$55 million settlement in FedEx race discrimination class action
In my view, this FedEx class action settlement is yet another sign that after years of near-dormancy, employment discrimination claims not based on disability, harassment, or termination of employment (e.g., those based on hiring and promotions) have become the biggest area of corporate employment law risk.
The ascendancy of these employment discrimination claims is led by very high-powered, fabulously wealthy class-action attorneys. Where [they] lead, I will follow. (Well, I won’t file these suits, but expect to be defending some as they become more common.)
Here’s today’s scoop:
Attorneys in a major race discrimination class action have reached a settlement that would force . . . FedEx Corp. to pay out almost $55 million and overhaul its pay, discipline and promotions practices.
The suit claimed that FedEx Express . . . harbored a culture of hostility toward people of color, allowing racial bias to infect its human resources decisions.
A FedEx spokeswoman said:
We voluntarily entered into the consent decree because we believe that this action demonstrates our deep commitment to diversity and equal employment opportunities. [In the consent decree, FedEx Express denies discrimination.]
Included is $15 million for attorney fees and costs, unspecified claims administration costs, and up to $360,000 for class representatives and people who gave declarations.
But [an attorney for the employees] was more eager to talk Tuesday about the part of the settlement that will promote equal employment opportunities for FedEx’s black and Latino employees.
“The money is nice, and people deserve to be compensated if they’ve been discriminated against. But the injunctive relief will go on for a long time and benefit people for years to come,” he said.
As part of the deal, FedEx agreed to stop using its “Basic Skills Test” as a prerequisite for promoting employees to higher-paid, more desirable positions.
[The attorney for the employees] said he could show that only 47 percent of blacks and 62 percent of Latinos pass the Basic Skills Test, as compared with 86 percent of white employees.
“So that test is a hurdle, and it’s keeping blacks and Latinos from getting these jobs,” he said.
Finberg said the class counsel brought in a UC-Berkeley psychology professor who determined that the Basic Skills Test is not a valid measure of success on the job and that FedEx could come up with another such test to take its place.
Under the proposed settlement, FedEx has also agreed to make its performance evaluation process less discretionary, while submitting policy changes to show that its revised practices do not continue to foster racial discrimination.
The gathering perfect storm of employment discrimination class action litigation gains strength from several factors:
Growing use of the disparate impact method of proving discrimination.
- Increased pursuit of hiring, compensation, and promotion employment discrimination claims challenging “systemic” discrimination, which lend themselves to disparate impact analysis and class actions.
- The involvement in the employment discrimination sphere of seasoned class action lawyers with the ability to bankroll big lawsuits using gains from prior settlements.
- The relative ease with which major corporations agree to multi-million-dollar employment discrimination settlements that include enormous sums allocated to attorneys’ fees (wonder what the $15 million comes to per hour?) I know the lawyers on both sides would laugh at my calling it “easy”; but the fact remains that I haven’t heard of a single such case going to trial (Wal-Mart may yet become the exception that proves the rule).
- The willingness of judges to endorse such settlements (why not, if nobody’s objecting to the fee award?).
- The failure of employment discrimination class members to object to the disproportionate amounts paid for fees.
How to save money and ward off the employment discrimination class-action lawyers
The preventive law approach for managing the substantial risk of such actions can be described simply, although its execution can be difficult and expensive in its own right.
Just beat these lawyers to the punch: closely monitor your employment practices and whether they have a significant disparate impact.
If so, look for alternatives without such an impact and/or assess your evidence of the business necessity for those practices that have a significant disparate impact.
If you are a government contractor or subcontractor (that is an awful lot of companies), much of this is part of the OFCCP compliance process.
- Lieff Cabraser Heimann & Bernstein, LLP’s description of the claims against FedEx.
- EEOC Investigates Potential Nationwide Test Discrimination At FedEx
- Everything You Ever Wanted to Know About Employment Testing (But Didn’t Know Where to Ask)
- Follow-Up to EEOC’s Investigation of FedEx’s Employment Testing
- Is Your Company A Target for A Discrimination Class Action Suit? Ten Factors to Consider
- HR Tests – Employment testing, personnel selection, and assessment: FedEx settlement and the PSI Basic Skills Test