Bias Complaints Unusually High at McDonnell

With Boeing Co. just days away from acquiring McDonnell Douglas Corp., McDonnell executives are trying to resolve an unusually large number of allegations of harassment and discrimination in the workplace.

In a lengthy three-year investigation, federal labor officials found numerous incidents of bias at McDonnell’s Long Beach plant and, for the last month, have been trying to negotiate a settlement.

“This has become a very complex investigation,” said Tino Serrano, a spokesman for the U.S. Labor Department’s Office of Federal Contract Compliance Programs. He declined to be more specific, except to note that the investigation involves a large number of employees in all departments.

In addition to the federal probe, McDonnell Douglas has, for the past 5 1/2 years, faced more than 330 discrimination complaints filed with the state’s Department of Fair Employment and Housing by female and minority employees throughout the company’s California operations.

Those complaints, most since resolved, amount to 41% of all such claims filed against the eight industry giants with operations in the state, a figure well above McDonnell’s 22% share of the group’s California employees.

In Washington state, by contrast, Boeing has more than three times the employees that McDonnell has in California, yet only 88 harassment and discrimination complaints have been filed with that state’s Human Rights Commission during the same period.

Executives at McDonnell and Boeing say that the allegations of workplace discrimination are not expected to affect the merger and that legal and settlement costs are minor compared to the $14-billion purchase price.

But labor and industry experts say the excessive number of complaints against McDonnell shows that its woes ran much deeper than financial, permeating the St. Louis company’s California operations and depressing employee morale.

“You have a major problem when you see those kind of numbers,” said Monica Ballard, president of Parallax Education, a Santa Monica firm that trains managers in diversity and discrimination issues. “Companies with that many complaints generally don’t treat their employees with respect.”

A McDonnell spokesman said that any problems found in the federal labor probe are not systemic and relate instead to specific areas or stem from company layoffs during the early 1990s.

“McDonnell Douglas has programs in place to attempt to bring us into full compliance across the company. That is our goal,” said Lawrence L. McCracken, a company spokesman. “We believe we’re being effective in doing that.”

But in lawsuits and in interviews, women and minorities said they found promotions and pay hikes hard to get and bosses sometimes crude and sexist. They said they often suffered in silence for fear of being downgraded in evaluations and, thereby, likely to be marked for the next round of layoffs.

In April, a Rialto woman won a $247,900 jury verdict on her claim that the company and two supervisors discriminated against her and wrongly terminated her because she was pregnant. A jury trial on punitive damages is expected to begin soon.

“Everybody has these problems to one degree or another,” said Paul H. Nisbet, an industry analyst at JSA Research in Newport, R.I.

“McDonnell went through more of a wrenching downturn because both of their major businesses [defense contracts and commercial planes] were declining rapidly and they weren’t in good financial shape to begin with,” he said. “They had to be more brutal in laying people off.”

Management problems have plagued McDonnell Douglas and particularly its Long Beach facility, where the C-17 military transports are built. The company was roundly criticized in Congress in the late 1980s for management “sloppiness” that produced $1.2 billion in C-17 cost overruns.

And, in an effort to stem growing criticism and red ink, the company changed its management style from a dictatorial leadership to a democratic teamwork approach. That caused massive confusion in middle management as well as among the rank and file, especially among union members. Some managers didn’t know the extent of their authority.

By the early 1990s, McDonnell Douglas was suffering severe financial strain as the federal government cut spending and commercial orders fell, especially for two new planes that it had spent millions of dollars developing.

The Long Beach plant was especially hard hit. Overall employment there sunk from a peak of about 50,000 in 1989 to 18,700 now.

Experts agree that downsizing causes more discrimination claims to be filed. “It’s unfortunate, but some might say, ‘I remember so-and-so told that dirty joke, so I’m going to sue them,’ ” Ballard said.

However, even companies in the throes of bankruptcy should have procedures to make sure employees aren’t mistreated, she said.

