Dive Brief:

• Two former Nike employees filed a class action lawsuit against Nike in the U.S. District Court of Oregon Thursday alleging sex discrimination on the grounds that Nike pays women less than their male counterparts, promotes women less and offers them smaller annual salary increases and bonuses, according to court filings and The Wall Street Journal, which first reported the news. According to a company statement emailed to Retail Dive by a spokesperson, "Nike opposes discrimination of any type and has a long-standing commitment to diversity and inclusion. We are committed to competitive pay and benefits for our employees. The vast majority of Nike employees live by our values of dignity and respect for others."

• Sara Johnston and Kelly Cahill, the two plaintiffs who filed the lawsuit, claim the company fosters an environment "where women are devalued and demeaned" and that "the company hierarchy is an unclimbable pyramid." They claim that women are passed over for promotions and must "far outshine her male counterparts" to succeed.

• In addition to poor promotion opportunities, former Nike employees Johnston and Cahill also claim the company ignores female employees' complaints about sexual harassment and discrimination, and that "male bad behavior is rarely penalized." The lawsuit draws on Johnston's experience at Nike, from 2008 to 2017, as well as Cahill's from 2013 to 2017, and other — sometimes unnamed — employees.

Dive Insight:

Nike has been suffering from the repercussions of a "boys club" culture since the departure of Nike Brand President Trevor Edwards in March under allegations of misconduct.

That resignation set in motion a slew of problems for the company, including claims that Nike was "failing to gain traction" on diversity hires. A cultural review of the company also sparked a mass exodus of top executives, which included the company's vice president of footwear, as well as the head of inclusion and diversity.

Since then, the company has attempted to make up for its "toxic" workplace culture by apologizing to employees, promoting women and raising salaries. Nevertheless, this lawsuit claims that the company's workplace is "hostile" and "devalues its female employees." Among the chief offenders was Edwards, who, according to the lawsuit, "caused and exacerbated a hostile work environment."

The filing also points out that, prior to his abrupt departure in March, Edwards was considered the likely replacement of current CEO Mark Parker and was offered a $6 million retention award by Nike, as well as a 14.3% increase to his salary, just weeks before his resignation. Meanwhile, in 2017, Cahill claims she was paid $20,000 less than a male colleague on her team who did "substantially similar work," and Johnston alleges that her starting salary was $2,000 less than a male employee hired shortly afterward.

Johnston and Cahill's other claims, which include male coworkers sending nude photographs and inappropriate messages, as well as male executives calling female coworkers "dykes," present a serious challenge for a brand that has been staking its future growth on women.

While the company has made some moves to correct these actions, one question remains: How much will the company's image suffer if female customers begin to see Nike as a brand unconcerned with its female employees?