportionate impact on blacks. Rather, they alleged that the rules were more severely applied, through supervisory discretion, to blacks than whites. The court concluded that the case was therefore susceptible to a disparate treatment,
Thus, without specifically discussing the decision in Stewart v. General Motors, supra, the Seventh Circuit has now aligned itself with those courts which apply the disparate impact theory only in circumstances similar to those in which the Supreme Court has applied the theory, for example, when the employer has a specific practice which is neutral on its face but impacts disproportionately on protected groups.
This court therefore concludes that, under Supreme Court precedent, Coates, and the Pouncy line of cases, the disparate impact theory should be applied only when such a policy has been identified by the plaintiff. Since the EEOC admits that it has not identified any specific, facially neutral policy of Sears which disproportionately excludes women from the jobs at issue in this case, the court will apply only the disparate treatment theory to this case.
C. Statistics
1. In General
Virtually all the proof offered by the EEOC in this case is statistical in nature, or related to the statistical evidence. Statistics are an accepted form of circumstantial evidence of discrimination. In some cases, where "gross disparities" are shown, statistics alone may constitute a prima facie case. Coates, 756 F.2d at 532 n. 6; Segar v. Smith, 738 F.2d at 1278. However, as the Court in Teamsters cautioned, "statistics are not irrefutable; they come in an infinite variety and, like any other kind of evidence, they may be rebutted. In short, their usefulness depends on all of the surrounding facts and circumstances." 431 U.S. at 340, 97 S.Ct. at 1856-57 (citations omitted).
Statistical evidence, like other evidence, must not be accepted uncritically. The usefulness of statistics depends to a large extent on "the existence of proper supportive facts and the absence of variables which would undermine the reasonableness of the inference of discrimination which is drawn." White v. City of San Diego, 605 F.2d 455, 460 (9th Cir.1979) (quoting United States v. Ironworkers Local 86, 443 F.2d 544, 551 (9th Cir.1971), cert. denied, 404 U.S. 984, 92 S.Ct. 447, 30 L.Ed.2d 367 (1971)). Inaccuracies or variations in data or in the formulae used to test
As this case will demonstrate, the assumptions made by a statistician in formulating a model can be far more important than the numerical complexities and results of the analysis. Without a sound theoretical basis, which is carefully reasoned and closely tailored to the factual circumstances of the case, the statistical results can be meaningless. Close attention will therefore be paid in this case to the assumptions made by the experts and their relation to reality.
2. Statistical Significance
In view of the highly statistical nature of the EEOC's proof in this case, a short discussion of a few relevant statistical principles is necessary.
An important concept to bear in mind in evaluating any statistical analysis is that no statistical analysis can prove causation per se. Statistical experts on both sides of this case have readily admitted this. Rather than attempting to prove what caused the results obtained from their analyses, statisticians endeavor to estimate the likelihood that the results occurred merely by chance. In statistical terms, they attempt to measure the level of statistical significance of their results.
One commonly used measure of statistical significance, the likelihood that the result occurred by chance, is the standard deviation. The standard deviation measures how much a typical observation varies from the average of all observations. D. Barnes, A Commonsense Approach to Understanding Statistical Evidence, 21 San Diego L.Rev. 809 (1984). A standard deviation of 2 indicates that there is a .045 probability (that is, almost a 5% probability), that the results observed occurred due to chance. A standard deviation of 3 represents a .003 probability, and a standard deviation of 4 represents a .006 probability that the result occurred by chance.
Statisticians generally consider results to be statistically significant at two or three standard deviations. However, statistical significance merely indicates that chance is not likely to have caused the result. As EEOC's expert, Dr. Siskin, testified, statistical significance and practical significance are two completely different concepts. Statistical significance can be determined merely by calculating the standard deviation or some other test statistic. To determine the practical significance of statistical results, a court must look at the theories and assumptions underlying the analysis and apply common sense.
Courts have not blindly adopted any test of statistical or practical significance. In Castaneda v. Partida, 430 U.S. 482, 496 n. 17, 97 S.Ct. 1272, 1281 n. 17, 51 L.Ed.2d 498 (1977), and Hazelwood School District v. United States, 433 U.S. at 308 n. 14, 311 n. 17, 97 S.Ct. at 2742 n. 14, 2743 n. 17, the Court indicated that, as a general rule, if the observed result is more than 2 or 3 standard deviations from the expected or average value, a hypothesis that the result occurred by chance is suspect. However, the Court has not laid down any hard and fast rules for evaluating statistical or practical significance in every case, and the Court's "2 or 3" standard deviation approach should be applied with caution. See D. Baldus and J. Cole, Statistical Proof of Discrimination 294-95 nn. 12-13 (1980). The Seventh Circuit has recommended using "extreme caution" in drawing any conclusions from statistical significance at a two-to-three standard deviation level. Coates, 756 F.2d at 547 n. 22. See also EEOC v. American National Bank, 652 F.2d 1176, 1198 (4th Cir.1981), cert. denied, 459 U.S. 923, 103 S.Ct. 235, 74 L.Ed.2d 186 (1982). The Coates court recognized that courts are not required to conclude from low standard deviations that the statistics
EEOC's statistical expert calculated "z" statistics for the disparities between his estimated actual and expected results for the commission sales claim. These z values represent the number of standard deviations between his actual and expected results. "T" values were calculated to measure the same for the checklist compensation analyses. Accordingly, when z values or t values in the analyses exceed three, the court will assume that the disparities may be statistically significant. The court's view of the practical significance of the results will be discussed at length below.
3. Multiple Regression
The primary statistical analyses performed by the EEOC in this case were multiple regression analyses. Multiple regression is a statistical technique designed to estimate the effect of several independent variables on a single dependent variable. It attempts to measure the effect of factors such as age, education, experience, or sex, on an outcome, such as a hiring decision. It estimates how much each factor affects the outcome.
The most important issue in a regression analysis is what factors should be included as the independent variables. It is important to include all variables that significantly influence the dependent variable.
As discussed above, the assumptions underlying any statistics must be critically examined by the court. In a regression analysis, this requires a careful evaluation of the variables included in the model, the ability to accurately measure these variables, and the importance of variables not included in the model, including variables which cannot be measured on a mathematical scale. In short, the court must evaluate "the fit" of the model to the reality of the facts and circumstances. See T.J. Campbell, Regression Analysis In Title VII Cases: Minimum Standards, Comparable
The court therefore will carefully examine the factors included and excluded from the regression analyses in this case, and the weight given to measures of statistical significance will depend upon the fit of the statistical model to the actual hiring and compensation practices of Sears.
Finally, it is important to recognize at the outset the limitations of statistical analyses when evaluating complex decision making processes. Although mathematical models such as those used in regression analyses can provide useful information in appropriate circumstances, the intricacies of human decision making often cannot be reduced, to mathematical formulae. The more complex the decision making, the less accurate a regression model will generally be. Thus, statistical analyses can be quite accurate when used to analyze relatively simple fact situations, such as when a job requires only a small number of minimum objective job qualifications. However, as will be seen below, as more qualifications and subjective factors are required, mathematical models are less able to accurately analyze the decision making process.
II. Hiring and Promotion Into Commission Sales
EEOC attempted to prove at trial that Sears intentionally discriminated against women in hiring and promotion into commission sales on a nationwide basis from 1973 until 1980. Both parties have analyzed separately those hired directly into commission sales and those promoted to commission sales from other jobs at Sears. Full time and part time positions in each category were also analyzed separately. The court will structure its analysis accordingly.
A. General Background
Sears is the nation's largest retailer of general merchandise, employing approximately 380,000 persons in over 4,000 facilities across the country. During the relevant time period, Sears had approximately 920 retail stores.
General corporate policies at Sears are formulated at the corporate headquarters, communicated to the territorial organizations, and eventually disseminated to individual stores. Although Sears has some very strongly enforced corporate policies, its entire management system overall is highly decentralized. This includes its hiring and compensation practices. Maximum flexibility, within bounds, is given to individual store managers to respond to the surrounding markets. Each store manager's compensation is significantly tied to the profitability of his or her store. Commission sales is a major source of store profits, and having a qualified and successful commission salesforce is of great importance
1. Commission Sales at Sears
During 1973-1980, Sears retail stores were divided into approximately 55 retail divisions. Salespersons in these divisions were paid either on a commission or noncommission basis. Merchandise sold on commission was usually much more expensive and complex than merchandise not sold on commission. Commission selling usually involved "big ticket" items, meaning high cost merchandise, such as major appliances, furnaces, air conditioners, roofing, tires, sewing machines, etc. Noncommission selling normally involved lower priced "small ticket" items, such as apparel, linens, toys, paint and cosmetics.
Until 1977, commission salespeople were paid on a "draw versus commission" basis. Commissions ranged between six and nine percent. Under this system, salespersons were guaranteed a "draw" each week, usually not exceeding 70% of average or estimated earnings. However, if the sales-person's commissions did not equal the amount of his weekly "draw", he incurred a deficit. This deficit was carried over to the next week. If the salesperson exceeded his draw for the next week, the excess would be applied against the preceding week's deficit. If the deficit was not eliminated in the following week, the deficit would be cleared. Thus, the deficit would be carried over for only one week. However, if the salesperson failed to meet his draw over a period of time, his employment could be terminated. Thus, there was substantial risk attached to commission selling.
After 1977, this risk was ameliorated to some extent when Sears changed its method of compensating commission salespersons to a "salary plus commission" basis. This change was implemented primarily to reduce the financial risk of selling on commission in an effort to attract more women to commission sales. Under this system, the salesperson earned a nominal salary plus a three percent commission. However, the salesperson's income was still substantially dependent on the amount of sales made, and failure to make sufficient sales could result in termination.
Noncommission salespeople were compensated on a straight hourly rate, except that a nominal 1% commission was earned by full time salespersons on all sales until January 1979. Throughout the period from 1973 through 1980, full time and part time commission salespersons on average earned substantially more than full time and part time noncommission sales persons.
Commission selling techniques varied from division to division, depending on the nature and price of the merchandise. Technical skills required to sell also varied widely between divisions. Some divisions required a high level of technical knowledge and expertise, while others required less technical knowledge. For example, selling in the Installed Home Improvements divisions required substantial technical knowledge and a high degree of motivation. The selling of some products was done on an "outside basis," at the customer's home or place of business. Products requiring "outside" selling included central air conditioning, heating, and plumbing systems. Merchandise sold "inside" included water heaters, attic fans, and other big ticket items which did not require complicated estimates or installations.
Products sold "outside" the store generally required a high level of technical expertise. Many jurisdictions required these salespeople to be licensed, which often required salespeople to pass a test. To be successful, the salesperson had to spend significant amounts of his own time and energy educating himself on all aspects of the product, from its technical functioning to installation and customer service. Sales usually would be closed in the customer's home, requiring substantial weekend and night time hours. Other important aspects of the process of selling home improvements include following up on sales, developing leads and referrals, and responding to emergency calls. In short, commission
Although other commission sales divisions required lesser degrees of technical skill than Installed Home Improvements divisions, all required some technical knowledge of the product. Equally important, all commission sales positions required a high degree of motivation. The salesperson's income and continued employment was dependent upon his ability to sell. In addition, as noted above, a substantial part of the store's revenues, and the store manager's income, was dependent upon commission sales. Managers therefore endeavored to hire the most highly qualified commission salespeople.
2. Qualifications for Commission Sales Positions
No written document at Sears specifically identifies the qualifications for commission sales positions. Sears' Retail Testing Manual (entitled "Psychological Tests for Use in Sears Retail Stores," Pl.Ex. 108, Def. Ex. 34), contains the only written description of a desirable commission sales candidate. The commission salesperson is described as a "special breed of cat," with a sharper intellect and more powerful personality than most other retail personnel. According to the manual, a good commission salesperson possesses a lot of drive and physical vigor, is socially dominant, and has an outgoing personality and the ability to approach easily persons they do not know. A good commission salesperson needs the ability to react quickly to a customer's verbal suggestions and modify the approach accordingly. Thus, according to the Retail Testing Manual, a higher level of "salesmanship" is required of the commission salesperson than is required of the general salesperson.
However, the Retail Testing Manual generally was not relied on to any significant extent in selecting commission salespersons. Most managers and interviewers relied far more heavily on past experience with commission salespeople. Many managers and personnel employees involved in the hiring process testified about the qualities they sought in commission sales people based on their own experience and the experience of their superiors.
First, in reviewing applications to identify potential commission sales candidates, Sears managers and interviewers look for: prior commission selling experience, prior experience selling a product line sold on commission at Sears, any specific indication of interest in commission sales, knowledge or experience of any kind in a product line, availability during the hours required for a particular job, a work or personal background reflecting a history of achievement, prior experience involving significant public contact, and any special training, education or experience indicating an active, outgoing personality. Previous product line experience was particularly important when there was a commission sales vacancy in an installed home improvements division, the automotive divisions, or custom draperies.
However, most of the essential qualities for commission selling could be determined only from an interview, not from a written application. As will be discussed below, all candidates were interviewed at least twice before being hired. During the interview, managers looked for a number of important qualities, including aggressiveness or assertiveness, competitiveness, the ability to communicate effectively, persuasiveness, an outgoing, social or extraverted personality, self-confidence, personal dominance, a strong desire to earn a substantial income, resilience and the ability to deal with rejection, a high level of motivation and enthusiasm for the job, maturity, and a good personal appearance. The extent that each of these characteristics was required depended on the particular job opening. However, one critical prerequisite for all commission sales jobs was availability during the required hours. An otherwise qualified individual could be rejected if he was not available during the hours required for the particular job. Each manager and interviewer used his best judgment
3. The Hiring Process
The hiring process at Sears varied from store to store. Normally, a person who appeared at a Sears store and expressed an interest in employment at Sears would be given an application form to complete. The application was usually a two-sided form provided by Sears corporate headquarters. It provided space for the applicant to indicate the type of employment sought, whether permanent or full time, the hours available for work, education, past work experience, and other background information.
On the application forms used from 1974 to 1980, the applicant checked boxes next to various types of jobs available at Sears. The application contained only one box for "sales"; it did not provide separate boxes for noncommission sales and commission sales.
It was Sears' policy to extend an initial interview to each applicant as a courtesy, whether or not a position was available at the time. This initial interview was often conducted at the personnel counter when the applicant handed in a completed application. The interviewers were usually experienced personnel department employees. The great majority of Sears' interviewers were women.
The content of the initial interview varied from store to store, but often applicants were not informed of specific openings during this interview. The interviewer attempted to glean basic information from the applicant, such as availability for work and areas of interest. The interviewer often wrote comments on the applications regarding the applicant's personal interests, qualifications, or suitability for a particular position. In some cases the interviewer would convey her comments to the personnel manager orally.
The second step of the hiring process involved a second interview and sometimes testing. Procedures for moving to this second step varied among stores. At some stores, the initial interviewer screened applications on the basis of factors such as availability, prior job experience, and affirmative action requirements before moving applicants to the second stage. At other stores, the store personnel manager reviewed all applications before deciding whether a second interview or testing was appropriate. At still other stores, applications were screened by various members of the personnel staff.
However, despite this variation in the mechanics of the process, at all stores, the most important part of the hiring process was the second interview. This interview was usually conducted by the store's personnel manager, and normally lasted approximately one-half hour. The interviewer would evaluate the applicant's personal characteristics, such as appearance, manner, assertiveness, friendliness, ability to communicate, motivation, and overall potential. Various job openings might be discussed with the applicant at this time.
Following this interview, the applicant might also be interviewed by the appropriate division manager or merchandise manager, and in some cases by the store manager. However, the personnel manager's
Another part of the "second phase" of the hiring process was testing. Testing procedures varied from store to store even more widely than interview procedures. However, most persons hired by Sears were tested at some point in the process. At some stores, tests would be given before the second interview. At other stores, they were given after the second interview, while at still other stores tests were given only after an applicant was hired.
If an applicant was tested, he would usually be given two tests, Sears' Test of Mental Alertness and the Thurstone Temperament Schedule. Although the extent to which the test results were relied on varied, in most cases test scores did not play a dispositive role in the decision-making process. Sears' testing process will be discussed more fully below.
Finally, all aspects of the hiring process, from the initial interview to the final selection of a candidate for commission sales, were highly influenced by the requirements of Sears' stringent affirmative action programs.
4. Affirmative Action At Sears
Sears has for many years had a far ranging and effectively enforced affirmative action program. Sears was the first major retail employer in the nation to institute an affirmative action program. Sears' program became a model plan followed by other corporations in the retail industry and in other industries as well.
Sears' commitment to affirmative action began in 1968, when it appointed its first Equal Opportunity Director, Ray J. Graham. Also in 1968, at the urging of Mr. Graham, Sears voluntarily declared itself to be a government contractor, thereby submitting itself to the stringent affirmative action and recordkeeping requirements of the Office of Federal Contract Compliance Programs ("OFCCP"). As a result, Sears submitted itself to approximately 2,000 compliance reviews by the OFCCP.
In 1968, Sears began to develop its affirmative action program by distributing a questionnaire to obtain information about minorities and women at Sears. One of the pages of the questionnaire was specifically devoted to the movement of women into commission sales. (Sears Ex. 247, Tab. 1268, at 7). Sears then began to formulate its affirmative action program, which required Sears managers to consider the race, sex, and national origin of applicants and employees in making every employment decision. Because Sears was decentralized and each Sears unit hired independently, each unit had its own specially tailored plan.
