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FedEx to pay $3 million to settle OFCCP hiring bias charges; company will reform hiring practices, pay back wages and interest to more than 21,000 applicants rejected for jobs at 23 facilities in 15 states

Via a press call on March 22, 2012, U.S. Secretary of Labor Hilda L. Solis and OFCCP Director Patricia A. Shiu announced a $3 million settlement of hiring discrimination allegations against shipping giant FedEx. Following a seven-year investigation, the OFCCP and FedEx have entered into a conciliation agreement resolving charges that the company’s hiring practices resulted in systematic discrimination against 21,635 workers who applied for entry-level positions at FedEx shipping centers in 15 states.

The agreement, which settles allegations against federal contractors FedEx Ground Package System Inc. and FedEx SmartPost Inc., both subsidiaries of Memphis, Tennessee-based FedEx Corp., concludes OFCCP compliance reviews that spanned seven years and numerous FedEx facilities in multiple states, the OFCCP reported in a statement. During a series of regularly scheduled reviews, OFCCP compliance officers found evidence that FedEx’s hiring processes and selection procedures violated Executive Order 11246 by discriminating on the bases of sex, race and/or national origin against specific groups identified at 23 facilities in 15 states. The reviews also uncovered extensive violations of the executive order’s record-keeping requirements, according to the OFCCP.

Affected workers. Under the terms of the conciliation agreement, the companies will pay a total of $3 million in back wages and interest to 21,635 applicants who were rejected for entry-level package handler and parcel assistant positions at 22 FedEx Ground facilities and one FedEx SmartPost facility. The affected workers included men and women as well as African-American, Caucasian and Native American job seekers, and job seekers of Hispanic and Asian descent. Director Shiu said during the press call that, of the 21,635 rejected applicants covered by the settlement, 61 percent were female, 52 percent African-American, 14 percent Hispanic, two percent Asian, and less than one percent Native American. Six of the victims were male, she added.

FedEx also has agreed to extend job offers to 1,703 of the affected workers as positions become available. The 1,703 workers “deserved these jobs at the time of their applications; they deserve these jobs today,” Secretary Solis said during the press call.

The agreement represents the largest single financial settlement negotiated by the OFCCP since the agency’s $5.5 million compensation discrimination settlement in 2004 with Wachovia (involving 2,021 current and former female employees). On the press call, Secretary Solis said she was “very excited” about the agreement which she said was one of the largest settlements of any case in OFCCP history. In addition, the OFCCP statement notes that the 21,635 rejected job seekers represent one of the largest classes of victims of any case in OFCCP’s history.

Reforms in employment practices. On top of the financial remedies and job offers, FedEx Ground has committed to wide-ranging reforms. The company has promised to correct any discriminatory hiring practices, develop and implement equal employment opportunity training, and launch extensive self-monitoring measures to ensure that all hiring practices fully comply with the law. FedEx Ground also has agreed to engage an outside consultant to perform an extensive review of the company’s hiring practices and provide recommendations to change and improve those practices, to train incumbent and future supervisors and employees, and to monitor compliance with the equal employment opportunity laws enforced by OFCCP. Finally, the company will take necessary steps to comply with all record-keeping requirements.

“Being a federal contractor is a privilege and means you absolutely, positively cannot discriminate, not when you are profiting from taxpayer dollars,” Director Shiu said in the statement. “Under this agreement, FedEx will have to really examine and revamp its hiring practices across the entire company. The American people ought to have confidence that one of our nation’s most trusted brands will not tolerate discrimination.”

During the press call, Shiu emphasized the corporate-wide and nationwide aspect of the investigation and settlement, noting that four of the agency’s regional directors (Northeast Region Acting Director Michele Hodge, Southeast Region Director Evelyn Teague, Southwest and Rocky Mountain Region Director Melissa L. Speer, and Pacific Region Director William D. Smitherman) took part, working together as “one team.”

“We will be monitoring what FedEx does; and we are going to ensure that these policy changes are made and that this discrimination will not continue,” Shiu stated.

FedEx response. When asked for a response to the OFCCP’s announcement, FedEx Ground provided the following statement to CCH:

“FedEx Ground has signed an agreement with the U.S. Department of Labor settling a multi-year disagreement over hiring practices in certain locations. The company admitted no wrongdoing and believes the DOL’s position was not supported by the law. The allegations were based on computer statistical analysis rather than individual complaints or investigations. We agreed to pay $3 million to avoid what would have certainly been a prolonged and much more expensive resolution process. We have and will continue to review and enhance our hiring practices to promote FedEx Ground’s commitment to diversity and equal employment opportunity.”

When asked about the FedEx statement during the press call, Shiu explained that, although the OFCCP has the power to address complaints, it is not primarily a complaint-based agency (as is the EEOC). Under the law, findings of discrimination can be the result not just of complaints, but also of disparate impact statistical analysis. In addition to intentional discrimination, selection procedures that have the effect of disproportionately excluding persons (a disparate impact) based on race, color, religion, sex, or national origin are unlawful where the selection procedures are not job-related and consistent with business necessity. There does not have to be “a sign saying no ‘African-Americans, Hispanics, women or others need apply,’” Shiu said. “What we saw here are trends of discrimination, not only against one group, but against many groups all across the country.” This settlement amount, along with the 1,700 jobs coupled with the extensive policy changes that will be made at more than 500 establishments across the country “speaks for itself,” she maintained.

The “very hard work,” including statistical analysis and refined information, undertaken by the OFCCP as part of its compliance reviews ferrets out “discrimination that people don’t even know happened,” Shiu said. “That’s the beauty of the OFCCP.”

FedEx Ground is based in Coraopolis, Pennsylvania. The 22 FedEx Ground facilities where OFCCP found violations are located in Sun Valley and Sacramento, California; Tampa, Florida; Ellenwood, Georgia; Carol Stream and Chicago, Illinois; Indianapolis and Jeffersonville, Indiana; Lenexa, Kansas; Livonia, Michigan; St. Paul, Minnesota; South Hackensack, New Jersey; Albany and Brooklyn, New York; Greenville, North Carolina; Addyston and Grove City, Ohio; Lewisberry, Pennsylvania; Fort Worth, Houston and South Houston, Texas; and North Salt Lake City, Utah. The OFCCP also conducted compliance evaluations at two FedEx Ground facilities in Phoenix, Arizona, and San Antonio, Texas, but found no violations. FedEx SmartPost is based in New Berlin, Wisconsin. The FedEx SmartPost facility where OFCCP found violations is located in Charlotte, North Carolina.