The Walt Disney Co. has agreed to pay $43.3 million to settle a gender pay discrimination lawsuit that has cast a shadow over the company’s pay practices for years. Filed by a group of female employees, the lawsuit alleged that Disney systematically underpaid women compared to their male counterparts performing similar roles. While the entertainment giant has not admitted fault, the settlement is a major milestone in the fight for pay equity.
The case began in April 2019 when two women, LaRonda Rasmussen and Karen Moore, stepped forward with claims of gender pay disparity at Disney. Over time, the lawsuit expanded to include nine women, eventually earning class-action status, representing over 14,000 female employees. These women, employed by Disney in California between 2015 and 2024 in salaried, full-time, non-union positions, alleged systemic discrimination stemming from Disney’s hiring practices. According to the plaintiffs, Disney hired women at lower starting salaries, which perpetuated a cycle of pay inequity as they advanced in their careers.
The settlement includes more than just monetary compensation. As part of the agreement, Disney will implement systemic changes, such as hiring an industrial/organizational psychologist to train executives on equitable job organization. Additionally, an independent labor economist will conduct a pay equity analysis for certain positions over the next three years. This combination of monetary relief and systemic reform sends a strong message about the importance of equal pay in corporate America.
Why HR Professionals Should Care
This case is not just a legal drama; it’s a wake-up call for organizations everywhere. The lawsuit highlights critical issues that HR professionals must address to ensure pay equity and fair treatment in the workplace:
- Historical Pay Inequity: The lawsuit exposed how basing current salaries on previous pay levels can perpetuate gender pay gaps. HR professionals must address these disparities during the hiring process.
- Training and Accountability: Disney’s commitment to training its executives on equitable practices underscores the importance of educating leadership about the impact of pay decisions.
- Proactive Pay Equity Analyses: Conducting regular pay audits can identify and rectify disparities before they lead to litigation.
The Financial and Reputational Cost of Inaction
For HR professionals and employers, the Disney settlement serves as a stark reminder of the high cost of ignoring pay equity. The $43.3 million settlement, while substantial, is just one part of the equation. Legal fees, reputational damage, and the erosion of trust within the workforce can create long-term consequences for companies. The non-reversionary nature of the settlement ensures that Disney’s funds will directly benefit affected employees and address the systemic issues that contributed to the pay disparities.
Lessons for HR Leaders
To avoid similar lawsuits, HR professionals should prioritize the following:
- Conduct Regular Pay Audits: Identify and address disparities across all employee levels.
- Establish Transparent Pay Practices: Ensure that hiring, promotion, and compensation policies are clear and consistently applied.
- Focus on Equity in Promotions: Prevent barriers that discourage certain groups from seeking higher-level positions.
- Invest in Training: Equip leaders with the tools to make fair and equitable pay decisions.
This story originally appeared in Los Angeles Times.
Elga Lejarza
Founder/CEO
Lejarza HR Consulting