In 1969, Sears set a long-term goal of 38 percent women in all jobs at Sears. This figure was derived from the government's estimates of women in the labor force. Because the female percentage of Sears employees substantially exceeded 38 percent, Sears concentrated on promoting women into non-traditional areas. Minority goals were also developed based on local labor force percentages.
In February, 1973, A. Dean Swift became president of Sears. One of his first actions as president was to call a conference of Sears' top 250 executives, for the first time in 23 years, to discuss affirmative action. The topic of the conference was the personal accountability of managers for affirmative action.
The one-of-two rule was not applied for women in technical service, automotive, and other craft-type jobs, or for men in clerical jobs, because of the lack of interested and qualified candidates. The rule for hiring into these positions was set at one in three, and then reset to one in five.
The MAG Plan was implemented in all Sears facilities by the summer of 1974. Management at all levels were involved in the Plan. Individual store managers were held primarily responsible for meeting Plan requirements. Managers were informed that their performance ratings and compensation would be tied in part to their affirmative action performance, and that they would be held accountable for failure to comply with the Plan. Some individual managers were disciplined for insufficient efforts.
Each store's compliance was monitored at the group and territorial level. Regularly scheduled personnel meetings always included discussions of affirmative action. Managers seeking to deviate from the Plan were required to submit Good Faith Efforts forms to the territorial office to obtain written permission to deviate from MAG requirements for a particular job. The manager was required to state the reason for the deviation, what efforts had been made to locate an individual of the required race or sex, why such a candidate could not be located, and why it was essential that the opening be filled at that time. Deviation requests were rarely granted.
In 1977, Sears raised its long range goal for women from 38 percent to 40 percent
In addition to imposing these hiring and promotion goals, in 1972, Sears implemented an Equal Pay Affirmative Action Plan. Under the plan, a nationwide formula was established for setting timecard salary to ensure that male and female timecard employees received equal pay. Task forces, a majority of whose members were women, conducted audits in every store and had complete authority to make on-the-spot pay changes. In 1974, Sears also developed its "Equitable Pay Package," which consisted of administrative procedures designed to ensure uniform application of wage scales to male and female employees.
The sincere dedication and commitment of Sears management at all levels to affirmative action was evident from the testimony of the Sears' officials and employees, whom the court found to be highly credible witnesses.
B. EEOC's Evidence: Hiring Into Commission Sales
EEOC has relied almost exclusively on statistics to prove its case. Not a single witness was called by EEOC to testify that she had been discriminated against by Sears, or had witnessed discrimination at Sears.
1. Data Bases
EEOC's statistical expert, Dr. Bernard Siskin, performed several analyses of Sears' hiring decisions in commission sales, in which he compared rejected applicants with persons hired into commission sales. To compile a data base for these analyses, he first obtained the employment applications of 33,000 rejected sales applicants from 33 randomly selected Sears stores across the country.
EEOC also attempted to identify all commission sales hires and promotions for the years 1973 through 1980, to determine the composition of these groups. To do this,
2. Statistical Analyses—Unadjusted Analysis
EEOC performed several analyses of this data. First, EEOC's expert, Dr. Siskin, attempted to estimate the female proportion of full time and part time commission sales hires in the nation and each territory for each year from 1973 through 1980.
Dr. Siskin next attempted to estimate the female proportion of full time and part time applicants for all sales jobs at Sears by year and territory. He analyzed the applications of the sample of non-hired applicants. He counted as "sales applicants" any person who applied for any job at Sears, except those persons who requested only a non-sales job. His definition of a "sales" applicant included not only persons who checked "sales" on their application, but also persons whose interest could not be determined, and those who checked "sales" in addition to other job categories.
Dr. Siskin also made the very critical assumption that all of these "sales" applicants were applicants for commission sales jobs at Sears. He further assumed that all of these "sales" applicants were equally qualified for and interested in all commission sales jobs at Sears. (Subsequent evidence proved that these assumptions were not correct.)
Based on these two arbitrary foundational assumptions, Dr. Siskin postulated that, in the absence of discrimination, Sears would be expected to hire into commission sales approximately the same percent of women as the percentage of women in his pool of "sales" applicants. He compared his estimated percentage of women commission sales hires, called the "actual percent female", with the percent of women in his "sales" applicant pool, the "expected percent female." These comparisons were made on a nationwide and territorial basis for each year from 1973 through 1980.
As Table 5 of the EEOC's Commission Sales Report demonstrates, these comparisons resulted in large disparities between EEOC's actual and expected percent of female commission sales hires on a national and territorial basis for all years. Table 5 also provides the "z" values for the differences between the actual and expected figures. The "z" value equals the number of standard deviations between the actual and expected figures. The "z" values estimated by Dr. Siskin for his nationwide comparisons are all very large, ranging from 11.9 to 45.1. Estimated z values for the individual territories are somewhat lower, but still
The same "unadjusted" analysis was performed by division, with the results appearing in Table 7 of EEOC's Commission Sales Report. The estimated z values were somewhat lower than the nationwide and territorial figures, but most had values above 5.0.
3. Adjusted Analyses
Dr. Siskin recognized that his unadjusted comparison of the female percent of all those he deemed "sales" applicants with the actual percent of women commission sales hires might not be meaningful, because there may be differences among those in his "sales" applicant pool which could explain some of the observed disparity. He therefore attempted to "adjust" his estimate of the expected percent female by taking into account various characteristics of applicants to determine whether the disparities might be explained by differences in the characteristics among male and female applicants. Three analyses were performed: a univariate analysis, a logit analysis, and a multivariate cross-classification analysis.
The first step for each of these analyses was to identify characteristics which might be associated with selection for commission sales. Dr. Siskin selected six factors which he thought might affect an applicant's chance of selection: (1) job applied for; (2) age; (3) education; (4) job type experience; (5) product line experience; and (6) commission product sales experience.
One analysis performed by EEOC to adjust for these characteristics was a weighted logit regression analysis. The logit analysis predicts the effect of a variable on a "yes or no" event, such as whether or not a person is hired. This analysis measures the effect of independent variables (e.g., age, experience, education), on the dependent variable, whether or not the person is hired. The logit coefficient for each independent variable represents the net effect of that variable on selection, after adjusting for the impact of all the other independent variables considered. However, the logit analysis does not allow all the independent variables to interact with each other. It assumes, for example, that experience with a particular product line has the
The second analysis, the multivariate cross-classification analysis, is a regression analysis that allows full interaction between all the variables in the model. Under the multivariate (also called multicell) analysis, a theoretical matrix is created with separate cells for each possible combination of all the different values possible for all of the characteristics considered. It calculates the expected percent female by comparing the number of hires with any given combination of characteristics, with the number of female non-hires with that particular combinations of characteristics. Dr. Siskin's multivariate model arbitrarily assumes that all persons within any particular cell are equally qualified for and interested in all commission sales jobs at Sears. In addition, in this and all of Dr. Siskin's analyses, it is arbitrarily assumed that all applicants were applying for all sales jobs in all divisions. (As subsequently explained, the evidence in this case proved that these assumptions were not correct.)
Finally, EEOC conducted a univariate cross-classification analysis, which measures the impact of any one characteristic alone on selection. It calculates the expected percent of female hires with any one characteristic, based on the number of persons hired who have that characteristic, and the number of women in the hiring pool who have that characteristic. This model does not allow for any consideration of the effect of variables other than the one being measured on the hiring decision.
EEOC relied primarily on its logit and multivariate analyses in this case. The results of the logit analysis are set forth in Tables 9 and 23 of EEOC's Commission Sales Report. The logit analysis reduced EEOC's original nationwide expected proportion of female commission sales hires for 1973 through 1980, from 61.1% to 49.5% for full time, and from 66.2% to 63.3% for part time.
Tables 9 and 23 also break the results down for each year, nationwide and for each territory, for full time and part time. In Table 10 of the Report, Dr. Siskin sets forth the relative chance of selection of men and women into full time commission sales positions after adjusting with the logit analysis.
The multivariate cross-classification analysis also reduced the disparity between EEOC's expected proportion of females in commission sales and EEOC's actual proportion of females hired. Tables 12, 13, 25 and 26 of EEOC's Commission Sales Report contain the results of the multivariate analysis for full time and part time positions, nationwide and by territory, for each year. The analysis reduced EEOC's aggregated expected proportion of female full time hires nationwide for all years from 61.1% to 40.3%. This disparity was later reduced to 37.2% (Pl.Ex. 48). The disparity for part time hires was reduced from 66.2% to 60.5%.
The tables also provide the z values for the differences between EEOC's expected and actual figures, which represents the standard deviation of the differences as discussed above. These z values were below 3 for a number of years in various territories. EEOC admitted that these disparities are not statistically significant. EEOC asserts, however, that statistically significant disparities exist nationwide and by territory in years in which the z value exceeds 3. They are:
Full time: Nationwide—1973-1977, 1980 Eastern— 1973-1974 Midwestern— 1973-1977
Pacific Coast— 1976-1978, 1980 Southern— 1973-1977 Southwestern— 1973-1978, 1980 Part time: Four Territories—1973-1980 Eastern— 1973-1979 Midwestern— 1973-1974, 1976-1980 Pacific Coast— 1976-1980 Southern— 1973-1980 Southwestern— 1973-1980
These are the years and territories in which EEOC presently claims Sears has discriminated against women in hiring into commission sales.
Dr. Siskin conducted a further multivariate analysis by product line groupings. The analysis was performed for each of 10 product line groupings separately, and disparities for each of these product line groupings were calculated. The analysis was conducted on a nationwide basis for the time periods 1973 through 1975, and 1976 through 1980. The results are contained in Table 15 (full time) and Tables 28A and 28B (part time) of EEOC's Commission Sales Report. These tables also provide the estimated z values for the disparities. For the 1973-1975 period for full time, the z values exceeded 3 in all product line groupings except women's apparel. In 1976-1980, the disparities were reduced significantly, and were not statistically significant in three of the ten groupings (home furnishings, appliances, and shoes).
In the part time analysis, 14 product line groupings were used. The Midwest Territory was analyzed separately because of apparent differences in hiring patterns. For both the 1973-1975 and 1976-1980 periods, in the four territories analyzed together, the z values of the disparities exceeded 3, and hence were considered statistically significant by EEOC, in 8 of 14 product line groupings. In the Midwestern Territory, disparities were statistically significant (had z values exceeding 3) in 8 of 14 product line groupings for 1973-1975, and in 7 of 14 product line groupings in 1976-1980.
4. Possible Biases
Dr. Siskin identified two potential problems with the multivariate which he asserts may result in an underestimate of the expected proportion of women—fragmentation bias and proxy bias. Fragmentation bias can occur when there are a large number of cells in the multivariate analysis to allow for all the possible combinations of characteristics. The larger the number of cells relative to the number of applicants, the greater the number of cells in which there are only hires, and no applicants. In this situation, Dr. Siskin asserts that the sexual composition of the expected hires tends simply to become the sexual composition of the actual hires, possibly masking the size of any disparities on the basis of sex.
To reduce this fragmentation bias, Dr. Siskin collapsed a number of the categories in the six characteristics and re-ran the multivariate analysis.
Dr. Siskin also identified proxy bias as another cause of a possible underestimation of the expected proportion of women in the multivariate analysis. He asserts that the analyses he performed do not reflect the extent to which the characteristics he adjusted for serve as a proxy for sex. In other words, he testified that, although it may appear from the analysis that a particular characteristic possessed disproportionately by males, such as automobile experience in automotives, is associated with success,
As noted above, the final figure arrived at by Dr. Siskin using the multivariate analysis, for all years nationwide, was 37.2% for full time commission sales. However, based on his perception of these possible biases in the multivariate analysis, and in light of the higher expected proportion of women resulting from the logit analysis (estimated at 49.5%), Dr. Siskin estimated the actual expected female proportion of hires, as adjusted for the six characteristics, is 40% for full time commission sales. The figures for each territory by year are set forth in Tables 12, 13, 25 and 26 as discussed above.
5. Other Statistical Evidence
EEOC presented one additional statistical analysis to support the results of its multivariate logit analyses. Dr. Siskin analyzed responses to Sears' Applicant Interview Guides. These guides were used in Sears' Southwestern Territory from 1978 through 1980. In these Guides, applicants rated their skill, interest and experience on a scale of one to five for various activity categories relating to jobs at Sears.
For all years at issue, Dr. Siskin adjusted his original pool of "sales" applicants based on the interest and experience responses to the Applicant Interview Guides he analyzed.
Dr. Siskin performed his analysis of responses to four categories on the Applicant Interview Guide which he determined were most appropriately matched with four product line groups at Sears: appliances, automotive, home building materials and home improvements.
6. Nonstatistical Evidence
Despite the comprehensive, nationwide scope of its lawsuit, EEOC did not produce any victims of discrimination by Sears, or any persons who claimed they witnessed discrimination against women by Sears. EEOC points, instead, to two aspects of Sears' selection process to support its statistical analyses: the subjective nature of Sears' selection process, and its testing practices. First, EEOC asserts that the absence of objective criteria for selection provides a ready mechanism for discrimination. It presented evidence showing a lack of written guidelines for selection of commission salespersons, and the lack of formal training of interviewers, both of which permitted subjective hiring decisions. The interviewers, most of whom were women, were formally trained primarily on nondirective interview techniques designed to encourage the applicant to "open up" during the interview. No formal instruction was provided regarding the qualities to look for in commission sales candidates. Interviewers were expected to learn the desirable characteristics for commission salespersons from observation of those persons presently selling on commission, and from managers' guidance as to the types of individuals who had been successful in the past.
EEOC also relies on Sears' Retail Testing Manual, discussed above, which apparently contains the only written descriptions of the desirable characteristics of a commission salesperson. EEOC focuses on the original version of the manual, issued in 1953, which describes a commission salesperson as a man who is "active," "has a lot of drive," possesses "considerable physical vigor," "likes work which requires physical energy," etc. References to males were eliminated in the 1960's. The present version is otherwise substantially similar in content to the original version.
EEOC also presented evidence of Sears' testing practices, EEOC focused its presentation on the Vigorous Dimension of the Thurstone Temperament Schedule. Some of the questions from which the vigor score is determined would more likely be answered affirmatively by males.
C. EEOC's Evidence: Promotions into Commission Sales
EEOC relies almost exclusively on statistical analyses to prove that Sears discriminated against women in promotions from noncommission sales jobs to commission sales jobs. In its analyses, EEOC considered only movements from noncommission sales positions to commission positions. It did not incorporate movements from any other positions into commission sales.
1. Year-end Store Pool Analysis
EEOC's expert, Dr. Siskin, performed two analyses of promotion data. First, he calculated the expected proportion of female promotions for each year using the female proportion of noncommission salespersons in each store at the end of each prior year (year-end store pool) as an estimate of the female proportion of the promotion pool. He compared these figures with the proportion of women actually
2. Year-end Division Pool Analysis
Dr. Siskin performed a second analysis of the same data, in which he calculated the expected female promotions using the female proportion of noncommission salespersons on a division basis (year-end division pool). This analysis was performed to take into account the possibility that persons in a division in which a promotion occurred had a greater chance of receiving the promotion than persons outside the division.
Tables 31 (full time) and 34 (part time) of EEOC's Commission Sales Report contain the results of this analysis, including z values for the estimated disparities. The z values exceeded 3 in all years and territories except for one territory in one year.
D. Analysis of EEOC's Evidence: Hiring
EEOC has relied almost exclusively on its statistical analyses to meet its burden of persuasion on its commission sales claim.
1. Inadequacies in Data and Variables Analyzed by EEOC
a. Data Analyzed
First, one of the most serious flaws pervading all of EEOC's statistical analyses is in its selection of the applicant pool for commission sales jobs at Sears. Dr. Siskin arbitrarily included in his "sales" applicant pool, on which he based all of his statistical analyses, any individual in the sampled stores who applied for any job at Sears, except those who specifically applied for nonsales jobs only. Thus, he considered that any person who checked the "sales" box on the application, or "sales" and any other box, or even those who checked the "any of the above" box, were applying specifically for a commission sales position at Sears. He also arbitrarily assumed that all of these members of his "sales" pool were applying for all commission sales positions at Sears in all divisions. EEOC presented no material evidence to support either assumption, and Sears' evidence proved that both assumptions were false.
Most written applications in the nonhired sample did not indicate whether the applicant was applying for commission sales. Of those who did indicate a preference for commission sales, over 75% were men. The "sales" pool constructed by Dr. Siskin had a disproportionately high percentage of women. See Written Rebuttal Testimony of Dr. Joan G. Haworth Regarding Commission Sales, at 2-3; Plaintiff's Exhibit 14 at 1-2 (corrected June 7, 1985). By using such an inaccurate, overbroad definition of "sales" applicant, EEOC substantially inflated the female percentage in
In addition, Dr. Siskin admitted that the use of applicant flow data,
b. Omission and Inadequate Coding of Important Variables
A second major flaw in EEOC's analysis is its failure to include in its analysis many important factors that significantly affect the hiring process. As described above, Dr. Siskin chose six factors which he determined might be associated with selection for commission sales jobs. These six factors are: (1) job applied for; (2) age; (3) education; (4) job type experience; (5) product line experience; and (6) commission product experience. However, Dr. Siskin is an expert only in applied statistics. He is not an expert in labor economics, has no expertise in the area of retail sales, and has no direct knowledge of Sears. His personal opinion regarding the factors important for commission selling is therefore entitled to little weight.
