Employees Can Sue on Options Programs Based on Sex Discrimination

A federal district court has certified a class of employees to proceed with a lawsuit contending their employer's stock option allocation policies violated Title VII of the Civil Rights Act of 1964 (Carter v. West Publishing Co., M.D. Fla., No. 97-2537-CIV-T-26A, 5/20/99). The suit claims that a discriminatory pattern of option awards left 29 female employee with "table scraps" when their legal information publishing company was sold in 1996. The plaintiffs contended that female employees were systematically excluded from or given only token option awards compared to their male counterparts.

A similar suit is now underway in California. If the plaintiffs prevail, it could cause a major reevaluation of option programs in many companies. Because option programs are discretionary by nature, however, many legal experts are doubtful that the Civil Rights Act can be used to sustain a suit over their allocation.