the new
financial incentives have turned companies into
vulnerable
targets.
Because of the
legislation, some say it has become too risky for
companies that
deny charges to let cases get to court. Instead,
they must agree
to large settlements for fear they will have to pay
even more if the
lawsuit goes before a jury, corporate lawyers say.
And they say the
high-stakes settlements actually may
undermine diversity efforts,
alienating non-minorities and forcing
companies to
surrender too much control to outside diversity task
forces.
“It’s hard to
say there’s more discrimination today than 20 years
ago, but if you
look at the numbers, you’d say we’ve regressed.
That’s
ridiculous. Employers are legitimately afraid of being sued,”
says Larry
Lorber, a Washington employment lawyer at Proskauer
Rose.
“The lawyers in
Coke got $20 million, and I don’t think they
ever set foot in
court . . . Looking at some of these cases, this was
not what the
civil-rights fight in the 1960s was all about.
Everybody’s
afraid. It’s real damaging. Does it build in a
disincentive to
hire women or minorities? I think yes.”
But a number of
plaintiffs and their lawyers deny that the
balance of power
has seesawed too far in favor of minority
employees, and
they say it is still a Herculean task to find lawyers
willing to take
on formidable corporations. Because mounting a
legal battle
against big business’ legion of lawyers is a costly risk,
many still balk.
They say just because a case may bring about
a
lucrative
settlement doesn’t mean the claims are not legitimate.
Legal fees like
those obtained in the Coca-Cola settlement are
not excessive,
they say, because lawyers may devote years and
spend
substantial amounts of their own money building a case.
What’s more,
they say, minorities are turning to the courts as a
last resort
because they’re so frustrated by the glacial pace of
progress.
Minority women are more than twice as likely as white
women to say
there’s been no change in advancement
opportunities in
the past five years, according to a 1999 study by
New York-based
research advisory group Catalyst.
“Frankly, people
are mad as hell, and they don’t want to take it
anymore,” says
George Eddings of Houston, a former employee of
Coca-Cola’s
Minute Maid division and a plaintiff in the class-action
lawsuit.
“There’s nothing you can really do to explain to the critics
the vicious hate
and pang of racism. Unless they don the skin of a
black man or woman and deal
with the slights, some overt, that
rob you of your
spirit and will to compete, they just won’t
understand.”
In the Coca-Cola
lawsuit, plaintiffs alleged that the company
discriminated
against African-Americans in pay, performance
reviews and
promotions. Former employees say they were denied
mentoring
relationships and passed over for promotions, while
others with
lower performance ratings got ahead.
The company
denied the allegations.
No matter what
the reasons for the rise in claims, the lawsuits
are having an
impact on companies. Some employers who have
been sued are
continuing to increase minority hires years after
settling race
discrimination claims.
Shoney’s
settled a lawsuit brought by plaintiffs who alleged
they were
discriminated against — passed over for promotions
and kept in
low-visibility and low-paying jobs. Some black
employees say
they were denied any management jobs.
Now Shoney’s
has seen the number of blacks who are
managers grow
from about 14.5% in 1993 to 38.9% today, officials
say. The
settlement agreement has led to programs such as
internal
complaint procedures, mandatory diversity training
for
managers and
performance evaluations linked to retention of
minorities.
Texaco took a
public relations thrashing over tape-recordings of
executives
referring to African-Americans as “black jelly beans.”
It
has since
increased minority hires despite a slowdown in its
employment
growth. The percentage of minority employees at
Texaco has
inched upward from 21% in 1991 to 22%, according to
a diversity task force report
last year.
In that case, plaintiffs alleged
that the oil company
systematically
discriminated against minorities in promotions.
Workers say
they endured racial prejudice and name calling.
Since the
settlement, there have been challenges as well as
accomplishments. An
independent task force established to
monitor
Texaco’s diversity
efforts found that “a continuing
challenge is
that ‘backlash’ comments are still repeatedly heard
from a vocal
minority of employees. Comments along the line of ‘ .
. . because of
the lawsuit, the company is only promoting women
and minorities’
were reported at every location we visited.”
“We’re dealing
with backlash. It deals with white males feeling
disenfranchised,”
says Angela Vallot, director of corporate
diversity initiatives at
Texaco in White Plains, N.Y.
Unintended
consequences
While the
lawsuits may help bring change, some employment
lawyers, such
as Memphis-based Timothy Bland, warn that they
can also have
troublesome repercussions. The lawsuits may leave
“some companies
gun-shy about hiring minorities,” Bland says.
“Corporations
may hold onto employees with performance pr
The rise in
employment claims, such as those alleging racial
discrimination,
is having unintended consequences that some
employment
lawyers warn may inalterably sour employee-
employer
relations. Many employers who never before thought
about being
sued are buying employment liability insurance with
unprecedented
zeal; the plans generally provide up to $50 million
in coverage for
compensatory damages, settlements, legal fees
and related
costs.
To avoid
damaging lawsuits, more companies are requiring
employees to
arbitrate claims rather than air them in court. To
some,
arbitration is a welcome reprieve from contentious legal
duels, while
others say it strips workers of their right to a
trial.