EEOC presented no credible evidence to show that the six factors chosen by Dr. Siskin are the actual factors most important to selection for commission sales at Sears or to success in commission sales. In fact, all the evidence offered at trial indicates, to the contrary, that a number of important factors were not included in EEOC's analysis, and many of the factors included in the analysis were inadequately coded.
First, with respect to excluded factors, the one single most important factor intentionally excluded by EEOC is the applicant's interest in commission sales and in the product to be sold. Dr. Siskin simply assumed that all applicants in his "sales" pool were equally interested in and qualified for all commission sales jobs at Sears. There was no basis in the evidence for this assumption; the evidence is overwhelmingly to the contrary. As will be discussed below, many applicants for sales jobs at Sears were not in fact interested in selling on commission, and women were considerably less interested in commission sales than men. Moreover, many women were not
Other important factors not controlled for in EEOC's analysis are those characteristics which could be determined only from an interview, not from the written application. These include physical appearance, assertiveness, the ability to communicate, friendliness, and economic motivation. Dr. Siskin admitted that these are factors identified by Sears managers as desirable for commission salespersons. However, no adjustment is made for these factors in his analyses.
Moreover, EEOC's coding of several of the factors it included in its analysis was clearly inadequate to properly adjust for these factors. A prime example of this is EEOC's coding of prior job experience. Dr. Siskin did not distinguish among applicants with widely varying previous sales experience. No distinction was made for those who had worked "outside" sales, those who sold complex or expensive products, or the amount of skill required to sell the product. Among the applicants who indicated only that they had "sales" experience on their applications, women were more likely than men to have been cashiers, and would have been coded with a lower level sales experience had they written "cashier" on the application. Tr. 5965 (B. Siskin), Plaintiff's Exhibit 6 at 6.
EEOC then combined such applicants who indicated only "sales" experience, with applicants who had been sales managers, in the "Sales—High" category, eliminating any distinction between the two groups. The sales manager group was disproportionately male. Tr. 5750 (B. Siskin); EEOC Commission Sales Report, Appendix 3 at 6. Combining these two groups masked the fact that men in the category were substantially more qualified than women in the category. Tr. 5750 (B. Siskin).
Applicants who had commission selling experience were all coded into the same category. Among the applicants coded as having commission sales experience on the basis of prior sales experience with a product sold on commission at Sears, women were more likely than men to have been cashiers. Therefore, more women than men were coded as having prior commission sales experience who did not in fact have commission sales experience. Tr. 6054-55 (B. Siskin); EEOC Commission Sales Report, Appendix 3 at 9-10. In addition, among men and women coded as having commission sales experience on the basis of their experience selling products sold on commission, men were more likely to have sold the more expensive items and women the less expensive items. Tr. 6050 (B. Siskin). Thus, among those applicants credited with commission sales experience, women had less real commission selling experience, and the experience they had tended to be of a lesser quality.
In addition, EEOC failed to distinguish between varying levels and quality of experience for applicants with non-sales experience. Applicants who owned or managed businesses would be credited with the same level of experience as a person who filled shelves in a stockroom. The coding of this experience did not reflect significant differences in the degree of responsibility or amount of accomplishment of different applicants. Although Dr. Siskin stated on direct examination that refinements within this category would not change anything, he admitted on cross examination that he had misspoken, and that refinements in this area could in fact make a difference. Tr. 4350, 5948-49 (B. Siskin). Male applicants were more likely than female applicants to have had the type of non-sales experience that would increase the chance of being hired into commission sales. See Sears Exhibit
EEOC also failed to code the amount of prior experience an applicant had. An applicant with one month of experience in any area was coded the same as an applicant with 15 years of experience. Male applicants were likely to have more experience than females.
Interruptions in work history were also ignored by EEOC. Men were less likely than women to have interrupted their labor force participation. Among those who did have gaps in their employment, the length of the gaps of women were greater than the length of the gaps of men. These gaps generally lessen the quality and amount of experience of women compared to the men in the same category of prior experience. See Sears Exhibits 6-J-2 and 6-J-3; Written Direct Testimony of Dr. Joan Haworth ¶ 10(b).
Finally, EEOC failed to code other relevant experience recorded on the application. The application forms used after 1973 asked the applicant, "What experience or training have you had other than your work experience, military service or education? (Community activities, hobbies, etc.)." Responses to this question revealed that male applicants were much more likely than female applicants to have a background experience or knowledge in areas relevant to commission sales product lines. For example, males were much more likely to have a background in automotive, building, or mechanical and technical areas (e.g., television repair, industrial arts). This experience generally related to products sold on commission at Sears. Women, on the other hand, were much more likely to have had experience in home furnishings and decorating, or women's apparel and fashions. See Sears Exhibit 6-12. Products related to these experiences are less likely to be sold on commission at Sears. By not coding this experience, EEOC ignored another difference between men and women which could explain some of its estimated disparities.
It is clear from all of these coding decisions that the prior experience characteristics of Dr. Siskin's model do not adequately distinguish between important variances in background experience and knowledge which could significantly affect a hiring decision. Because of the nature of these coding deficiencies, women are credited with greater amounts of experience at higher levels than they actually had. The effect of all these inadequacies is to inflate the percent of women the statistical models estimate should be hired. Since prior experience is a factor which can be highly significant in the decision to hire for commission sales, these inadequacies seriously affect the ability of EEOC's statistical models to make accurate estimates. As Dr. Siskin admitted, if variables are poorly specified or defined, or if important variables are left out, the analysis can lead to the wrong conclusion.
c. Coding Errors
Moreover, errors in EEOC's mechanical coding of information from applications in its hired and nonhired samples also make EEOC's statistical analysis based on this data less reliable. Numerous significant coding errors by EEOC's coding staff were brought to light at trial. Substantial trial time was devoted to this problem. Dr. Siskin attempted to correct these errors by personally recoding commission sales experience and product line experience of full-time commission sales hires. After the recoding by Dr. Siskin, the final percentages of full-time commission sales hires with these experiences were almost identical to the percentages Sears originally presented based on an analysis by Sears' counsel.
However, Dr. Siskin did not recode the "job applied for" variable for full time commission sales hires. EEOC contends that, using its coding, 21.2 percent of the full time sales hires expressed a preference for
These errors in the construction of EEOC's data base and its omission or inadequate coding of important variables, are sufficient together to raise serious doubts about the practical significance of all of EEOC's analyses. EEOC has inflated the female percentage of its "sales" applicant pool by including many applicants who did not apply for commission sales. It has also consistently coded prior experience in such a way that less experienced women are considered to have the same experience as more experienced men. Further, it has made so many general coding errors that its data base does not fairly reflect the characteristics of applicants for commission sales positions at Sears. While some of the statistical inadequacies of the EEOC may have resulted from a misguided attempt to save money, these decisions by EEOC all have the obvious tendency of artificially inflating the percentage of women that EEOC's analysis estimates should have been hired into commission sales by Sears. Therefore, under the principle of "garbage in, garbage out," referred to by Dr. Siskin, results from this analysis are highly suspect.
2. Faulty Basic Assumptions
Even more important than EEOC's errors in constructing its data base and adjusting for factors important to commission sales hires, EEOC's statistical analyses are based on two essential assumptions for which there is no credible support in the record. In designing all of his statistical analyses relating to commission sales, Dr. Siskin made the important assumptions that (1) all male and female sales applicants are equally likely to accept a job offer for all commission sales positions at Sears, and (2) all male and female sales applicants are equally qualified for all commission sales positions at Sears. Plaintiff's Siskin Exhibit 12; EEOC Commission Sales Report at 4. The court finds that both of these assumptions were proven untrue. Without these assumptions, EEOC's statistical analyses are virtually meaningless.
a. Assumption of Equal Interest
EEOC has offered no credible evidence to support its assumption of equal interest by male and female applicants in all commission sales positions at Sears. Sears, on the other hand, has offered much credible evidence that employees' and applicants' interests, preferences and aspirations are extremely important in determining who applies for and accepts commission sales jobs at Sears. Sears has proven, with many forms of evidence, that men and women tend to have different interests and aspirations regarding work, and that these differences explain in large part the lower percentage of women in commission sales jobs in general at Sears, especially in the particular divisions with the lowest proportion of women selling on commission.
(1) Store Witnesses
The most credible and convincing evidence offered at trial regarding women's interest in commission sales at Sears was the detailed, uncontradicted testimony of numerous men and women who were Sears store managers, personnel managers and other officials, regarding their efforts to recruit women into commission sales. As discussed above, attracting women to commission sales has been an important priority in Sears' affirmative action programs since the first affirmative action questionnaire was circulated in 1968. Sears managers and other witnesses with extensive store experience over the entire relevant time period testified that far more men than women were interested in commission selling at Sears. Numerous managers described the difficulties they encountered in convincing women to sell on commission.
Female applicants who indicated an interest in sales most often were interested in selling soft lines of merchandise, such as clothing, jewelry, and cosmetics, items generally not sold on commission at Sears. Male applicants were more likely to be interested in hard lines, such as hardware, automotive, sporting goods and the more technical goods, which are more likely to be sold on commission at Sears. These interests generally paralleled the interest of customers in these product lines. Men, for example, were usually not interested in fashions, cosmetics, linens, women's or children's clothing, and other household small ticket items. Women usually lacked interest in selling automotives and building supplies, men's clothing, furnaces, fencing and roofing. Women also were not as interested as men in outside sales in general,
Custom draperies, however, was one division in which women were willing to sell on
The percentage of women hired in the various categories generally paralleled their interests and background in the product line involved. This illustrates how much an applicant's interest in the product sold can influence his willingness to accept a particular commission sales position. As is evident from the above discussion, interests of men and women often diverged along patterns of traditional male and female interest.
This lack of interest of women in commission sales was confirmed by the number of women who rejected commission sales positions. Although evidence was presented only for the Eastern territory, this evidence showed that many women turned down commission sales job offers or otherwise expressly indicated that they were not interested in commission selling at Sears. See Sears Exhibit 25.
Women at Sears who were not interested in commission sales expressed a variety of reasons for their lack of interest. Some feared or disliked the perceived "dog-eat-dog" competition. Others were uncomfortable or unfamiliar with the products sold on commission. There was fear of being unable to compete, being unsuccessful, and of losing their jobs. Many expressed a preference for noncommission selling because it was more enjoyable and friendly. They believed that the increased earnings potential of commission sales was not worth the increased pressure, tension, and risk.
These reasons for women not taking commission sales jobs were confirmed in a study performed by Juliet Brudney
(2) Survey Evidence
Sears also introduced a number of surveys taken of Sears employees and applicants which also demonstrate that women were much less interested than men in commission selling at Sears. This evidence also showed that women were particularly less interested than men in selling products in divisions where EEOC found the greatest disparities between the expected and actual proportions of women.
First, Sears presented extensive evidence of differences in the general interests and attitudes of men and women in American society over the past 50 years. This evidence was developed by Dr. Irving Crespi from an exhaustive study of national surveys and polls taken from the mid-1930's through 1983 which related to the changing status of women in American society. Although the evidence presented by Dr. Crespi demonstrated many changes in attitudes over the past 50 years, he made a number of conclusions directly relevant to women's interest in commission sales. Dr. Crespi found that: (1) men were more likely than women to be interested in working at night or on weekends, (2) women were more likely than men to be interested in regular daytime work; (3) men were more likely than women to be interested in sales jobs involving a high degree of competition among salespersons; (4) men were more likely to be interested in jobs where there was a chance of making more money, even though it involved a risk of losing the job if they did not sell enough; and (5) men were more likely than women to be motivated by the pay of a job than by the nature of the job and whether they like it.
Sears' evidence also demonstrated that women's attitudes toward work changed measurably between 1970 and 1980. During this time, significant changes occurred in the sexual compositions of the workforce. The number of females in many traditionally male-dominated fields doubled or tripled (e.g., securities and financial services salespeople, lawyers, hardware and building supplies). The female proportion of college students majoring in business subjects rose from 10 percent to nearly one-third in each category. Sears evidence also showed that, by the late 1970's, women were more open to commission sales positions than in the early 1970's, but it was still necessary to "sell" the job to them in many cases. Some reasons for the increased willingness of women to accept commission sales jobs were: (1) commission sales jobs changed from being almost exclusively full time to largely part time, and many more women preferred to work part time; (2) the change in compensation for commission sales from draw versus commission to salary plus commission, which reduced the risk perceived by some women in commission selling; (3) a group of successful commission saleswomen that over time provided role models for other women; and (4) the increased availability of day care, which increased the hours many women were available to work. Thus, female interest in and availability for commission sales increased during the period from 1973 through 1980.
In addition, specific surveys of the interests of Sears employees reveal that far more men than women are interested in commission sales. Sears has taken regular morale surveys of its employees in every retail store approximately once every three years since 1939.
The morale surveys demonstrated that most noncommission salespeople were happy with their work, and that more noncommission saleswomen preferred to stay in their present jobs than noncommission salesmen. In 1974-1976, noncommission saleswomen were much less interested than noncommission salesmen in promotion to division management or a higher level. They were far more likely than noncommission salesmen to want to remain in the job they had or one like it. In 1978-1980, only 14% of full time noncommission salesmen and 8.4% of noncommission saleswomen were interested in a different position. Thus, although only a small percentage were interested in other jobs, almost twice as many men as women were interested in new jobs. In addition, almost twice the percentage of female (56.4%) as male (30.3%) full time noncommission salespeople expressed a preference to remain in their present jobs.
The morale of noncommission salespersons was higher than that of all other timecard nonsupervisory employees. Noncommission salespersons were satisfied with their work, and noncommission saleswomen were more satisfied than noncommission salesmen. Most noncommission salespersons, and especially females, enjoyed their work and took pride in their jobs.
Noncommission saleswomen were more likely than noncommission salesmen to believe that their pay levels favorably influenced their attitudes toward their jobs, and were less likely to feel underpaid and to report that their pay at Sears was inadequate to meet their needs. Noncommission saleswomen were also more likely than noncommission salesmen to feel good about their futures at Sears.
Sears also presented the results of a special Job Interest Survey taken in 1976. See Sears Exhibit 254-1. This survey was administered to full time noncommission salespersons to determine their interest in big ticket commission selling. The survey was conducted to determine the amount of backpay, if any, Sears might be liable for as a result of EEOC's charges.
The results of this special survey were similar to those of the morale surveys.
The survey next provided a definition of big ticket commission selling, and asked respondents if they agreed with this definition. Almost all employees agreed with the definition. See Sears Exhibit 254-6. The survey then asked if the respondent would be interested in such a job. After reading the definition, 32% of the men, but only 3.5% of the women, expressed a definite interest in a big ticket commission sales job at Sears. See Sears Exhibit 254-7. The clear majority of females (69.4%) responded that they were definitely not interested in such a job, while only 37.9% of the males responded "definitely no." See Sears Exhibit 254-7. These results demonstrate that at least three times as many males, and possibly as much as eight times as many males, as females were interested in selling big ticket items on commission at Sears.
EEOC has attacked the 1976 job interest survey on several bases, through the testimony of Dr. Stanley Presser.
The results of Sears' National Timecard Nonsupervisory Special Survey ("NTNSS") also confirm this relative lack of interest of Sears' noncommission saleswomen in commission selling at Sears. This survey was taken in 1982, using a sample of 53 Sears "A" and "B" stores. The survey was designed to be given to commission and noncommission salespeople at Sears. Unlike many other surveys taken by Sears, the NTNSS contained many questions requiring highly personal information in response. It asked questions about the attitudes, interests, and the personal beliefs and lifestyles of the employee. To assure respondents of the promised absolute anonymity, the unit of the respondent is not identified on the response sheet.
Question 42 of the survey asked respondents which three positions they wanted to be considered for next at Sears. Commission sales was one of the many alternative responses provided to the question. More than three times as many full time noncommission salesmen as noncommission saleswomen responded that they wanted to be considered for commission sales (20% of the males, 6% of the females), and more than twice as many part time noncommission salesmen as saleswomen (23% of the males, 9% of the females) were interested in commission sales.
EEOC has offered a number of criticisms of this survey. First, it contends that noncommission salespeople could not be adequately identified from responses to the survey. However, although the responses to the question designed to identify noncommission salespersons demonstrated that the question was somewhat ambiguous, Sears was able to adequately identify noncommission salespersons through responses to other questions.
Next, EEOC contends that Question 13C, not Question 42, is the most appropriate predictor of whether a noncommission salesperson is interested in commission sales. Question 13C asks whether the respondent would accept a commission sales job if offered one. However, as Dr. Crespi testified, Question 42 is a better indicator of real interest in the position, since the respondent must affirmatively choose commission sales. A "yes" answer to Question 13C requires less affirmative interest in the position. As discussed above, a strong interest in commission sales is an important factor which Sears managers look for in hiring commission sales applicants.
As Sears' witness Dr. Roper testified, perhaps the best indication of interest in commission sales can be derived from a combined analysis of the two questions. His combined analysis produced results similar to the responses to Question 42. Of the full time respondents, 20% of the men but only 6% of the women were actively
In addition to the findings regarding the interest of noncommission salespersons in commission sales determined from direct questions, the NTNSS provided other useful information about the interests of men and women in noncommission sales. Noncommission salesmen, both full time and part time, were more interested in advancement at Sears in general than noncommission saleswomen. See Sears Exhibit 3-B at 9. Noncommission salesmen were more willing to make sacrifices for advancement, including working overtime, working more off-hours and weekends, and being assigned to bigger divisions. See Sears Exhibit 3-B at 10. In addition, among those with prior commission or big ticket sales experience, noncommission salesmen were much more likely than noncommission saleswomen to want to return to commission sales jobs. See Sears Exhibit 3-B at 14. Many other related differences between male and female interests and aspirations were found,
The court finds that, again, although there are some flaws in the design and administration of the NTNSS, they are not significant enough to undermine the essential validity of the results. The responses described above corroborate the uncontradicted testimony of Sears' store witnesses, the results of the morale surveys, and the 1976 Job Interest Survey discussed above.
