The Walt Disney Co. has reached a $43.25 million settlement in a gender pay discrimination class action lawsuit, according to a court filing on Monday.
The case, initially filed in 2019, was brought by former Disney employee LaRonda Rasmussen, who alleged she was paid less than her male counterparts for the same role. As the lawsuit progressed, additional female employees joined the case, and in December 2023, a California judge granted class certification, allowing the case to proceed as a class action.
The plaintiffs claimed that before 2018, Disney’s compensation policies led to women receiving lower starting salaries than men. One of the main points in their argument was Disney’s practice of using prior salary history to determine new employees’ pay, a system that they contended perpetuated existing gender-based pay gaps. According to the plaintiffs, this approach resulted in a gender pay penalty of 2.01 percent, based on an analysis conducted by labor economist David Neumark, who examined Disney’s pay data from 2015 to 2022. While Disney disputed the findings of this analysis, the company has agreed to settle the lawsuit.
“We have always been committed to paying our employees fairly and have demonstrated that commitment throughout this case, and we are pleased to have resolved this matter,” a Disney spokesperson said in a statement following the settlement announcement.
The case originated when Rasmussen discovered that six male colleagues in the same role as hers were paid significantly more, including one with less experience who earned $20,000 more annually. Over time, approximately 9,000 current and former female Disney employees joined the lawsuit, which claimed that gender-based salary disparities were widespread across the company.
As part of the settlement, Disney will pay the $43.25 million to the affected female employees. In addition, Disney has agreed to hire an external labor economist to conduct a pay equity analysis over the next three years, specifically reviewing the annual base pay of employees to identify any statistically significant pay differences. Disney will also employ an industrial/organizational psychologist to train its compensation personnel in efforts to prevent future pay disparities.
While Disney has not admitted to any wrongdoing, the company’s policy shift in 2018—following a California law that prohibited employers from asking about a candidate’s prior salary—has been cited by the plaintiffs as a reason for the reduction in the gender pay gap. Prior to this law, the use of salary history in setting pay was believed to perpetuate existing gender inequalities. Neumark’s analysis showed that the gender pay gap at Disney narrowed significantly after 2017, from 4.36% to 1.3%.
Christine Webber, a lawyer representing the plaintiffs, praised the efforts of the women who brought the lawsuit forward, noting that their actions could pave the way for more equitable treatment at Disney moving forward.
“This settlement would not be possible without these courageous women… Because of them, women can expect equitable treatment at Disney in the future,” Webber stated.
With input from the Hill, Forbes, and Al Jazeera.