The greater number of complaints filed with the state against McDonnell is startling, she said, because the number didn’t rise proportionately among all major defense contractors, even though reduced government spending caused big layoffs throughout the industry.

McCracken attributed most complaints filed with the state’s Department of Fair Employment and Housing to the “tough years” of the early 1990s.

“You can go back X number of years and things were not as good as they are now” in terms of harassment and discrimination complaints, he said. “It takes time to move us forward.”

In several lawsuits against McDonnell, women who were laid off charged that managers and supervisors leered at them, made crude remarks, touched them, grabbed them and repeatedly asked them out on dates.

A federal judge in one case in 1995 found “overwhelming evidence” of sexual advances being made and “significant evidence” of a hostile working environment. That case was quickly settled.

Women also contend that they have been paid far less than men who are in comparable positions but have less education and experience.

“My business degree was in operations management with a specialty in purchasing,” said Anne Lopez, who worked in the purchasing department for the C-17 military cargo transport. “They didn’t even know I had that degree. They didn’t even care.”

Lopez helped stir the company to action after she conducted some research two years ago. Her findings, she said, showed that women were not being promoted and were not being paid as much as men who performed the same work and who, in some cases, did not have comparable education or experience.

Lopez, however, did not stay to see any changes. She quit early last year, just as the company offered her a raise and a title to go with the work that she said she long had been doing without the recognition or the raise.

Joy Young, who once negotiated multimillion-dollar contracts with suppliers as a buyer on the company’s C-17 military transport project in Long Beach, is the Rialto woman who won $247,900 from a jury that found she was a victim of a hostile work environment based on sex and race.

After she told colleagues in 1992 that she was pregnant, her high rankings in her evaluations suddenly plummeted, and one supervisor decided that she no longer could fly cross-country to meet with suppliers. She also was subjected to sexist and lewd remarks made or tolerated by supervisors, Ginsburg said.

Young, an African American, was laid off in July 1992, in what the company called a reduction in the work force. But, Ginsburg said, two white males were hired the next week to handle her work.

McDonnell Douglas is considering an appeal.

For Lopez and other women, the discrimination they see comes down to an emotional level as well. “We all felt that we were not appreciated,” she said.

The length of the three-yearfederal labor review startled some experts in workplace issues, but Labor’s understaffed contract compliance office occasionally takes that long on a major audit.

McCracken said the agency concluded a separate affirmative action audit at corporate headquarters in four months and found “no problems.”

In Long Beach, though, the long review ended with a demand for an “outrageous” amount of money for back pay and other lost benefits, he said. He would not specify the amount.

The company asked for details, and both sides have been holding settlement talks for the last month. They had hoped to finish before the acquisition, but they now say it will take at least another month.

The Labor office usually directs employees to file complaints with the state fair employment agency or with the federal Equal Employment Opportunity Commission. But in cases where it sees a pattern of violations, it can treat complaints as a class and seek remedies.

Remedies can run from changes in procedures to promotions with two years of back pay. In extreme cases, which have occurred rarely since the authorizing legislation was signed into law in the 1950s, the office can remove a company from the approved list of federal contractors.

“Typically, there are incremental changes, especially for companies like McDonnell Douglas that have been in the program since it began,” said Frank Cronin, an Irvine lawyer who specializes in employment law. “The agency’s method is to develop a plan to lead toward compliance.”

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Discrimination Complaints

By far the largest share of 807 employment discrimination complaints filed in California against eight aerospace and defense firms between 1992 and May 1997 were lodged against McDonnell Douglas:

McDonnell Douglas Corp.: 334

Rockwell International: 184

TRW Inc.: 134

Lockheed Martin Corp.: 71

Allied Signal Aerospace: 66

Others*: 18

* Includes Litton Industries, Northrop Grumman Corp. and Hughes Electronics Corp.

Source: California Department of Fair Employment and Housing