(3) Comparing Sears to National Data
In addition to Sears' evidence of actual interest of its employees in commission sales, Sears analyzed national labor force data as another measure of both interest in and availability for commission sales positions. As discussed above, applicant flow data available in this case does not provide a reliable basis for determining whether an applicant was qualified for and interested in a commission sales position at Sears. As an alternative to the applicant flow analyses performed by EEOC, Sears presented
Dr. Haworth analyzed the number of male-owned and female-owned businesses by the type of product sold as a measure of interest in the product, since owning a business is the ultimate form of commission sales. She found wide differences in the percent of female-owned business depending on the product involved. For example, women owned 42.3 percent of the apparel and accessory stores, but only 3.9 percent of automobile dealerships and service stations. See Sears Exhibit 6-11. Dr. Haworth also found a wide divergence of male and female interests within product lines. For example, within the apparel and accessories businesses, in 1980, women owned 68.5 percent of women's ready-to-wear stores, but only 13.1 percent of shoe stores, and none of the men's apparel stores. See Sears Exhibit 6-11.
The data also showed a large difference in male and female interest in the various products grouped together by EEOC. For example, for its home furnishings product line, EEOC grouped together furniture, floor coverings and draperies. National data revealed that women owned 60.5 percent of the drapery, curtain and upholstery stores in 1980, but they owned only 14.2 percent of the furniture stores and 1.2 percent of the floor coverings stores.
Although business ownership and general interest in selling a particular product may not be perfectly correlated, this data does give an indication of the differences between male and female interest in selling particular products. This data corroborates other Sears evidence that male and female interest in selling varies significantly by product line.
This difference in male and female interests by product line is important in this case, because most of the disparities produced by EEOC's analysis are concentrated in five product lines: automotive, home building materials, electronics, appliances,
This national data corroborates Sears' strong evidence of female lack of interest in commission sales and in the particular product lines discussed above. It is further proof that EEOC's assumption of equal male and female interest in commission sales and in all product lines has absolutely no basis in fact.
(4) Other Evidence of Interest
The only evidence introduced by EEOC regarding the interest of women in commission sales is the testimony of several witnesses regarding women's interests and aspirations in the workforce in general.
However, these experts provided little persuasive authority to support their theories. The particular examples of unknown numbers and proportions of women in history to which they refer generally focus on small groups of unusual women and their demonstrated abilities in various historical contexts, not on the majority of women or their interests at the time of this case. The sweeping generalizations these witnesses sought to make are not supported by credible evidence.
More convincing testimony in this area was offered by Sears expert Dr. Rosalind Rosenberg. Dr. Rosenberg testified that, although differences between men and
In conclusion, EEOC's statistical analyses are dependent upon the crucial arbitrary assumption that men and women are equally interested in commission sales jobs at Sears. As is evident from the above discussion, EEOC has provided nothing more than unsupported generalizations by expert witnesses with no knowledge of Sears to support that assumption. Sears has offered a wide variety of credible evidence that, during 1973 to 1980, women in fact were far less interested in commission selling at Sears than men. All the evidence presented by Sears indicates that men are at least two times more interested in commission selling than women. Thus, EEOC's assumption of equal interest is unfounded and fatally undermines its entire statistical analysis. Moreover, a difference in interest of this magnitude clearly would explain the disparities resulting from EEOC's faulty analysis.
b. Assumption of Equal Qualifications
In addition to assuming equal interest, EEOC also assumed that male and female applicants in its "sales" pool are equally qualified for all commission sales positions at Sears. However, as EEOC's Commission Sales Report itself demonstrated, this assumption is also false. The report indicates that, on average, female applicants in the "sales" pool were younger, less educated, less likely to have commission sales experience, and less likely than male applicants to have prior work experience with the products sold on commission at Sears. See EEOC Commission Sales Report at 34, 64; Plaintiff's Exhibit 14; Plaintiff's Exhibit Siskin 36, 37. Although EEOC attempted to adjust for some of these differences in its logit and multivariate analyses, as discussed above, its attempts were not successful. Therefore, its erroneous assumption of equal qualifications of male-female applicants also undermines the validity of its statistical analyses, particularly its unadjusted analysis.
3. Other Deficiencies in EEOC's Statistical Analysis
In addition to all the data problems, the omission and miscoding of important variables, and the faulty assumptions of equal interest and qualifications of men and women in commission sales jobs, there are a number of other important flaws in EEOC's analysis. First, as noted above, Sears is highly decentralized, and each store has a great deal of local autonomy. Each store hires its employees independently of other stores. Each store for the most part has its own individual pool of applicants for jobs at that store. There is generally no swapping of applicants among stores. No territory-wide or nationwide applicant pool has ever existed at Sears from which individual stores could draw the most qualified applicants. EEOC's analysis, however, creates artificial territorial and nationwide applicant pools where none actually existed, and then seeks to evaluate the hiring decisions of individual store managers by comparing those hired with the nationwide and territorial pools it artificially constructed. There is likely to be considerable variation in the quality of applicants
In addition, the large z statistics relied on by EEOC as proof that their statistical analyses have significance are essentially meaningless. As discussed above, a z statistic measures only the probability that a given difference between two numbers occurred by chance. In the context of this case, the z statistic will have significance only if the numbers compared are the correct proportions of qualified and interested female applicants for commission sales and the correct proportions of female commission sales hires and promotions. Since EEOC did not properly control for interest or qualifications, EEOC never compared these two groups. Without meaningful underlying comparisons in its unadjusted and adjusted analyses, EEOC's z values prove nothing.
EEOC's unadjusted analysis compared the proportion of women hired into commission sales to the proportion of women in EEOC's "sales" pools. As discussed above, the "sales" pool included many persons who were not applying for or interested in commission sales, and contained a disproportionately high percentage of women. This analysis assumed that male and female applicants in the "sales" pool were equally interested in and qualified for commission sales, and made no adjustment for any differences among applicants. Since these assumptions have been proven untrue, EEOC's comparison of the groups provides little useful information to the court.
With respect to EEOC's two adjusted analyses, the z values also have little significance. Both analyzed the same highly overinclusive "sales" pool. Although EEOC attempted to adjust for some factors affecting chance of selection, the adjustments attempted were sorely inadequate, as discussed at length above. No adjustment was attempted for interest in a commission sales position, which might have narrowed the pool down to a more realistic group of applicants interested in commission selling. Therefore, EEOC's "adjusted" analyses cannot provide fair estimates of the proportion of women Sears should have hired into commission sales. Since the comparisons made in the analyses have little value, the z statistics associated with these comparisons also have little value.
In addition, as Dr. Wise
When these variances were taken into account, the z statistics associated with EEOC's disparities were significantly lower. See Sears Exhibits 5-3, 5-4. For EEOC's nationwide multivariate analysis of full time commission sales hires, z values exceeded 3 in only two years.
4. EEOC's Applicant Interview Guide Analysis
EEOC has analyzed responses to Applicant Interview Guide questionnaires independently of its regression analyses. These questionnaires allowed applicants to rate their interest, skill and experience in a number of categories. EEOC adjusted its "sales" pool using the interest and experience responses of applicants. In performing this analysis, Dr. Siskin attempted to factor in the extent to which commission sales hires actually had experience according to EEOC's coding. EEOC concluded from its analysis that the expected female hiring rate still exceeded the actual rate in all four product lines.
However, EEOC's analysis does not adjust for any of the factors included in its multivariate and logit analysis. EEOC merely adjusted its "sales" pool, the flaws of which were discussed at length above, by the applicants' own ratings of their skill and experience on a scale from one to five. The court finds that this analysis of the ill-conceived "sales" pool cannot be used as a fair basis for comparison with Sears hiring rates. Sears' analysis of the Applicant Interview Guide questionnaires is discussed below.
5. EEOC's Nonstatistical Evidence
Some of EEOC's nonstatistical evidence also merits discussion. First, EEOC has focused considerable attention on Sears' testing practices. Although EEOC has stated throughout this litigation that it does not claim that Sears' testing practices violate Title VII,
However, many Sears applicants were not tested, and often those who were tested were not tested until after they were hired. The testimony of Sears managers makes clear that, in most cases where employees were tested before being hired, the test had little impact on any decision to hire. This was especially true in considering female applicants for less traditional jobs like commission sales. The credible evidence shows that test scores for women were often completely ignored in hiring women into commission sales.
Moreover, Sears' evidence showed that it used different scoring criteria for males and females, which resulted in a lower satisfactory score for women. In addition, the
EEOC also relies on what it characterizes as Sears' "masculine" description of a commission salesperson in Sears' Retail Testing Manual. However, there is no evidence that this historical description had any influence on hiring decisions, particularly during the years in question. To the contrary, Sears managers often paid no attention to information in the manual. There is no basis in the record for concluding that this description had any negative impact on the selection of women for commission sales.
Finally, EEOC presented two witnesses in its rebuttal case, two women who had applied for commission sales positions at Sears and were not hired. These witnesses were not called specifically to testify that Sears' had discriminated against them. They were called to rebut testimony of a Sears witness regarding coding of applications. Their testimony illustrated the difficulty of determining interest and qualifications of applicants solely from an application form. Neither witness provided any evidence that Sears discriminated against women.
One witness, Alice Howland, applied to a store which had hired only one commission salesperson from outside of Sears for nine years, from 1976 to the present. Consequently, at the time Ms. Howland applied, applications for full time commission sales generally were not even processed. Thus, her testimony provides no proof of discrimination by Sears.
The second witness, Lura Nader, applied for a commission sales position in draperies in response to an advertisement. She was not hired, and testified at trial that, while she didn't think so at the time, she now thought Sears had discriminated against her. However, Sears proved that it hired in that position at that time two other women who had applied on the same date as Ms. Nader and who had better qualifications for the job than she did. Faced with this evidence, Ms. Nader refused to alter her claim of discrimination. Obviously, however, her testimony provides no credible evidence that Sears discriminated against women.
Therefore, none of the nonstatistical evidence offered by EEOC supports its statistical analyses or provides any credible proof of discrimination by Sears. All of the deficiencies in EEOC's evidence discussed above leave its statistical analyses with virtually no persuasive value. Moreover, Sears has presented other persuasive evidence to prove that it did not discriminate against women in commission sales.
E. Sears' Commission Sales Analyses: Hiring
Sears did not perform its own statistical analyses of applicants for commission sales positions.
1. Hiring and Promotion Figures at Sears
During the period from 1973 through 1980, Sears never hired fewer than 20 percent women into full time commission sales and 37 percent women into part time commission sales in any year. Sears hired as many as 40 percent women into full time commission sales, and 52 percent women into part time commission sales. Between 1973 and 1979, the female percentage of full time commission sales hires doubled from 20 to 40 percent. See Sears Exhibits 61, 6T, 6KKK.
Between 1973 and 1975, the female percentage of part time commission sales hires increased from 41.5 percent to 52.3 percent. After 1975, this percentage decreased. This decrease is explained primarily by the fact that the distribution of part time commission sales positions within product lines changed. The number of commission sales positions in product lines in which women were interested decreased, while jobs selling products of greater interest to men increased (e.g., automotive, home building materials).
The proportion of women hired into commission sales varied substantially by product line. For example, the percentage of women hired to sell automotive products was much lower than the percentage of women hired to sell home furnishings. See Sears Exhibit 6-T.
From 1974 through 1980, Sears promoted 11,428 noncommission salespersons to commission sales at 992 Sears stores across the nation. Of those promotions, 53.5 percent went to women. The female proportions of promotions was never lower than 40.7 percent (in 1977), and was as high as 58.3 percent (in 1976). The female proportion of promotions from noncommission to part time commission sales exceeded 50 percent in every year from 1974 through 1980, reaching a high of 62.2 percent in 1975. See Sears Exhibits 6-15-1, 6-LL, 6-PPP.
More than 350 different positions supplied employees for commission sales jobs. Only half of the movement from other positions at Sears into commission sales came from noncommission sales positions. See Sears Exhibit 6-15-2.
The female percentage of commission sales promotions varied substantially by product line. For both full time and part time employees, the proportion of women promoted into commission sales has always exceeded the proportion of women hired to sell both products in which women have been more interested and products which women have not been very interested in selling. See Sears Exhibits 6-T, 6-2. This is the result of the success of Sears' affirmative action efforts in promoting women into commission sales who otherwise would not have applied for the positions.
2. Characteristics of Commission Salespersons
Commission salespeople and noncommission salespeople at Sears have differing distinct characteristics. Commission salespeople are older and have more experience than noncommission salespeople. Differences in age and experience are even more pronounced between big ticket commission salespeople and noncommission salespeople. Both male and female commission sales hires were more likely than nonhires to have been managers, self-employed, or former Sears employees. Most commission sales hires, and to a greater extent big ticket commission sales hires, had this type of related experience.
In addition, among those hired into commission sales, males tended to have more desirable job qualifications than females. Men were more likely to have had previous experience related to commission sales. Among the hires with previous experience, the men had more experience than the women. Even among the hires who had the same number of previous experiences, men had more experience than women. See Sears Exhibits 6-9, 6-J-1. In addition, among the hires with previous related experience, commission salesmen were more educated than commission saleswomen. See Sears Exhibit 6-9C.
This Sears case study revealed a number of significant facts. Of full time commission sales hires, 80 percent of the males and 75 percent of the females had at least one of the following three characteristics: (1) a preference for commission sales, or to sell a product sold on commission at Sears; (2) commission sales experience; or (3) training, experience or education relevant to the product line in which they were hired to sell. Of part time commission sales hires, 46 percent of the men and 34 percent of the women had at least one of these three characteristics. Of new full time commission salespersons who transferred from other positions at Sears, 60 percent of the men and 38 percent of the women had at least one of these three characteristics. Of the part time commission sales transfers, 75 percent of the men and 51 percent of the women had at least one of these three characteristics. It must also be noted that a disproportionate number of women hires and transfers were credited with this experience solely because they expressed an interest in or had a background in interior design or draperies, which relates only to a small part of the commission sales product lines.
Sears' study further revealed that, of those remaining employees who did not have one of the three characteristics described above, almost all hires and transfers, and more men than women, were one of the following: (1) a prior Sears employee; (2) a member of a minority group and/or a Vietnam-era veteran; or (c) persons whose files disclosed "patterns of achievement" apart from prior commission sales or product line experience.
As EEOC points out, this study would be more valuable if a representative group of nonhired applicants had also been analyzed for comparison with the hires. However, even without this basis for comparison, the study is useful because it demonstrates that Sears' commission sales hires all tend to have at least one characteristic which would make them more likely to be hired than persons without that characteristic, and that the men hired possessed more of these characteristics than the women. Both of these findings are consistent with Sears' evidence that it attempted to hire commission salespersons who demonstrated in some manner that they could perform well, while complying with its own affirmative action plans.
3. Sales Performance Data
Sears also analyzed the sales performance of its commission salespeople. Sales
Sears expert, Dr. Wise, examined the bottom 10 percent of sales performers and offered another explanation for Sears' hiring patterns. Sears hires relatively few commission salespersons in comparison to the number of job applicants. According to EEOC's analysis, only one of every 250 job applicants is selected for commission sales. Dr. Wise demonstrated that this very small probability of selection can significantly affect the percentage of men and women hired, if men on average are more qualified than women. A difference in average male and female qualifications would not have a great effect on hiring if a large number of applicants were hired. However, when a very small percentage of applicants is hired, assuming that Sears tries to hire the most qualified applicants (those located at the right tail of the distribution curve of job applicants), then far more males than females will be hired. This is true because there are far more males than females at the right tail of the distribution curve due to the difference in average qualifications of males and females. Dr. Wise provided many examples of the effect on the expected proportion of female hires of differences in interest or qualifications that are not incorporated into EEOC's analysis.
EEOC attacked Dr. Wise's model because it is based on the assumption that Sears can perfectly choose the applicants best qualified to sell on commission at Sears. EEOC witness Dr. Siskin contends that there are likely to be errors in the evaluation of applicants which would make Dr. Wise's model inapplicable to Sears. As Dr. Wise testified, however, any random error that might occur in the evaluation process would inure to the benefit of the lesser qualified group, in this case, the women.
4. Applicant Interview Guides
Sears also analyzed Applicant Interview Guides provided to applicants in certain stores
Dr. Haworth examined certain responses to the Applicant Interview Guides which are related to the five divisions in which EEOC found the greatest disparities. In analyzing these responses, she "normalized" the scores that applicants gave themselves on interest, skill and experience in each of these categories.
Sears also analyzed the Applicant Interview Guide data to take into account the fact that very few applicants would be selected, in accordance with Dr. Wise's testimony discussed above. This analysis reduced the expected percentage of females even further, such that the "actual" proportion of female hires as counted by EEOC exceeded the expected percentage of female hires in all five product lines. See Sears Exhibits 5-6; 6-HHH. This was true for both full time and part time commission sales hires.
