Teen retailer Abercrombie & Fitch Co. will revamp its hiring and training practices and pay $40 million to thousands of female and minority employees and job applicants as part of a legal settlement given preliminary approval Tuesday by a federal judge in San Francisco.
The settlement is intended to resolve three lawsuits that accused the Ohio-based company of discriminating against women and minorities.
Abercrombie, which denies the charges, said last week that it had settled the suits to avoid a drawn-out court dispute.
The settlement calls for the company to make an effort to hire more minorities for sales and managerial positions and develop internal procedures to handle discrimination complaints. The company also agreed to provide managers with additional diversity training and to include diversity-related criteria in performance evaluations.
“They’re going to match their cutting-edge fashion style with updated employment practices,” Kimberly West-Faulcon of the NAACP Legal Defense and Educational Fund said at a news conference in Los Angeles.
Twenty-three Abercrombie applicants or former employees named in the lawsuits will receive $5,000 to $39,000 apiece. As many as 50,000 more people are expected to apply for shares of the $40-million restitution fund. Abercrombie will set aside about $10 million to cover attorney fees and other expenses related to the settlement.
Abercrombie also agreed to reflect diversity in its marketing materials, including catalogs, shopping bags and store posters.
Still, the parties remained at odds over marketing at the retailer, accused in one of the lawsuits of promoting a virtually all-white image.
An Abercrombie spokesman, Thomas Lennox, said that his company’s marketing materials were already diverse and that the decree did not allow outside parties to contest its marketing or selection of photographs.
Thomas Saenz, vice president of litigation for the Mexican American Legal Defense and Educational Fund, one of several groups involved in the legal action, disagreed.
“They’ll be in serious trouble if they don’t change their marketing,” Saenz said. “Not just because they have a commitment in the decree to include diversity, but beyond that it could have an effect on their compliance with the rest of the decree.”
U.S. District Judge Susan Illston will hold a hearing April 14 in San Francisco to consider final approval of the terms of the settlement, which could be in force for as long as six years.
The case began in June 2003 when MALDEF, the National Assn. for the Advancement of Colored People, the Asian Pacific American Legal Center of Southern California and a plaintiffs’ law firm sued Abercrombie in federal court in San Francisco on behalf of nine minority plaintiffs.
The lawsuit was later consolidated with two other discrimination cases brought against Abercrombie, including one filed by the U.S. Equal Employment Opportunity Commission.
Plaintiff Eddie Gonzalez, a chemistry major at Stanford University, recalled Tuesday that he was told to seek positions in the stockroom or overnight crew when he inquired about work at an Abercrombie store in Santa Clara, Calif., in 2002.
At an adjacent Banana Republic, he said, employees asked whether he was applying to be a manager.
“It was pretty blatant,” Gonzalez said. “Based on my looks, one place is saying ‘We don’t want to see you’ and the other was asking me if I wanted to lead other people.”