Judge to Consider $55M FedEx Discrimination Settlement

April 11, 2007 (PLANSPONSOR.com) - A federal judge is scheduled to formally consider a settlement Friday in a major race discrimination case affecting some 20,000 FedEx workers that could see the shipping giant pay nearly $55 million in damages and bring widespread changes to its HR practices.

The afternoon court session in San Francisco, in front of U.S. District Judge Susan Illston of the U.S. District Court for the Northern District of California, comes in the class action lawsuit alleging that the company’s FedEx Express unit harbored a culture of hostility toward people of color, allowing racial bias to creep into its human resources decisions, according to a news report in The Recorder.

If Illston okays the pact, it would benefit some 20,000 hourly employees and low-level operations managers who have worked in the company’s western regional facilities since October 1999, according to The Recorder.

The approximately $54.9 million in agreed-upon damages includes $15 million for attorney fees and costs, unspecified claims, administration costs, and up to $360,000 for class representatives and people who gave declarations, according to The Recorder report.

According to a settlement approval request document, the pact provides for service payments of up to $30,000 each for nine class representatives. In addition, the settlement provides for service payments of up to $5,000 each for 18 additional class members who submitted sworn declarations and, in some cases, were deposed by FedEx., the document said.

“Not only is the monetary relief provided to class members substantial, but the extensive injunctive relief provided for in the Consent Decree will materially advance the goal of equal employment opportunity for African Americans and Latinos at FedEx Express (FedEx),” lawyers wrote in the settlement approval document.

According to the approval request,the parties participated in negotiations with the help of mediator, Hunter Hughes of Atlanta in April 2006, December 2006, February 2007 and March 2007.

The settlement document admits that FedEx does not admit guilt in connection with the discrimination allegations. “FedEx has and would continue to contest vigorously the merits of class members’ claims,” the court document said. “FedEx denies that it engaged in any intentional discrimination against African-American or Latino employees and points to, among other things, its affirmative-action policies and the percentage of minority employees within its workforce as compared to regional labor markets.”

Promoting Equal Future Opportunities

But a plaintiffs’ lawyer, James Finberg, was eager to talk with The Recorder about the part of the settlement that he said will promote equal employment opportunities for FedEx’s black and Latino employees.

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.

Even though FedEx agreed to drop its “Basic Skills Test (BST)” as a prerequisite for promoting employees to higher-paid, more desirable positions, the settlement approval document also said the company does not admit the test is faulty.

Declared the court document: “FedEx also contends that the BST has been properly validated and is job-related and consistent with business necessity.”

In addition to agreeing to extensive changes to its training and other personnel policies, FedEx declared in the settlement document: “FedEx will not knowingly maintain or enact any policy that has the purpose or effect of unlawfully discriminating against any hourly class members on the basis of race or national origin or the effect of unlawfully discriminating salaried, managerial class members on the basis of race.”

“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,” Finberg told the newspaper.