EEOC has challenged Sears' use of the Applicant Interview Guides on a number of bases. First, it contends that the normalization process unnecessarily deflates the expressed interest of women in these product lines. EEOC asserts that this process is appropriate for comparing interests of a single individual in various products, not for comparing different applicants' interest. It is clear from the testimony that normalization of the scores may in some cases distort an applicant's true interest, and in other cases may appropriately modify an applicant's inflated rating of interest and abilities. The court recognizes that, by normalizing scores, Sears may have undervalued the interest of some female applicants in these product lines. Bearing this in mind, however, the court finds that the results of Sears' analysis do provide probative evidence of relative lack of interest. Although Sears' analysis may understate to some extent female interest, its analysis of the Guides is consistent with other more reliable evidence of female interest discussed above. Collectively, this evidence clearly demonstrates that differences in interest alone accounts for a great proportion of EEOC's disparities. This Sears' analysis also illustrates the important fact that most of the disparities claimed by EEOC arose in product lines in which women tend to have relatively little interest.
EEOC also criticized the Applicant Interview Guide categories chosen by Sears as failing to correspond to the five product groups with which Sears compared them. Although some categories relied on by EEOC in its analysis may be more analogous to the relevant product lines,
EEOC also notes that Sears compared the Applicant Interview Guide responses only to Sears' hiring in the years 1976 through 1980, not for 1973 through 1975. However, the Guides were distributed only in 1978 through 1980. Since the interest of women in nontraditional jobs increased significantly in the 1970's, Sears comparison of the responses only to the years 1976-1980 was reasonable.
Finally, EEOC challenges on two bases Sears' second analysis of the Guides, which takes into account the fact that very few applicants are actually hired. First, EEOC contends that the analysis is flawed because it requires that all hires be from the 99th percentile of persons responding to a particular item. However, as Dr. Wise testified, the model does not assume that persons at the top of the ranking on the Applicant Interview Guides would be among the top one percent of applicants according to actual qualifications. The model only shows that according to the ranking, and including its random error components, the proportions of women would vary dramatically by product line. Second, EEOC asserts that the model assumes that the scores of men and women will be normally
In conclusion, the court finds that Sears' analysis of the Applicant Interview Guides provides some useful information regarding women's lack of interest in commission sales at Sears, and it corroborates Sears' other persuasive evidence to that effect discussed above. However, because of the problems with both parties' analysis of the Guides, the court has not given substantial weight to either side's analyses of the Applicant Interview Guides.
F. Conclusions Regarding Commission Sales Claim: Hiring
Viewing all of this evidence together, considering the credibility of the witnesses and the reasonableness of their testimony, the court finds that EEOC has failed to carry its burden of persuasion on this claim. Its statistical evidence is wholly inadequate to support its allegations. The evidence is replete with flaws which, if any were considered alone, might invalidate the statistical conclusions. Together, all of these flaws leave the analysis with little probative value.
The most eggregious flaw is EEOC's failure to take into account the interests of applicants in commission sales and products sold on commission at Sears. EEOC turned a blind eye to reality in constructing its artificial, overinclusive "sales" pool, and assuming away important differences in interests and in qualifications. The court finds that, because of these errors, EEOC's highly inadequate coding of data available to it, and the other problems with the analyses discussed above, the results of EEOC's statistical analyses are entitled to little weight.
Moreover, evidence presented by Sears provided a more reasonable basis for evaluating Sears, and showed that Sears met all reasonable estimates of the proportion of qualified and interested women. Its evidence demonstrated that, when interest and qualifications are taken into account, EEOC's alleged disparities are virtually eliminated.
Equally important, EEOC has failed to counter Sears' highly convincing evidence of its affirmative action programs. Sears has proven that it has had a long and serious commitment to affirmative action, which applied to the recruitment of women for its commission sales force. Sears' affirmative action evidence established that, not only were women much less interested in commission sales at Sears than men, but also, more importantly, Sears did not have any intent to discriminate against women. Sears' affirmative action efforts to recruit women to commission sales went much farther than is required by law. EEOC has not presented any credible evidence to cast doubt on the commitment of Sears to affirmative action. The court therefore finds that Sears' evidence of its strictly enforced affirmative action programs is strong evidence that it did not in fact intentionally discriminate against women.
Finally, notably absent from EEOC's presentation was the testimony of any witness who could credibly claim that Sears discriminated against women by refusing to hire or promote women into commission sales. It is almost inconceivable that, in a nationwide suit alleging a pattern and practice of intentional discrimination for at least 8 years involving more than 900 stores, EEOC would be unable to produce even one witness who could credibly testify that Sears discriminated against her.
Therefore, based on all of the evidence presented, the court concludes that EEOC has failed to prove that Sears had a pattern or practice of intentionally discriminating against women in hiring into commission sales. On the contrary, the court finds that Sears has proven that it did not have such a pattern or practice. Further, Sears has proven legitimate, non-discriminatory reasons for the alleged statistical disparities between the hiring of men and women into commission sales from 1973 until 1980, and EEOC has not proven them pretextual.
G. Promotion Claim
Much of the evidence discussed above with respect to hiring is relevant to EEOC's promotion claim against Sears, particularly the evidence regarding interest in commission sales, the qualities sought in commission salespeople, the characteristics of commission salespeople, and affirmative action. All of the court's findings above relating to these and all other relevant matters are incorporated here. However, EEOC analyzed promotions to commission sales separately, using a completely different analysis. Its promotion analysis must therefore be discussed separately.
1. EEOC's Promotion Analysis
EEOC analyzed promotions into commission sales by arbitrarily assuming that all noncommission salespersons at Sears were candidates for commission sales positions. EEOC also arbitrarily assumed for its analysis that, during the relevant time period, all noncommission salespersons were equally interested in and qualified for, and had in fact applied for, commission sales jobs at Sears. It's Year-End Store Pool analysis used the female percentage of noncommission salespersons at Sears as the "expected" percentage of female hires into commission sales. It compared these percentages for each year with the female proportion of promotions from noncommission sales into commission sales. EEOC contends that the resulting disparities are proof of Sears' intentional exclusion of females from commission sales.
EEOC made only one effort to "adjust" its analysis, by taking into account the possibility that a noncommission salesperson in a division in which there is an opening might have a greater chance of getting that position than someone outside the division. This analysis did not substantially change the results of the first analysis.
Once again, however, EEOC has deliberately made false assumptions which undermine the validity of its analyses. Its assumption that all noncommission salespersons are in essence applicants for all commission sales jobs at Sears has absolutely no basis in fact, and is contrary to all the credible evidence in the case. As discussed at length above, Sears' evidence of its affirmative action efforts, its survey evidence, and the uncontradicted testimony of
Not only did EEOC erroneously fail to consider the interest of noncommission salespersons in commission sales, it did not even attempt to make any adjustments for differences in qualifications of males and females. EEOC asks this court to assume that all noncommission salespersons would all perform equally well in all commission sales positions, without offering any basis from which the court could reasonably make such an assumption. To the contrary, all evidence regarding qualifications shows that males at Sears were more qualified for commission sales positions than females. The court therefore cannot accept EEOC's baseless assumption of equal qualifications. EEOC's assumptions of equal interest and qualifications render its promotion "analysis" virtually meaningless. Its "adjustment" of its analysis by division pool does nothing to cure these fatal defects.
2. Sears' Evidence Regarding Promotions
Sears expanded EEOC's analysis of promotions by factoring in the indicated interest of noncommission salespersons in commission sales. It relied on responses to Career Aspirations Questionnaires administered to noncommission salespersons at stores in EEOC's non-hired applicant sample. Responses to these questionnaires show that, even in 1982-83, noncommission salesmen were three times as likely as noncommission saleswomen to be interested in moving to commission sales. Applying these figures to EEOC's year-end division pool figures eliminates the overall disparities calculated by EEOC for both full time and part time commission sales promotions.
EEOC criticizes Sears' use of the Career Aspirations Questionnaires, because Sears combined full time and part time responses due to the lack of full time female applicants interested in commission sales. However, there is no indication that the part time responses do not fairly reflect female interest in commission sales. Moreover, very similar results were obtained from the 1976 Job Interest Survey and the National Timecard Nonsupervisory Special Survey ("NTNSS"), both discussed above. The court therefore finds that the Career Aspirations Questionnaires provide a reasonable estimate of the interest of noncommission saleswomen in commission sales. Sears' analysis of these questionnaires demonstrates that interest alone can account for the disparities computed under EEOC's analysis.
Sears also performed a second expansion of EEOC's analysis. First, it adjusted the analysis according to divisions that actually feed into commission sales positions in a given division. EEOC's analysis adjusted only for the division in which a position existed. EEOC assumed that noncommission salespersons in all other divisions had an equal chance of promotion to that division, regardless of how related their experience was to sales in the division with the commission sales opening. EEOC's analysis also adjusted only for those divisions in which there were both commission and noncommission salespersons. Sears' approach reflected the reality that, in many divisions, most persons promoted to commission sales came from a small number of feeder divisions.
Sears performed two adjustments in this regard. First, it adjusted to take into account the possibility that a noncommission salesperson, working in an EEOC selected product line grouping in which a promotion occurred, had a greater chance of receiving the promotion. This analysis substantially reduced EEOC's disparities. See Sears Exhibit 6-5-2 at 1-4. Sears then adjusted to take into account the greater chance of being promoted from the most important feeder divisions, irrespective of whether the product line was related. This analysis also substantially reduced EEOC's disparities. After this analysis, the difference
Sears further adjusted this data by controlling for the age and seniority of noncommission salespersons. This adjustment reduced the disparity to only 10% of all promotions into commission sales. See Sears Exhibit 6-5-2 at 5-6. The product lines that contributed most heavily to the remaining disparities were automotive, home building materials and men's apparel. All three are product lines in which women had relatively little interest. Thus, even without controlling for interest, EEOC's asserted disparities have been substantially reduced.
EEOC challenges this second Sears analysis on several grounds, the most important of which relates to the "feeder division" adjustment. EEOC asserts that there is no basis for adjusting for divisions which were shown to feed into commission sales positions in a particular division, unless there is some relationship between the product lines or the experience in the two divisions. EEOC correctly notes that Sears has not shown that the experience in these feeder divisions is related to the type of selling required in the division with the opening. The court agrees that the adjustment for all feeder divisions may be inappropriate. Although there may be legitimate business reasons for the pattern of movement from various divisions into particular commission sales positions, Sears has introduced no evidence to prove this. The court cannot therefore wholly accept Sears' second analysis. However, Sears' adjustment for divisions in the same EEOC product line may reflect related experience. The court therefore finds Sears' second analysis is probative, but recognizes that the analysis may overreduce EEOC's disparities. Despite this, however, the analysis shows that adjusting EEOC's results for just a few relevant factors, excluding interest, substantially reduces the disparities. It is reasonable to conclude that, if the interest factor were added to the analysis, the disparities would be virtually eliminated.
H. Conclusions Regarding Commission Sales Claim: Promotions
All of Sears' evidence merely underscores the complete inadequacy of EEOC's statistical analysis of promotions. EEOC's analysis, based on false assumptions, provides no evidence from which the court could reasonably infer that Sears intentionally discriminated against women in promotions to commission sales.
Moreover, as discussed above with respect to the hiring claims, Sears' affirmative action efforts effectively disprove any claim of intentional discrimination by Sears with respect to promotions. As recounted above, continuous efforts were made to convince noncommission saleswomen to try commission sales. Sears' witnesses' testimony convincingly demonstrated that Sears' entire management, from the highest levels at corporate headquarters to store managers and other personnel, were committed to Sears' affirmative action goals, including the promotion of noncommission saleswomen into commission sales. This testimony stands uncontradicted. The statistical evidence presented by EEOC on its promotion claims does not refute this evidence.
EEOC also failed to present testimony by any Sears employee that she had been unfairly denied a promotion into commission sales at Sears. Once again, despite its allegations of nationwide discrimination in more than 900 stores over 8 years, EEOC was unable to produce one Sears employee to testify that Sears discriminated against her by refusing to promote her to commission sales. This total lack of any testimony to "bring the statistics to life" is but further confirmation of the failures of EEOC's statistical evidence.
Considering all of this evidence, the court concludes, as it did in the hiring claim, that EEOC has failed to prove its claim of a nationwide pattern or practice of intentional discrimination against women in promotions into commission sales at Sears. To the contrary, the court finds that Sears
III. Checklist Compensation
Sears employees are classified as either timecard or checklist. Checklist employees are the company's salaried executive management, professional and administrative employees, most of whom meet the duty requirements for "exempt" status established by the Fair Labor Standards Act. EEOC has charged that Sears had a nationwide pattern and practice of discrimination against women by paying them less than men in 51 specified checklist jobs.
Although EEOC originally alleged pay claims under both the Equal Pay Act and Title VII, EEOC subsequently dropped all of its claims under the Equal Pay Act. Its pay claim will therefore be analyzed under Title VII only. The general legal standards applicable to Title VII cases were discussed above. However, a few issues relating to pay claims under Title VII have arisen which require further discussion.
A. Legal Standards
1. Elements and Burdens of Proof
First, EEOC asserts that the elements and burdens of proof of the Equal Pay Act apply to its claim of a pattern and practice of pay discrimination against Sears under Title VII.
The Bennett Amendment, § 703(h) of Title VII, 42 U.S.C. § 2000e-2(h), provides:
In Gunther, the Supreme Court held that the Bennett Amendment incorporates into Title VII only the four affirmative defenses of the Equal Pay Act, which are that any pay differential resulted from a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or "any other factor other than sex." The Supreme Court took great care to point out that its holding was narrow, and that it was not deciding how sex-based wage discrimination litigation under Title VII should be structured to accommodate the incorporated defenses of the Equal Pay Act, and in particular, the fourth defense. 452 U.S. at 171, 101 S.Ct. at 2249.
At least one of the cases which EEOC cites as support for its contention that the Equal Pay Act analysis applies to Title VII claims of unequal pay for substantially equal work was decided before the Supreme Court's 1981 Gunther opinion.
However, the Supreme Court in Gunther did not hold or imply that the Equal Pay Act analysis governs Title VII claims of unequal pay for substantially equal work. The passage in Gunther which the cases point to as implying that the Equal Pay Act analysis applies in Title VII sex-based wage discrimination cases is not as equivocal as these courts have presented it to be.
In addition, applying the Equal Pay Act analysis to Title VII claims of unequal pay for substantially equal work creates, rather than prevents, confusion and disharmony between the Equal Pay Act and Title VII. Indeed, confusion has already resulted from such application. For example, the cases which have applied the Equal Pay Act analysis under Title VII do not agree on whether the Equal Pay Act analysis applies in every Title VII case involving
Still more confusion and disharmony would result in a Title VII unequal pay for equal work case where the employer was exempt under the Fair Labor Standards Act. If the Equal Pay Act analysis applies, the employer would lose the benefit of its exemption under the Fair Labor Standards Act and would have to meet the Equal Pay Act's heavier burden of proof. Exemptions under the Fair Labor Standards Act would therefore be rendered superfluous.
Finally, in the recent decision of Patkus v. Sangamon-Cass Consortium, 769 F.2d 1251 (7th Cir.1985), the court stated:
769 F.2d at 1260 n. 5.
Therefore, following Gunther and other persuasive authority, the legislative history of the Bennett Amendment, and the principle that statutes should be construed harmoniously, this court finds that the Bennett Amendment incorporates into Title VII the four affirmative defenses of the Equal Pay Act, but not the corresponding Equal Pay Act analysis regarding the elements and burdens of proof. Title VII of the Civil Rights Act of 1964 and the Equal Pay Act of the Fair Labor Standards Act have different purposes,
2. "Similar" Work Standard
EEOC also asserts that it need only prove that the persons in the job it analyzed were performing "similar" work. EEOC acknowledges that, under Title VII, a plaintiff establishes a prima facie case of discrimination when it shows that women receive less pay than men for substantially equal work, the standard applied under the Equal Pay Act, 29 U.S.C. § 206(d). Under this standard, EEOC must prove that the persons compared performed work of equal skill, effort and responsibility. Id. This is the "traditional" equal pay analysis, applied under both the Equal Pay Act and Title VII. EEOC has attempted to prove at trial that, during the years 1973-1980, persons with the same job title and job code at Sears performed substantially equal work under this standard.
EEOC also asserts, however, that it can prevail on its pay claim even if it does not prove that the jobs are substantially equal, if it proves that they are "similar." EEOC relies again on Gunther, supra. In Gunther, the employer assessed the worth of male and female prison guards jobs by considering the worth of the jobs and outside markets. It then decided to pay male guards 95 percent of the assessed worth of their jobs, and female guards 75 percent of the assessed worth of their jobs. The jobs performed by male and female guards were not equal. Therefore, no relief could be granted under the Equal Pay Act standard. However, the Court concluded that failure to meet the Equal Pay Act standard does not bar recovery under Title VII.
The Court reasoned that the Bennett Amendment to Title VII, which incorporates the Equal Pay Act defenses into Title VII, does not preclude other types of compensation claims under Title VII not cognizable under the Equal Pay Act. The Court pointed to the broad remedial purposes of Title VII, and found that limiting Title VII to claims cognizable under the Equal Pay Act standard could allow blatant cases of sex-based wage discrimination, which do not fit within the Equal Pay Act analysis, to go unredressed. The Court was faced with such a situation, in which female employees
The Court specifically declined to define the precise contours of compensation claims under Title VII beyond the facts presented to it. The Court indicated the narrowness of its ruling by stating:
452 U.S. at 166, 101 S.Ct. at 2246 (footnotes omitted). The Court further clarified, in a footnote, that the sole issue before the Court was whether the respondents' failure to demonstrate equal work precluded them from proceeding under Title VII. 452 U.S. at 166 n. 8, 101 S.Ct. at 2246 n. 8. Throughout its opinion, the Court stressed the uniqueness of the plaintiffs' claim and the strength of the evidence they offered, noting that they had direct evidence of discrimination.
