Bank Will Pay Record $14 Million to Victims in Discrimination Case

A Chicago bank that was the government’s biggest target of racial and sexual discrimination charges has agreed to pay $14 million in back pay, the largest such settlement ever obtained by the federal government, the Labor Department said today.

The settlement also requires Harris Trust & Savings Bank to revise its affirmative action policies, provide training and other assistance to women and minority workers and file periodic reports with the government documenting its compliance with anti-discrimination laws.

The $14 million in back pay Harris Trust agreed to pay is the largest such settlement ever obtained by the government from a single employer. It was not immediately clear how many current or former bank employees will share the award.

The agreement ends a controversial dispute with the government that dates back to 1977 and involved a 1965 presidential order requiring federal contractors to refrain from discrimination against minorities and women in their hiring, promotion and wage policies.

A sidelight to the case was an unsuccessful 1985 effort by then-Atty. Gen. Edwin Meese III and the U.S. Chamber of Commerce to persuade President Reagan to repeal the executive order. They argued that requiring affirmative action goals and timetables to make amends for institutional bias amounted to reverse discrimination.

An administrative law judge in 1981 found that Harris Trust had discriminated against women and minorities and awarded $12.2 million in back pay to plaintiffs in a class-action suit against it. But then-Labor Secretary Raymond J. Donovan set aside the decision, saying the bank had been wrongly denied an opportunity to present statistical studies in its defense.

The case was then reheard. In 1986, Administrative Law Judge Nahum Litt again ruled that the bank was liable for back pay to women and minority employees on its payroll from 1974 until Dec. 22, 1986, unless it could prove that it had ceased the discriminatory practices before that date.

The following summer, in an additional ruling in the case, Litt said the awarding of back pay should be treated as a class action.