GM Will Give Raises and Pay Millions to Settle Racial Bias Suit
General Motors said Tuesday that it had agreed on a multimillion-dollar settlement to end a 6-year-old class-action lawsuit claiming that the leading auto maker discriminates against its salaried black employees.
GM, the nation’s largest company, said the agreement calls for payment of about $3 million in immediate grants to former employees and pay raises for 1,000 current staff members.
The settlement, if given final approval by a federal judge in Detroit, could be worth up to $40 million over the next 10 years to 10,000 current and former GM employees in Michigan, Ohio and Indiana, spokesmen for the plaintiffs said.
GM has about 8,400 blacks on its U.S. salaried staff of about 90,000, not counting the company’s financing units, GM spokeswoman Patricia Molloy said.
Detroit-based GM agreed to set up a new affirmative action monitoring system to assure that blacks among its white-collar staff get equitable treatment in future promotions and raises.
In addition, all salaried employees--black or not--will be covered by a new system in which they can appeal their supervisors’ performance appraisals.
Neither the auto maker nor the plaintiffs conceded the other side’s legal claims in agreeing to settle the case.
The plaintiffs said GM’s old performance appraisal system, scrapped in late 1987, has hurt black employees since 1982.
The plaintiffs had a serious chance to win their case charging systemic bias when a judge agreed two years ago to hear the suit as a class action covering all black salaried staff in the three affected states, civil rights lawyer Dennis James said. The ruling would allow representative witnesses and statistical evidence in the case, he said.
But the Detroit attorney said an actual trial would have taken “the better part of a year,” with appeals of any ruling postponing the final resolution of the dispute for many years.
As for the settlement, “This decree will help blacks attain their rightful places in the upper management of General Motors and help ensure fairness in the decision-making process,” said the Rev. James Kennedy, a lead plaintiff who retired after 31 years with the auto maker.
Kennedy, now pastor of Mount Carmel Baptist Church in Flint, Mich., was employed at GM’s AC spark plug subsidiary in Flint.
He told a news conference Tuesday that after starting in 1956, he worked his way up from janitor to supervisor of warehousing and shipping at the AC plant but found that whites had better paychecks and higher job expectations.
GM Vice President Richard O’Brien said in a statement that the auto maker is “proud of our track record regarding equal employment and affirmative action, and I believe this agreement will further strengthen and support our existing programs and policies in this area.”
Lawyers said the agreement, contained in a five-year consent decree, calls for the following:
- GM payments from a $1.6-million fund to about 2,800 former employees.
- Raises averaging $1,000 a year for about 1,000 of the 6,800 current black staff in the three states whose pay is most out of line with their “statistical white counterparts.”
- A new “group monitoring system” for promotions to last five years and “leading to an estimated increase of 25% in black promotions.”
- A monitoring system for discretionary pay raises for five years to ensure compliance with the decree’s statistical formula. GM agreed to pay a penalty if it fails to meet specificed affirmative action goals.
- A new “individual monitoring system” giving all GM salaried employees a way to appeal supervisors’ rating of their work.
- A one-time distribution of $325,000 to be divided among 82 “anecdotal” and potential witnesses and plaintiffs.
- GM to pay all of the plaintiffs’ costs and fees in the suit, which James put at more than $200,000.
The lawyer said the cumulative value of the settlement could range from $20 million to $40 million, depending on GM’s financial health.
The figures cover increases in black employees’ current and future pay rates, benefits that are based on pay rates and their chances for promotion to higher paying jobs, James said, adding: “These are raises they otherwise wouldn’t have gotten.”
Those GM workers affected by the settlement will be notified of the proposed agreement over the next two weeks and be given a chance to lodge any objections they may have. U.S. District Judge John Feikens then will schedule a hearing on whether the settlement should be approved, James said. The settlement, he said, was submitted to Feikens about two weeks ago and Feikens gave his preliminary approval Tuesday.
The allegations brought in the suit against GM weren’t the first time the auto maker has been accused of discrimination. In 1983, GM settled a case brought by the Equal Employment Opportunity Commission, alleging that the company had engaged in systemic discrimination though its procedures and practices. The case was settled for $42 million, paid out over a five-year period to a variety of institutions, primarily black universities.
Discrimination in the auto industry has been under scrutiny for some time. Most recently, Japanese auto manufacturers have come under heavy criticism for their hiring practices that have denied jobs to blacks and women.
Last year, Honda settled discrimination charges after a sweeping federal investigation and agreed to pay $6 million to 377 blacks and women who were denied jobs at its three Ohio plants between 1983 and 1986. Hiring at Toyota and Nissan was also the subject a federal investigation last year.
Sheldon Miller, an attorney for the plaintiffs, said the tentative GM settlement “reaffirms the importance of class-action civil rights litigation, especially in the current unfriendly political climate towards civil rights in general.”