In concluding its opinion, the Court addressed the fears of employers that allowing compensation suits outside of the Equal Pay Act analysis would place "`the pay structure of virtually every employer and the entire economy ... at risk and subject to scrutiny by the federal courts,'" because "`Title VII plaintiffs could draw any type of comparison imaginable concerning job duties and pay between any job predominantly performed by women and any job predominantly performed by men.'" 452 U.S. at 180, 101 S.Ct. at 2253 (quoting Brief for Petitioners 99-101). The Court responded that the employers' fears were unjustified, because claims that called for such comparisons are "manifestly different" from the plaintiffs' claims in Gunther. Id. The plaintiffs' suit did "not require a court to make its own subjective assessment of the value of male and female guard jobs, or to attempt by statistical technique or other method to quantify the effect of sex discrimination on the wage rates." 452 U.S. at 181, 101 S.Ct. at 2253-54.
Thus, the Court indicated that its analysis would not apply to cases unless the evidence of intentional discrimination was direct, or the violation "blatant." The last quotation above strongly suggests that cases requiring subjective assessment of the value of jobs, or relying on indirect evidence of discrimination, such as statistics, would not fall within its analysis. Other courts have limited Gunther to cases where the plaintiff shows a transparently sex-based system for wage determination, or direct evidence of discrimination in pay, and have refused to apply the analysis if it would require a subjective assessment of the differing duties and responsibilities of positions. See, e.g., Plemer v. Parsons-Gilbane, 713 F.2d 1127 (5th Cir.1983). This court concludes that the Gunther Court did not intend to allow comparison of unequal jobs when no direct evidence of blatant intentional discrimination is presented, and when the court is required to make subjective valuations of differing jobs.
In this case, as will be dlscussed below, EEOC has presented no direct proof of any sort of intentional sex discrimination in checklist pay, nor has it identified any discriminatory practice of Sears with respect to checklist pay. Moreover, EEOC's claim would require the court to make a
Moreover, even if Gunther is construed not to require direct evidence of sex discrimination, it is clear from the Court's analysis that it did not intend to lessen the standard of proof required. In this case, EEOC has alleged and attempted to prove that males and females in each job code analyzed were performing substantially equal jobs but were paid unequal wages. Unlike in Gunther, it has not attempted to show or offered any proof that there were some predominantly male jobs and other predominantly femalejobs and that the males were compensated on a higher basis than the females. To the contrary, EEOC has attempted to prove that males and females within the same jobs are deliberately paid differently. Its claim therefore falls within the "classic" framework of unequal pay for equal work. As will be discussed below, EEOC has had difficulty establishing that the actual content of the jobs at issue are substantially equal. It has therefore attempted to rely on the Gunther decision to relieve it of its burden of proving the substantial equality of jobs under the traditional analysis, claiming that Gunther permits comparison of merely similar jobs.
However, there is no indication in Gunther or any other case that the Court intended to lessen the standard of proof for a traditional pay discrimination claim. Instead, Gunther only intended to allow redress for claims of discrimination which fall outside the traditional equal pay analysis.
B. Background
Sears management has always been highly decentralized. Decision-making authority is delegated to the lowest possible levels. After World War II, Sears began a period of rapid expansion, opening new facilities in many communities across the country. During this extended post-war growth period, Sears' decentralization allowed a high degree of flexibility and greatly contributed to its success.
Individual units were given great autonomy in almost every aspect of Sears' operations, including compensation. Sears officials believed that management tools such as job descriptions and organizational charts inhibited individual initiative and growth. Managers emphasized that the person makes the job. Consistent with this philosophy, Sears set compensation based on the individual in the job, his prior work history and salary, and his potential with the company, not solely on the basis of his present job title. Starting salaries were highly dependent on pay levels prior to entering checklist. Employees promoted into checklist would typically receive a raise of 10 percent to 15 percent above their previous pay rate.
1. Pre-1976 Organization and Compensation
Prior to 1976, as a result of Sears' decentralization, compensation practices and organizational structures varied significantly among different geographic regions and facilities, and by the function of a facility. Job functions and duties were not specifically defined. Persons with the same job title in different units often performed different duties at the discretion of the unit manager. Each manager attempted to use his employees to maximum advantage, varying job duties to meet the needs of the unit or to best utilize the particular talents of an individual employee. Sears had developed a series of job titles and associated job codes, known as "C" codes. However, the job titles were assigned without any precise study of the content of particular jobs. Over the years, "C" codes lost most of their job content meaning. Thus, persons with the same job code could be performing widely varying activities. There was no way to ascertain from general employment information whether persons with the same job were performing the same work.
Compensation of checklist employees was also very loosely controlled. There was no system under which a person with a certain job would be paid a certain salary. Instead, salary decision-making was also highly decentralized. Although checklist salary guidelines existed prior to 1976, checklist salary was generally a product of negotiation between the unit manager and the employee. Store managers made recommendations regarding checklist salaries to the group or zone manager.
Compensation for checklist employees in credit operations was set in a different manner. Most credit functions were performed in Credit Centrals, which were separate administrative units. Prior to 1976, the Assistant Credit Manager for each territory was the primary decision maker regarding checklist salaries for Credit Central employees. The Assistant Credit Manager generally consulted the Regional Credit Manager and the territorial personnel department in making salary decisions. Thus, decisions for credit personnel were generally made at the territorial level.
In addition to their salary, almost all checklist employees were eligible for annual bonuses prior to 1977.
Thus, both salary and bonus decisions were made primarily on a local level, with individual managers exercising broad discretion in this area. As a result, salaries of checklist employees could be widely different, even among employees performing the same job duties. These factors, and the factors which generally affect checklist pay at Sears discussed above, such as job history at Sears, caused substantial differences in compensation among checklist employees of both sexes.
2. New Executive Compensation Program
Many checklist employees at Sears perceived this compensation system as inequitable and unwieldy. By the early 1970's, as Sears' expansion slowed, top management recognized the need for a change in its compensation practices. It sought a new executive compensation system which would be competitive in the marketplace, have internal equity, and reward individual performance.
During these two years, Sears management worked closely with Hay Associates to evaluate its compensation practices. Sears used the Hay Guide Chart-Profile Method of Evaluation ("Hay method") to evaluate jobs. Under this method, each position is measured in terms of know-how, problem solving, and accountability. Evaluators were trained to make systematic judgments about each of these dimensions of a job. The sex of employees holding a particular job was never considered as a factor and was never discussed at any time throughout the entire evaluation and implementation process.
To evaluate all the positions at Sears, Hay consultants and Hay-trained Sears employees wrote position descriptions for each checklist job at Sears.
The goal of the evaluation committee process was to systematically evaluate positions as they were to be performed under
The committees assigned points to each position for the know-how, problem solving and accountability it entailed. Evaluation points determined the comparative relationship of positions within Sears to provide the basis for structuring salary ranges. A salary range, with a minimum, midpoint, and maximum, was set for each job title and job code in 1976. Sears adopted a salary range of 75 percent to 120 percent of the midpoint salary for each position. These salary ranges were modified annually to maintain Sears' competitive standing in the marketplace.
While the Hay evaluation system helped set the salary ranges, many other factors influenced the actual salary of individual checklist employees. As discussed above, these included performance evaluations, previous job history, number of relocations, seniority, and geographic location. Under the new salary range system, Sears still compensated employees on these bases. However, an effort was made to eventually bring all employees within the given salary range for the job performed. When the new system was introduced, employees whose salaries were below the minimum were immediately given raises to bring them within the salary range. However, because of Sears' policy of not reducing an employee's pay, the process of bringing employees with salaries above the maximum into the salary range took several years to complete. Although salaries were not cut, in adherence to Sears' longstanding policy, salary increases for persons above the maximum were sharply reduced, until the yearly increases in the salary range caught up with the employee's salary to bring him within the maximum salary range. The bonus system was eliminated entirely after 1976.
Salary Increase Guides were introduced to provide time intervals for and percents of salary increases. However, managers still retained discretion as to the actual timing and size of the increase within the intervals provided in the Guide.
The standardization of job activities for a given position sometimes took several years to accomplish. No formal directives changing actual job structures were issued as a result of the Hay evaluation process. Instead, Sears gradually communicated changes to employees over a period of years. Variations in job duties from store to store still exist. In addition, after the initial Hay evaluation process was for the most part complete, Sears continued to make changes in its evaluations of jobs and to create new job categories as needed to better fit the jobs actually performed by employees.
C. EEOC Evidence
As with its commission sales claim, EEOC presented no direct evidence that an employee's sex was considered in making pay decisions. All the direct evidence is to the contrary. EEOC relied on simplistic statistical analyses to attempt to create circumstantial evidence to prove its checklist compensation claim. It performed regression analyses to predict the salaries of male and female employees in each of the 51 checklist jobs at issue, taking into account a number of factors which might influence salary level. EEOC relies on the disparities between its predicted salaries and the actual salaries paid by Sears as proof of Sears' nationwide pattern or practice of discrimination in pay against women.
1. Persons and Jobs Analyzed
EEOC attempted to analyze all Sears employees in the 51 checklist jobs at issue for each year from 1973 through 1980. These 51 job categories were identified by EEOC in terms of job titles and job codes created by Sears when its new executive compensation program was introduced in 1976.
To prove that the jobs performed by the persons EEOC compared were substantially similar, EEOC relied on Sears' own evaluation of these jobs with Hay Associates in 1974 through 1976. EEOC asserts that the three factors evaluated under the Hay method, problem solving, know-how, and accountability, are equivalent to the Equal Pay Act standards of skill, effort and responsibility. EEOC contends that, since Sears pays employees in each of its job codes within the same salary range, it considers them to be performing substantially equivalent jobs. EEOC therefore relies on Sears' own analysis of its job categories and codes completed in 1976 as proof that the persons in each 1976 job code were performing substantially similar work.
However, prior to 1976, Sears' jobs were identified only by nebulous "C" codes, which were assigned without any analysis of job content. Acknowledging that it could not rely on these "C" code designations to prove substantially similar job duties for employees from 1973-1975, EEOC attempted to work backwards from the 1976 job codes to develop "correspondences" between "C" job codes and the 1976 job codes.
To develop these "correspondences," EEOC compared the 1976 job codes of persons who had not been promoted or transferred in 1976, with the "C" job codes of those persons at year-end in 1975. Since there were often several 1976 job codes associated with one "C" code, EEOC's analyst made judgments from the patterns of movement among jobs to decide which jobs corresponded. He admitted that he made these judgments without any knowledge of the job content of the positions he was analyzing.
Using the "correspondences" thus established, EEOC traced employees backward from their 1976 job codes to compile a group of employees to analyze for 1973-1975. To be counted in a particular position in 1975, an employee had to be in a particular 1976 job code in 1976 and in the corresponding "C" code in 1975. To be counted in 1974, an employee had to have been in the 1976 job code in 1976 and the corresponding "C" job code in both 1974 and 1975. Similarly, to be counted in 1973, an employee had to be in that 1976 job code in 1976, and in the corresponding "C" job code in 1973, 1974 and 1975. Thus, EEOC analyzed only those persons in each year who had not been transferred or promoted from their "corresponding" "C" code job between that year and 1976.
EEOC presented virtually no evidence of the actual job content of employees counted in its analysis for these years.
2. Statistical Analyses
Having thus compiled a group of Sears' checklist employees to analyze for each year between 1973 and 1980,
EEOC first calculated the average salary difference for the males and females they analyzed in each of the 51 jobs for each year, without adjusting for any factors that might affect salary. For some job years, the salary differences were over $5,000, but in most, the differences were between $1,000 and $3,000. Males almost always had the higher average salary. See Table 8, EEOC Report on Checklist Compensation Practices of Sears, Roebuck and Co. (Revised September 18, 1984) [hereinafter referred to as "Checklist Compensation Report"].
EEOC next performed regression analyses to control for some factors which might affect salary. Dr. Siskin developed two models to control for certain factors he believed might affect compensation. In Model 1, he attempted to control for factors "one would expect to affect an employee's compensation." See Checklist Compensation Report at 20. These factors were: (1) length of time in present checklist assignment, overall checklist service or service in the company; (2) territory of the employee; (3) job performance; and (4) Hay points of the job. To measure these factors, he used the following variables: (1) sex; (2) time in present assignment; (3) time in present assignment squared; (4) additional time in checklist (beyond variable 2); (5) additional time in checklist squared; (6) additional time at company (beyond the sum of variables (2) and (4) ); (7) additional time at company squared; (8) territory of employee; (9) job performance, and (10) Hay points.
In Model 2, Dr. Siskin added factors which he considered as potential factors, but about which he was "uncertain whether or not they should affect compensation." These factors are: (1) education, (2) hire as college trainee, and (3) location in an urban or suburban facility. Model 2 evaluated these factors in addition to the factors incorporated into Model 1. To attempt to measure these additional factors, Dr. Siskin added to Model 1 the following variables: (1) employee hired as college trainee; (2) facility in urban area; (3) facility location unknown, (4) facility location in a suburban area; (5) grammar school completed; (6) high school completed; (7) two years of college completed; (8) four years of college completed; (9) advanced education completed; (10) other education; and (11) education unknown.
Regression analyses using both Model 1 and Model 2 were performed on two separate levels. First, both models were run for all employees in a particular job as identified by EEOC for each year. Second, Dr. Siskin grouped what he considered to be related positions into "job families," and ran both models for these job families.
After reviewing the results of the analyses under both models, he concluded that the variables added to the Model 2 "did not have a consistent effect." He therefore based his report and conclusions only on his analysis of Model 1. When analyzed at the job level, in nineteen of the fifty-one jobs at issue, there were no differences in compensation which were statistically significant at the three standard deviation levels. Salary differences for the remaining thirty-two jobs were significant above the three standard deviation levels in most years. The job family analyses produced similar results.
EEOC presented no nonstatistical evidence to support its claim. No individuals testified of situations in which women were paid less than men for substantially equal work.
D. Deficiencies in EEOC's Evidence
After considering all the evidence presented with respect to checklist compensation, the court finds that the EEOC has not proven a nationwide pattern or practice of intentional pay discrimination by Sears on the basis of sex. EEOC failed to prove that the employees analyzed performed substantially equal work. In addition, EEOC excluded a substantial number of checklist employees from the group of employees analyzed for 1973-1975, relied on inaccurate data, failed to consider important variables which affect salary, and ignored many legitimate employment and pay policies of Sears which affect checklist compensation.
1. 1973-1975 Analysis
EEOC's analysis for 1973 through 1975 is inadequate. EEOC offered no credible evidence that the persons it compared were actually performing the same or substantially the same job. It sought to rely on Sears' 1976 evaluation of its own jobs by tracing employees in the 1976 job codes back into 1975, 1974 and 1973. However, the 1976 job codes did not exist in these years. A relatively small number of "C" codes had been divided into a large number of 1976 codes. As discussed above, Sears evaluated positions as they were to be performed under the new system, not necessarily as they had been performed in the past. The job reevaluation process resulted in a number of changes in job content. In addition, especially prior to 1976, there could be substantial variation from store to store in the job duties performed by persons with the same job title. Sears' decentralization permitted individual store managers to completely change the job duties of employees in their stores based on the abilities of the individual employee and the manager's needs.
Moreover, the job "correspondences" upon which EEOC relied to select employees for its analysis were not based on any analysis of job content. EEOC's analyst merely examined patterns of movement from 1975 "C" job codes into the 1976 job codes, and used his individual judgment to determine which jobs corresponded, without any knowledge of the actual job content of any of the jobs he was analyzing.
In light of all of these facts, even assuming that Sears' 1976 job evaluation process establishes that persons with the same job title and code were performing substantially equal work after 1976, there is no basis for relying on the 1976 evaluations as proof of job content before 1976. EEOC has provided no other credible evidence of the job content of the persons it compared in these years.
In addition, the analysis for 1973-1975 is inadequate because, by its method of selecting employees to be analyzed, EEOC excluded substantial numbers of employees from its analysis. It excluded: (1) employees who were in one of EEOC's "corresponding" jobs who were promoted or transferred into a different, noncorresponding job before 1976; (2) employees in a corresponding job if they were promoted to another corresponding job; and (3) employees who terminated their employment with Sears before 1976, even if they were active employees sometime from 1973 through 1975.
For all of these reasons, the court concludes that EEOC's analysis of employees for 1973-1975 is insufficient to create a reasonable inference of a pattern or practice of sex discrimination by Sears. It has therefore failed to meet its burden of proof for these years. In addition to the reasons discussed above, however, EEOC's proof for the years 1973 through 1975 shares the deficiencies in statistical analyses discussed below with respect to all years.
2. 1976-1980: Equality of Jobs
As discussed above, for the years 1976 through 1980, EEOC relies on Sears' own evaluation of its checklist jobs to prove that checklist employees with the same job codes were performing substantially equal work. To meet its burden of proof on this claim, EEOC must prove the equality of jobs in terms of the Equal Pay Act standards of equal skill, effort, and responsibility. "[T]he EEOC must establish, based upon `actual job performance and content—not job titles, classifications, or descriptions,' that the work performed ... is substantially equal." EEOC v. Mercy Hospital and Medical Center, 709 F.2d 1195, 1197 (7th Cir.1983) (quoting Gunther v. County of Washington, 623 F.2d 1303, 1309 (9th Cir.1979), affirmed, 452 U.S. 161, 101 S.Ct. 2242, 68 L.Ed.2d 751 (1981)). Thus, EEOC must introduce proof of the jobs as they are actually performed. It may not rely on the fact that employees bear the same job title, job code or written position description to prove equality.
