A federal judge in Illinois has given final approval of Walgreen Co.’s plan to pay a $24 million settlement following claims that the company discriminated against African American employees nationwide. The lawsuit filed by the U.S. Equal Employment Opportunity Commission is one of the largest monetary settlements in a race-related case by the EEOC. A comprehensive injunctive relief designed to improve the company’s promotion and store assignment practices was also ordered.
According to the EEOC, Walgreens discriminated against African American retail management and pharmacy employees in promotion, compensation, and assignment. The suit alleged that African American applicants for management trainee positions were rejected because of their race and that the company steered African American managers to low-performing stores. The recent settlement also resolves a private class-action suit filed in June 2005 on behalf of 14 current and former African American Walgreens employees. The two cases were consolidated in April 2007.
The Deerfield, Illinois-based drugstore chain was ordered to pay $20 million to about 10,000 past and present Walgreens workers. The remainder of the settlement is set to go to fees associated with the case.
While Walgreen Co. agreed to the settlement, the company continues to maintain its innocence. According to a released statement, “From the beginning, we denied all allegations. We do not tolerate discrimination in any aspect of employment.” Walgreens also maintains it is a “drugstore industry leader in the employment and promotion of African American managers and pharmacists.”
The company reports that its African American store and district managers represent more than 17% of total employees in those positions, compared with the industry average of 9%. African
American staff pharmacists at Walgreens account for 15% of those positions, compared with the industry average of 10%. The statement went on to say, “We are the nation’s best-represented retailer in urban areas, and managers of all backgrounds are promoted to senior levels from those locations.”But according to one of the attorneys involved in the case, Teresa Demchak, of law firm Goldstein, Demchak, Baller, Borgen & Dardarian, the EEOC pursued the lawsuit only after finding evidence of discrimination by Walgreens. “When the original plaintiffs filed the (private) lawsuit, the EEOC was continuing its investigation of the plaintiffs’ EEOC charges,” she says. “Later, the EEOC determined that there was cause to support the allegations in the charges. The EEOC’s attempt to reach conciliation with Walgreens failed, and the EEOC filed its own lawsuit against Walgreens, which was then consolidated with the private plaintiffs’ lawsuit.”
Racial discrimination allegations dominate the complaints received by the EEOC. In 2006, 27,238 charges filed with the EEOC alleged race-based discrimination, accounting for 36% of charges filed that year.
“One of the reasons of the increase in discrimination lawsuits of all kinds is that employees have increased awareness of diversity and higher expectations for an inclusive workplace,” says Janet Crenshaw Smith, president of Ivy Planning Group L.L.C., a consulting and training firm specializing in diversity, strategy, and leadership.
Although it is not the best way, Smith says, lawsuits tend to be the most effective way to force companies to address their diversity issues. “Other corporations tend to take note of lawsuits involving their competitors and begin addressing those issues as well,” says Smith, whose clients have
included MetLife, Nike, Hyatt Hotels, Lockheed Martin, L’Oreal, and PepsiCo. “Ivy has been fortunate to have clients that have been proactive, versus responding to a lawsuit,” Smith adds.Demchak says there have already been notable changes at Walgreens since the suit was filed. “Changes to Walgreens’ employment practices that it has agreed to undertake are laudable and will benefit all current and former Walgreens retail store and pharmacy management employees, regardless of race,” she says.
The plaintiffs themselves have also reported that Walgreens has demonstrated its commitment to implementing the terms of the settlement. “I am hopeful that cases such as this are a strong wake-up call to those companies in this country who do not take the fair employment laws seriously or believe that they apply to them,” Demchak adds.