The soft-drink company agrees to outside supervision to ensure pay and promotions for minorities improve.
In the largest settlement ever in a racial discrimination case, Coca-Cola Co. agreed Thursday to pay more than $156-million to resolve a federal lawsuit brought by its black employees.
The settlement also mandates sweeping changes, which will cost the company an estimated $36-million, and requires Coke to relinquish broad monitoring powers to a panel of outsiders _ an unusual concession in employment discrimination cases.
The lawsuit, filed in April 1999, accused Coke of erecting a corporate hierarchy in which black employees were clustered at the bottom of the pay scale, where they typically earned $26,000 a year less than white workers in comparable jobs. As redress, the settlement provides each of the 2,000 current and former employees in the class with an average of $40,000 in cash, while the four plaintiffs will receive up to $300,000 apiece.
"The most important piece is there's going to be fundamental change at the Coca-Cola Company," said Kimberly Gray Orton, a plaintiff who worked for Coca-Cola for 13 years and says that she made less than the white workers she supervised. "A lot like a rock in a pond, there are going to be ripples."
Perhaps more surprising than its size, the settlement gives an outside panel, appointed equally by Coke and the plaintiffs' lawyers, limited authority to dictate company policy, a capitulation even optimistic observers did not expect the settlement to yield.
Serving as a watchdog with some access to the company's books, the panel is charged with ensuring that Coke's record of paying and promoting all minority workers and women improves. Unless granted an exception by a judge, company officials must put its suggestions into practice.
Coke officials say that the panel, composed of business and civil rights experts who have yet to be identified, will help them stay focused on the massive overhaul the company already has begun.
"We need to have outside people helping us," said Douglas Daft, Coke's chairman and chief executive, who ushered in a companywide diversity program last month. "We would be foolish to cut ourselves off from the outside world."
Though withholding final judgment until the company's internal changes bear fruit, civil rights leaders applauded the accord.
"It sets a new standard for corporate settlements," said the Rev. Jesse Jackson, referring to Coke's agreement to tie executives' salaries to how well they meet the company's diversity goals. "The internal cultures of companies have been built on patterns of exclusion based on gender and race. This is a step in the right direction."
Coke officials and plaintiffs' lawyers characterized the settlement as a "business necessity," particularly since minorities in the United States drink a disproportionate share of its sodas.
"This company had a credibility gap between the image that it cultivated with the African-American community on the outside and on how African Americans were treated on the inside," said Cyrus Mehri, a plaintiffs' lawyer who negotiated a similar $140-million cash settlement with Texaco in 1996.
While efforts by disgruntled employees in Atlanta to incite a national boycott of Coke never crimped the company's bottom line, the lawsuit has troubled the soft-drinkmaker for the past 18 months and, company officials concede, tarnished the image of one of the world's best-known brands. Few officials expect the pall that has shrouded the company will instantly clear, but they portrayed the settlement as evidence that Coke has shed one of its most nagging burdens.
Still, the settlement may not resolve the company's legal quandaries. In June, Johnnie Cochran and Willie Gary, a Florida lawyer who specializes in personal-injury cases, filed a $1.5-billion lawsuit in a Georgia state court on behalf of four black Coke employees. That lawsuit was not included in Thursday's settlement.
The Coke lawsuit illustrates a shift in the battle over race in the American workplace. The number of complaints about discrimination in hiring have fallen 20 percent in the past decade, according to the Equal Employment Opportunity Commission. But charges of racial harassment on the job almost doubled last year, to 6,249 from 3,272 in 1990, the EEOC said. The acts ranged from derogatory slurs to nooses hung in doorways.
Similarly, complaints by minorities who feel they have been denied promotions or raises because of their race have grown by more than 50 percent since 1990, stirring commission officials to quadruple the number of racial bias lawsuits filed against companies in the past four years.