EEOC asserts that the Hay evaluation process establishes equality of job performance for each of the jobs at issue in this case. As discussed above, using the Hay Guide-Chart Profile Method, Sears evaluated its checklist jobs in terms of "know-how," "problem-solving," and "accountability." In a pamphlet entitled "An Introduction to Sears Executive Compensation Program," Sears Exhibit 221, Sears gave simplified definitions of these terms as follows. Know-how is the knowledge, experience and skill needed to get the job done. Problem solving is the use of the know-how in getting the job done. Accountability is the degree to which a position has impact on results. Although these factors appear to be subsumed to a large extent within the Equal Pay Act categories, they are not the equivalent of equal skill, effort and responsibility.
More importantly, Sears' evaluations measured only idealized position descriptions.
Moreover, Sears made changes in positions as it developed descriptions and evaluated jobs. It also attempted to standardize job duties as much as possible. However, changes in job duties resulting from this process were not immediately communicated to employees. Instead, Sears gradually introduced these changes, sometimes over a period of years, through personnel directives and other means. Thus, the actual job content of many positions could still vary for some time after the new executive compensation program was implemented. Differences in actual job performance and content from store to store still exist today.
EEOC bears the burden of proving that the jobs it evaluated were substantially equal. Not only has the EEOC failed to introduce any evidence of the actual performance of jobs, but also Sears has shown through credible testimony that there were differences in job content of employees with the same job code. EEOC was obligated to demonstrate that these differences were not significant, and that the persons compared performed "substantially" equal duties. It failed to introduce any such evidence. The court therefore concludes that EEOC has not met its burden of proving the substantial equality of the jobs analyzed.
Moreover, even if the Hay evaluations were deemed adequate to prove the substantial equality of the jobs in general, this proof would be insufficient in a number of instances. Since EEOC relies wholly on the accuracy of Sears' evaluation of its jobs to prove job content, it is also limited by the inaccuracies of that process. In a number of positions, Sears found that it had improperly evaluated jobs. A sizeable number of credit collection employees were misclassified under the new program in 1976. Persons performing different duties were sometimes classified in the same job code, and persons performing the same duties were sometimes classified into different job codes. Since EEOC relies solely on Sears' analysis of these jobs, it has completely failed to prove the substantial equality of jobs performed by employees in these job codes.
3. Overall Statistical Analyses
In addition to its failure to properly analyze employees in 1973-1975, and its failure to prove equality of jobs, EEOC's statistical analyses are so flawed that they lack any persuasive value. Its data base has serious errors, it omitted important variables from its analyses, and it used a model
a. Data Base
The data base analyzed by EEOC does not accurately reflect the compensation or other factors EEOC attempted to analyze. EEOC relied exclusively on the computer extract tapes provided by Sears, which contained inaccurate data and omitted important data.
Overwrites earned as a timecard Division Manager or a checklist Catalog Sales Office Manager, and changes in monthly salary resulting from reapportionment of the overwrite, often were not identified on the tapes. In addition, transfer and relocation histories, and the dates of assignment to present position and entrance of checklist data were often inaccurate.
EEOC possessed paper records which it could have compared with the computer information, but it chose not to check the data for accuracy. Sears checked the computer data against the paper records. Dr. Haworth used the paper records to correct the date of present assignment and the date of checklist entry. Correcting the data for these two fields only, using EEOC's analysis, Sears reduced by over thirteen percent the number of job/years
In addition, job performance data was missing for many employees. Virtually no job performance data was available before 1977, and data for 1977-1980 is very limited. Whenever there was no data in the job performance field on the extract tapes, for the years 1977-1978, EEOC arbitrarily assigned a job performance score of 42, the midpoint of the "adequate" rating category. For 1979-1980, EEOC assigned a score of 57, the midpoint of the "very good" rating category.
These inadequacies in the data analyzed by EEOC make the results of its analyses highly suspect. As Dr. Siskin admitted, errors in a number of these variables could artificially create a pattern of negative sex coefficients adverse to women. The weight given to EEOC's statistical evidence must therefore be reduced accordingly.
b. Omitted Variables
More important than the inadequacies discussed above, EEOC's statistical analyses lack persuasive value because EEOC omitted important variables which influence checklist compensation at Sears. It is important to bear in mind that, with the type of statistical model used by both EEOC and Sears, all important factors
Among the measurable variables EEOC failed to analyze are: prior non-Sears experience, the level of prior timecard responsibility at Sears, the number of relocations, accurate performance measures, organizational levels, unit size, merchandise groups, and leaves of absence. As discussed above, two of the most important variables affecting checklist starting salary are prior non-Sears experience and prior timecard experience with Sears. Data on prior non-Sears experience was generally not available. However, from the limited information available, men had more pre-Sears experience than women. Omission of this variable would therefore bias the results and produce artificially high unexplained salary disparities. EEOC also failed to factor in prior timecard experience. As discussed above, Sears set compensation to a large extent on the basis of the employee's last salary at Sears. Often, employees entering checklist received a ten to fifteen percent salary increase above their last timecard pay level. Men often entered checklist from a higher timecard level than women. This variable therefore should also have been factored into EEOC's analysis.
Another factor which significantly affected checklist salary at Sears was the number of relocations. As discussed above, substantial salary increases were given to employees who relocated, and such increases were unrelated to the job responsibilities the relocated employees were to assume. Employees willing to relocate not only received greater salary increases, but were promoted from one position to another more quickly. Therefore, an employee's salary could be significantly higher than that of another employee with fewer relocations who was performing the same job. Sears' evidence showed that males were more willing to relocate than females. However, EEOC completely failed to control for the number of relocations in either of its models.
EEOC included a variable to control for the territory in which an employee worked. However, because of Sears' decentralization, salary decisions were usually made at the unit or group level, with only nominal approval by territorial officials. By failing to control for the individual unit, group or zone of an employee, EEOC omitted another important factor affecting salary.
In addition, compensation for various buyer positions was related to the merchandise group in which an employee worked. Employees working with more profitable products were often compensated at a higher level than others. A buyer's merchandise group could therefore be a significant factor affecting his salary. EEOC also failed to control for this factor.
Other measurable factors that could affect salary which EEOC did not include in its model are: veteran status, marital status and size of family, leaves of absence and college major.
Thus, EEOC's statistically significant disparities were substantially reduced by attempting to adjust for only those measurable variables discussed above. However, even the variables included in the analysis could not be accurately measured. For example, only the number of relocations could be controlled for, not the size of the salary increase associated with the relocation. Also, as previously indicated, no data was available for pre-Sears experience. Further, as noted above, EEOC's job performance variable was wholly inadequate to measure job performance. EEOC arbitrarily substituted scores never relied on by Sears for employees whose scores were missing. Since no accurate job performance scores were available for many employees, Sears could not include an accurate job performance measure for these employees. The disparities remaining after Sears expanded EEOC's model could be explained by the inability to accurately adjust for these measurable factors alone.
In addition to the measurable variables, however, a number of unmeasurable variables which could significantly affect checklist compensation at Sears were not analyzed. These include commitment, loyalty, dedication, and motivation. As Dr. Siskin admitted, these factors may have a greater impact on compensation than other variables that are more easily measured. Although it would be virtually impossible to measure these variables for inclusion in a regression model, they do legitimately affect compensation. Their omission from the model must therefore be taken into account when evaluating the results of the analyses.
c. Other Flaws in EEOC Models
In addition to problems with the data and omitted variables, the model itself used by EEOC is flawed. The most important flaw in EEOC's entire analysis is that it aggregated its analysis for each job on a nationwide basis. Salary decisions were almost always made by individual store managers in conjunction with group or zone managers, and salary levels varied considerably from group to group. To make a valid comparison of male and female employees at Sears, EEOC should have analyzed employees at the same unit level where possible, or otherwise at the same group or zone level. Although the number of checklist employees performing equal work may have been small, EEOC is not limited to proof by statistical analyses. It could have proven that, within units, groups or zones, in which salaries were determined on the same basis, men and women performing substantially equal work were given unequal pay. It chose not to attempt to prove any discrimination at the unit, group or zone level. By failing to do so, it failed to compare men and women who were similarly situated. Because it did not compare employees who were similarly situated, its measures of statistical significance based on nationwide aggregations have little meaning.
EEOC could have analyzed each territory separately to control for differences between territories and variances within territories. As Dr. Siskin acknowledged, the territorial variable included in his models did not adjust for variances within each territory. When he ran the analysis separately by individual territory for one position, the disparities and associated t-values were substantially reduced. See Plaintiff's Exhibit Siskin (Pay) 43. Performing the entire analysis by individual territory could
EEOC's model is also flawed because it analyzes an employee's salary in each year as though salary is set anew every year. In fact, an employee's salary for any year is highly dependent upon his salary in prior years. EEOC's analysis fails to take this into account. As will be discussed below, Sears designed a model to take this fact into account, and estimated salary disparities were substantially reduced.
In addition, there is no basis for EEOC's analysis of job families. Jobs were grouped together into so-called families without any knowledge of whether factors important to compensation for the jobs were similar. Sears never made any such grouping of its jobs for any business purpose. EEOC's analysis of these artificial job families therefore provides little useful information to the court.
As the foregoing discussions indicate, EEOC made no attempt to reflect the decision-making process at Sears. In fact, its expert stated that there was no reason to do so. As a result, its model has little persuasive value. EEOC's omission of important factors, its use of an inadequate data base with significant errors, and its use of a flawed statistical model, all render its statistical evidence insufficient to support a reasonable inference of intentional discrimination by Sears.
This conclusion is strongly reinforced by the utter lack of testimony by any of the supposed thousands of victims of this alleged nationwide pattern or practice of discrimination. It is hard to imagine that, if Sears had been systematically paying women less than men performing the same work on a nationwide basis for 8 years, not one person would be available to so testify. Without any witnesses to provide some basis for making the leaps of faith required to accept EEOC's statistical analyses, no reasonable inference can be made from its statistical evidence that Sears had a nationwide pattern or practice of discrimination against women in pay during the period 1976 through 1980.
In addition, as discussed above, EEOC's analysis of employees in 1973 through 1975 is unacceptable for other reasons as well, and EEOC has failed to sufficiently prove equality, or even similarity, of job content. For all of these reasons, the court concludes that EEOC has failed to carry its burden of proof with respect to its checklist compensation claim. The court's conclusions with respect to EEOC's evidence is also supported by Sears' evidence on this subject, discussed below.
E. Sears' Evidence
Sears presented both direct and circumstantial evidence to prove that it did not discriminate against women with regard to checklist compensation. Sears presented the testimony of numerous Sears employees concerning checklist compensation practices at Sears. It also performed both multiple regression analyses and a cohort analyses of its employees.
1. Regression Analysis
Sears performed its own regression analyses using computerized data supplemented with more accurate and complete data from employees' Personal Record Cards. To reflect that salary is a function of starting salary plus salary increases, Sears used a model which analyzed both the salary level, which is the entering salary component, and a rate of change component. Sears' statistical expert, Dr. Joan Haworth, used an exponential model, which takes into account the diminishing influence of certain variables and the rate of salary change.
To reflect compensation practices at Sears, its model attempted to measure the following variables: seniority, education, job performance, relocations, organizational level, unit size, merchandise lines, prior timecard salary, and prior timecard experience. The court finds that all of these factors can affect checklist compensation at Sears. Sears' model also controlled for marital status, number of children, veteran
Adjusting for all of these factors, Sears calculated the "adjusted percent difference"
Sears also performed its regression analysis for the years 1973 through 1975, using data available for persons in EEOC's "artificial workforce." Under Sears' regression analysis, three jobs had adjusted salary disparities with t-values in excess of three. Two of these jobs (Satellite Appliance Store Managers I and II (R362, R361)) could not be properly analyzed because accurate overwrite data was not available from the computer or paper records. For the third job (CSO Manager I—Without Service), Sears' evidence showed that lack of overwrite data in the computer records caused the salary disparity.
Sears refined its analysis for 1973 through 1975 by excluding statistical "outliers," because their characteristics skewed the results. An "outlier" was defined in this case as an employee whose predicted salary is more than two standard errors from his actual salary. Exclusion of such outliers is an accepted statistical practice. When outliers were excluded from the "artificial workforce" analyzed by EEOC, all statistically significant disparities except for one job/year were eliminated. See Sears Exhibit 6-XXX.
Although Sears performed its regression analyses for the years 1973 through 1975, Sears' expert testified, and the court agrees, that meaningful results cannot be obtained from these regression analyses because bonus data was inaccurately recorded on the computer tapes in those years. Thus, there is no accurate way to determine the amount of total compensation earned by employees in those years.
In addition, for all years analyzed, but particularly for 1973 through 1975, important data regarding timecard salary and experience and non-Sears experience was missing. As discussed above, an employee's entering checklist salary was highly dependent upon his prior timecard experience and salary. Basing entering salary on prior timecard experience and pay level was a legitimate way of compensating employees on the basis of the quality of their previous experience. Since prior timecard data was often missing, this important variable cannot be adequately factored into any statistical analyses. A large part of the
Sears demonstrated that this is the case by analyzing the 1980 salaries of checklist employees who had entered checklist jobs between 1976 and 1980. The computer data for these employees in 13 jobs was more complete. Sears analyses showed that differences between men's and women's salaries in these jobs were significantly greater when the quality and level of prior timecard experience was not included in the analysis. See Sears Exhibit 6-VVV. Thus, it is very likely that a significant part of the salary disparities estimated by both Sears' and EEOC's analyses are the result of missing data, not discrimination by Sears.
The inability of the model to fully control for other factors included in the model also results in an overestimation of salary disparities. For example, the checklist seniority variable is inadequate because it does not account for the quality of work performed; it accounts only for the amount of time spent in previous checklist positions. Sears illustrated the importance of this by comparing a male and a female employee in the same position, Assistant Buyer IV (Buy Level 5+) (MO28), in 1979. The male employee had six prior checklist positions as well as significant timecard positions. The female had only one prior checklist position and clerical timecard positions. The actual monthly salary difference between the two employees was slightly more than $700. Sears' model predicted a gap of only $300. This disparity most likely occurred, at least in part, because the model did not control for the quality of prior experience.
The same is true of other variables. For example, with respect to relocations, although the number of relocations can usually be determined, there is no way to ascertain the size of the salary increase associated with a relocation to accurately adjust for this factor. In addition, although Sears performed regressions on a territorial basis, these analyses could not fully reflect Sears' decision-making, which was performed at lower organizational levels. The number of comparable employees at the unit, group or zone level was too small to perform a meaningful regression analysis at these levels. This is yet another example of the inability of regression models to properly analyze the facts of this case.
In addition to these problems relating to measurable variables, the statistical models are unable to adjust for important unmeasurable variables, such as motivation, commitment and loyalty. Yet, the testimony clearly establishes that these may be the most important variables that affect salary. However, despite all of these limitations of regression analyses, Sears' model showed relatively small disparities between the salaries of males and females. See Sears Exhibit 6-YYY.
The limitations of regression analyses were also illustrated by a Sears case study. Sears analyzed two male employees in one of the job/years in which Sears found a statistically significant disparity after performing its regression analysis. The study was based on information in their personal record cards. The case study showed that these employees' salaries were substantially different, by as much as $600 per month, and that this gap could not be explained by Sears' multiple regression model. Regression models can only predict earnings based upon what the measurable variables indicate about employees' earnings differences. If these employees had been of different sexes, much of this salary disparity would have been attributed to sex discrimination. This case study illustrates another important limitation of regression analyses. Although these analyses can provide useful information in some cases, when applied to analyze highly complex matters, such as the factors which affect management salary decisions, their results can be of limited value.
EEOC has criticized Sears' regression analysis on two major grounds. First, EEOC questions the inclusion of a number of the variables in Sears' model. These variables are marital status, number of children, leave, veteran status, business
With respect to marital status and number of children, the theory for including these variables is that they tend to have different effects on males than females. Earnings of males tends to increase if they are married and as the number of children increases, purportedly due to the increased need to support their families. The effect on women's earnings tends to be the opposite, particularly as the number of children increases, since demands in the home are usually greater for women. Sears included these variables in the model because, if they do affect salary and are omitted from the analysis, their impact on salary will be reflected in the residual sex coefficient and therefore attributed to sex discrimination. However, the explanatory power of these variables is uncertain. When a variable has an obvious correlation with sex, as these variables do, but no clear relationship with salary, their inclusion in a model can drive down the model's estimated effect of sex on salary and the associated t-values. Although these variables seem to have some relationship with salary and therefore there is some basis for including them in the analysis, the court has taken into account that these variables can also artificially reduce estimated salary disparities and the associated t-values.
The same is true of the business major variable. This variable seems to have little explanatory power in the model. Since more male than female college students major in business, inclusion of this factor may also bias the results of the analysis.
EEOC also challenges inclusion of the veteran status variable. Although there are many conflicting opinions of the value of military service in civilian employment, at least in some cases, military service is related to higher starting salaries, and can be related to higher job performance. If nothing else, the variable measures a type of pre-Sears experience which, like any pre-Sears experience, can affect checklist starting salary. The court therefore finds that inclusion of this variable in the model is justified. Similarly, the leave variable affects at least the quantity of experience, and may in some cases affect the quality of prior experience. It may therefore legitimately be included in the model.
The court also finds that EEOC's criticisms of the timecard salary and experience, merchandise category and unit size variables are without merit. Sears' evidence shows that these factors can have an impact, sometimes significant, on checklist salary. They are therefore legitimately included in the model.
As discussed above, with this type of statistical analysis, it is probably better to err on the side of including variables when their effect on salary is unclear. However, the court must also consider the possible bias that inclusion of these variables can cause, and has discounted Sears' results to take this into account.
EEOC's second major criticism of Sears' regression analysis relates to Sears' measures of statistical significance. EEOC contends that the t-values Sears calculated for the salary rate and level variables of its analysis are not valid measures of statistical significance. EEOC's expert, Dr. Siskin, testified that the t statistic can only measure the statistical significance of a single dependent variable, such as total salary. Dr. Haworth's model measured the impact of various factors on two dependent variables, salary level and the rate of change. According to Dr. Siskin, when two dependent variables are analyzed, calculations of statistical significance must be based on both of the dependent variables together. He asserts that a "joint F" statistic, not the t statistic, will give a meaningful
Sears' expert, Dr. Joan Haworth, testified that a joint F statistic should not be used when data are incomplete as in this case. However, Dr. Haworth responded to Dr. Siskin's criticism by applying a joint F test to 13 jobs for the year 1980 for which there was relatively complete data. None of the 1980 salary differences for these jobs was significant at the 1 percent level (2.58 standard deviations), and only three were significant at the 5 percent level (1.96 standard deviations). Sears' Haworth Rebuttal (Pay) Exhibit 2. Thus, when complete data was available, salary disparities were not significant even applying the joint F test.
In addition, Dr. Wise testified that, although the F statistic may be able to measure the joint statistical significance of both variables, given the imprecision of all the statistical models in this case, the best way to determine the significance of the results of the analyses is to look directly at the adjusted salary disparities estimated by the model. According to Dr. Wise, these disparities should be judged in light of the factors left out of the model and the other failings of the model.
This approach seems the most reasonable. Although the t statistic cannot provide the most useful measure of the statistical significance of the results of Sears' regression analysis, the adjusted disparities produced by the model provide valuable information regarding the effect of various factors on checklist compensation at Sears. See Sears Exhibits 6-BBBB, 6-AAAA, and 6-EEEE. Considering the inability of the model to accurately reflect important, legitimate, non-sex based factors which affect checklist compensation at Sears, the possibility of bias from the inclusion of variables discussed above, and all the evidence in this case, the court concludes that the remaining disparities are attributable to deficiencies in the statistical analysis, not sex discrimination by Sears.
The foregoing discussion and Dr. Wise's testimony illustrate the severe limits of regression analyses in evaluating complex decision-making processes of this nature. Neither EEOC's nor Sears' regression models could fairly analyze male and female checklist compensation at Sears. Recognizing the limitations of its own regression analysis, Sears also performed a cohort analysis to more accurately compare male and female checklist compensation. The results of the cohort analysis support the court's conclusions with respect to Sears' regression analysis.
2. Cohort Analysis
In Sears' cohort analysis, it attempted to compare the careers of similarly situated male and female checklist employees. All employees entering checklist in a given year were analyzed together in terms of their starting salaries and their rates of salary increase over the succeeding years. An analysis of yearly cohorts provides a comparison of the compensation patterns of those who entered checklist positions under similar market conditions and pursued differing career paths at Sears.
Women from the 1973 cohort of all checklist employees received higher percentage increases in salary than men for every year from 1974 through 1980. See Sears Exhibit 6-17. Similar results were obtained for the 1974 through 1979 cohorts.
In addition, Sears measured the rates of increase for all checklist employees in general, not just those in the cohorts discussed above. Year-to-year percentage increases
Sears adjusted its cohort analysis to determine whether the results favoring women were related to differences in individual characteristics. Even after adjusting for job performance, position in the salary range, and time in current job, the increases favored women. In fact, in the 22 comparisons made, the only statistically significant differences are in the 13 that favored women. See Sears Exhibit 6-HHHH. The same pattern is found after analysis of all cohorts of entering employees who remained in the same job for two consecutive years.
Sears also tested its results to determine whether women were given greater salary increases because they had lower starting salaries. It adjusted for the quartile of the salary range an employee was in. Its analysis showed that women had higher percentage increases even adjusting for the employees' position in the salary range. Thus, the greater increases for women did not depend on whether the woman was at the lower end of her salary range. See Sears Exhibit 6-HHHH.
Thus, Sears' analyses show a clear pattern of consistently higher salary increases for women than men. In addition, Sears' evidence showed that in all years from 1973 through 1980, except 1976 (the year in which the new compensation program was introduced and promotions cannot be accurately identified), Sears promoted females into all checklist jobs at a higher rate than it promoted males. See Sears Exhibits 6-28, 6-HH. Checklist women were thus given larger salary increases and were promoted more often than checklist men.
Entering salaries of checklist cohorts for all years were also analyzed. When Sears compared the small number of men and women entering checklist with similar timecard job level and seniority, there is no pattern of significant disparity. See Sears Exhibit 6-AA. However, there are relatively few employees with comparable experience.
Sears also analyzed all checklist employees entering jobs at issue in each year combined. It adjusted for the initial position, territory, timecard experience, and individual attributes controlled for in Sears' regression analysis discussed above. Salary disparities ranged from 3.57 percent in 1976 to 1.08 percent, all in favor of males. See Sears Exhibit 6-YYY. The limitations of Sears' regression model discussed above are applicable here, and could easily explain these small disparities.
Sears also analyzed the salary increases given to men and women upon promotion to checklist in 1976 through 1980. This analysis showed that there was no pattern of disparities adverse to women. See Sears Exhibits 6-23, 6-24, 6-25. Although there is some disparity between male and female increases in 1974 and 1975 when all checklist jobs are aggregated, the differences vary significantly and strongly favor men in some jobs and women in others. See Sears Exhibits 6-26 and 6-27. No clear pattern of disparity against women can be discerned in these years either.
Thus, Sears' evidence shows no pattern or practice of discrimination in the increases given to checklist employees when promoted from timecard positions. This is further evidence that there were no significant disparities between men and women in starting checklist salary. As discussed above, Sears' analyses of salary increases and rates of promotion show that women were treated more favorably than men. Together, these analyses are strong evidence that Sears did not have a pattern or practice of discrimination against checklist women with respect to compensation. This evidence demonstrates that, in many cases, Sears actually treated checklist women more favorably than checklist men. This is consistent with its affirmative action program.
3. Sears' Witnesses
More important than any statistical evidence in this case is the testimony of Sears' witnesses. Sears employees from many areas of the company testified regarding Sears' checklist compensation practices and treatment of women.
The witnesses' uncontradicted testimony helps "bring to life" Sears' statistical evidence, and lends strong support to the conclusion drawn from Sears' statistical evidence, that Sears compensated checklist men and women in a non-discriminatory way. The fact that Sears' affirmative action programs were in effect throughout this period, making it unlikely that Sears would be intentionally discriminating against women in pay at the same time, corroborates their testimony.
In stark contrast to Sears' presentation, EEOC presented no credible witnesses with personal knowledge of Sears who could contradict the testimony of Sears' witnesses, or give any life to EEOC's inadequate statistical data and analyses. EEOC did not prove even one individual instance of pay discrimination by Sears, and it presented no credible evidence of a nationwide pattern or practice of pay discrimination. As EEOC's statistical expert admitted, statistical analysis alone cannot prove causation, or, in this case, that the salary disparities it estimated were caused by Sears' intentional discrimination. Without more, EEOC's statistical evidence is not sufficient to permit a reasonable inference of pay discrimination by Sears. Sears, on the other hand, has provided far more convincing statistical evidence and highly credible witnesses with personal knowledge of Sears to support its denial of pay discrimination.
F. Conclusion: Checklist Compensation
Based on all the evidence presented with respect to checklist compensation,
ORDER
Accordingly, based on the above findings of fact and conclusions of law, it is hereby adjudged and ordered that judgment is entered against plaintiff and in favor of defendant on all claims at issue in the trial of this case, and plaintiff's claim for relief is hereby denied.
FootNotes
The EEOC summarized Sears' responses by territory in an Attachment to its Memorandum in Support of its Motion for Partial Summary Judgment.
The October 15, 1982 Statement of Issues also sets out the dates upon which Sears deleted from its Personnel Manual the policy statements that the EEOC now challenges. According to the October 15, 1982 Statement, the policy of providing a day's paid absence to male employees when their wives gave birth, but not to female employees who gave birth, was deleted in March, 1975; the policy of failing to offer the same protection from lay-off to employees on pregnancy leave as that offered to employees absent with other temporary disabilities, in 1978; and the policy of involuntarily transferring pregnant employees "when appearance is a factor," in 1978.
Even though substantial portions of the extensive evidence in this case (including virtually all of EEOC's evidence) involved statistics, these findings of credibility and weight to be given testimony were of crucial importance in deciding the outcome of the case. As will be discussed below, the massive statistical evidence presented must be evaluated in light of the facts and circumstances at Sears. Therefore, the testimony of nonstatistical witnesses was as important as the testimony of the statistical experts. The credibility of statistical experts and the weight to be given their testimony were also of great importance. The court made specific credibility and weight findings on various issues testified to by each of the experts. The court has only included certain specific credibility and weight findings to the extent that they could practically be incorporated into this lengthy opinion.
The General Services Administration ("GSA") was selected by OFCCP to review Sears' compliance. GSA organized workshops to help companies develop affirmative action plans. It sometimes asked Sears to take leadership roles in these workshops. On occasion, GSA even requested that Sears assist in the training of the government's equal opportunity personnel. See Written Direct Testimony of Ray J. Graham at 15-16. GSA thus considered Sears a model company for others to follow with respect to affirmative action. Government correspondence affirmed this.
The court finds the testimony of Ray J. Graham to be highly credible and entitled to great weight.
The Age characteristic was divided into seven age group categories.
The Education characteristic was grouped into four categories: (1) less than 12 years; (2) 12 years; (3) 13-15 years; and (4) 16 or more years.
The Job Type Experience characteristic was divided into six categories: (1) commission sales (persons whose applications specifically indicated commission sales experience); (2) sales-high (prior experience not identified as commission sales or as lower level sales positions such as cashiers); (3) sales-low (generally cashier-type experience); (4) unspecified (job experience illegible or of indeterminate type); (5) non-sales; and (6) no experience. No attempt was made to code for amount of job experience, to differentiate between those with very little experience and those with many years of experience.
The Product Line Experience characteristic was designed to take into account experience with a product, whether or not that experience was in sales. Thirteen product line groupings were used, consisting of twelve product lines and an "all others" category.
The Commission Product Sales Experience characteristic was developed to identify sales experience that was likely to have been commission sales but was not specifically indicated as such on the application. A person was generally given credit for commission product experience if the application indicated experience with a product sold on commission at Sears.
See EEOC's Commission Sales Report, Appendix 3.
Multivariate
Cross- Applicant
classification Interview
Analysis Guide
Appliances 42.4 48.7
Automotive 28.9 51.0
Home Building 32.5 47.4
Materials
Home Improvements 43.1 41.5
(Pl. Ex. Siskin 72).
The court finds the testimony of the Sears officials and employees in this case to be very credible and persuasive. Their testimony in the case was supported by a substantial number of other employees whose uncontradicted written testimony was also persuasive.
EEOC also argues that evidence of female job refusals is not helpful unless the number of male refusals is also known. However, even without data on male refusals, this evidence corroborates Sears' witnesses' testimony that sincere and extensive efforts were made to recruit women into commission sales, and that many women were not interested.
With respect to the automotive and service technician jobs, Ms. Brudney found that women had little or no training or experience in these fields before Sears hired them. Sears trained them on the job and in special training courses at company expense. They were assisted by male employees at Sears, and did not encounter the male resistance often found with other employers. This willingness of Sears to train women in this manner is further proof of their sincere and costly attempts to recruit women into nontraditional jobs.
The court also notes that EEOC analyzed Sears Applicant Interview Guide data. This analysis was performed separately from EEOC's principal multicell and logit analyses. Dr. Siskin adjusted the data to reflect the relative experience of Sears' commission salesforce. This evidence relates only to a few product line groupings, and, because of Dr. Siskin's adjustment of the data, EEOC's analysis provides no specific data on applicant interest in commission sales that is useful to the court in determining applicant interest in commission sales. EEOC's analysis of the Guide data is discussed below.
"When the statistical evidence does not adequately account for `the diverse and specialized qualifications necessary for [the positions in question],' strong evidence of individual instances of discrimination becomes vital to the plaintiff's case." Valentino, 674 F.2d at 69 (citations omitted). See generally B. Schlei & P. Grossman, Employment Discrimination Law 1391-94 (2d ed. 1983).
Moreover, particularly in the area of promotions, the EEOC should have presented evidence of actual applications for commission sales positions that were discriminatorily denied, or evidence that, had a woman employee who claims discrimination known of an opening in commission sales, she actually would have applied for that position. See Box v. A & P Tea Co., 772 F.2d 1372, 1377 (7th Cir.1985).
452 U.S. at 170-71, 101 S.Ct. at 2248-49 (footnote omitted). This passage does not, as the cases have asserted, imply that the Equal Pay Act analysis applies in Title VII sex-based wage discrimination cases. If this passage implies anything at all, it implies only that incorporation of the fourth affirmative defense may alter the structure of Title VII disparate impact cases, because the "any other factor other than sex" defense is different from and broader than the "business necessity" defense established in Griggs. See B. Schlei & P. Grossman, supra, at 479.
The Senate did not refer the Civil Rights bill to any committee before it considered the House version; therefore, neither House of Congress conducted a formal analysis on the implications of the overlapping jurisdiction of the two statutes. In the Senate floor debates, however, several Senators did express concern that insufficient attention had been paid to the overlapping jurisdiction of the statutes.
Senator Bennett proposed his amendment to address this general concern over possible inconsistencies, not to address any specific potential conflict between the statutes. In the short discussion on the floor of the Senate, Senator Bennett emphasized the technical nature of the amendment and the need to prevent disruption of the effective administration of the Equal Pay Act. He explained that the amendment assured that the provisions of the Equal Pay Act would not be nullified in the event of a conflict with Title VII. The Supreme Court interpreted his explanation as referring only to the affirmative defenses of the Equal Pay Act. 452 U.S. at 174, 101 S.Ct. at 2250. In other words, Senator Bennett's concern in proposing the amendment was for the benefit of employers — that the four affirmative defenses be available to employers in Title VII, as well as Equal Pay Act, cases.
Senator Dirksen was likewise concerned that the defenses be available to employers universally in sex-based wage discrimination cases. In the Senate discussion, he commented that all the Bennett Amendment does is recognize the exemptions to coverage in the Fair Labor Standards Act, of which the Equal Pay Act is a part. These exemptions make the Fair Labor Standards Act applicable to a class of employers narrower than that class to which Title VII applies. According to the Supreme Court, Senator Dirksen's remarks are consistent with its view that the Bennett Amendment assures that the Equal Pay Act defenses are available to employers even where only Title VII applies, because, for instance, the employer is exempt from the Fair Labor Standards Act. 452 U.S. at 175, 101 S.Ct. at 2251.
After the brief discussion, the Bennett Amendment passed in the Senate without recorded vote. Back in the House, there was no debate on the Bennett Amendment when the Senate version of the Civil Rights bill returned for final approval.
Given the summary treatment of the Bennett Amendment in both Houses of Congress, it is clear that Congress did not intend the Bennett Amendment to have the radical effect of carving out of Title VII jurisprudence the one and only exception where Title VII analysis would not apply in a Title VII case. Also, the expressed concerns of Senators Bennett and Dirksen, as interpreted by the Supreme Court, do not support the interpretation that the Bennett Amendment incorporates into Title VII the Equal Pay Act analysis. As stated above, Senators Bennett and Dirksen intended the amendment to make the Equal Pay Act defenses universally available to employers in sex-based wage discrimination cases. The interpretation that the Bennett Amendment incorporates the Equal Pay Act analysis would penalize, rather than protect, employers in Title VII cases by requiring them to meet a greater burden of proof.
691 F.2d at 875 (emphasis added and citations omitted).
417 U.S. at 195, 94 S.Ct. at 2228 (citation omitted).
In addition, the court found that much of the testimony of Mr. Laking was not credible. He was removed from the Sears project after little more than a year because his performance was unsatisfactory. He was subsequently asked to resign as a general partner at Hay. Jobs evaluated under his direction had to be completely reevaluated after he left. There were also a number of inaccuracies in his testimony. His memory on cross-examination was also highly selective, and he had an obvious basis for prejudice against Sears. Based on all of these factors, and the court's observation of Mr. Laking at trial, little weight was accorded to his testimony. On the other hand, the court found the testimony of Charles Bacon and Ian Sym-Smith, among others, to be highly credible and entitled to great weight.
In addition, even if somehow the Gunther standard of "similar" jobs were applied to this case, EEOC would still be required to prove the actual job content of positions as performed. It could not rely solely on the Hay evaluations of positions. Two other courts have rejected reliance on the Hay evaluation system to prove substantial equality of jobs. See Marshall v. J.C. Penney Co., Inc., 464 F.Supp. 1166, 1191 (N.D. Ohio 1979); Wheeler v. Armco Steel Corp., 471 F.Supp. 1050, 1052 (S.D.Tex.1979).
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