The U.S. Equal Employment Opportunity Commission has found that retailer Wet Seal Inc. discriminated against a former African American store manager.
It’s just the latest problem plaguing the struggling Foothill Ranch company, which in the space of five months has fired its chief executive, overseen a board overhaul and revamped its strategy to bolster flagging sales.
Now, the federal agency tasked with enforcing laws against workplace discrimination has determined that Nicole Cogdell, a former manager of a Wet Seal store in Pennsylvania, was “subjected to a hostile work environment” because of her race.
In a three-year investigation, the commission found evidence that Wet Seal corporate managers openly stated that to be profitable the retailer had to retain workers with “the Armani look” — meaning thin, blond and blue-eyed.
One high-level executive sent an email to underlings in 2009 pointing out that the dominance of African American workers was a “huge issue.”
“Managers were instructed to make employment decisions based on race,” the agency said in documents made public Monday.
Wet Seal said it cooperated with the investigation and had voluntarily collaborated with the agency on “an extensive program” to promote diversity. That included an ethics hotline, which workers can use to report incidents that violate the retailer’s anti-discrimination policy.
“We demand our employees’ full commitment to and compliance with these policies,” Kenneth Seipel, president of Wet Seal, said in a statement. “We ask them to think carefully about the meaning and importance of every sentence; to reflect upon whether their words and actions are fully supporting these policies.”
The EEOC said it cannot comment on specific cases. But ReNika Moore, a lawyer representing Cogdell, said it is uncommon for the commission to issue such a finding against a retailer, especially one citing detailed evidence including corporate emails.
“When you have emails that put in writing a kind of discriminatory policy like this, it is very unusual, and that is what motivated the EEOC to issue this kind of ruling,” said Moore, a lawyer at the National Assn. for the Advancement of Colored People.
The agency’s findings may bolster a separate discrimination lawsuit against the company alleging a high-level policy of bias against its African American workers.
Filed in July, the lawsuit accuses the clothier of adopting a policy of firing black employees and denying them promotions and pay raises in favor of hiring white workers who better fit the company’s “brand image.”
Cogdell, one of the named plaintiffs in the suit, contended that she was fired after a senior executive visited the store and said that the manager should have “blond hair and blue eyes.”
The commission findings can be used as evidence in the lawsuit, which is seeking class-action status on behalf of more than 250 management-level employees at Wet Seal, Moore said.
Aside from the lawsuit, Wet Seal has been fighting to turn around more than a year of falling sales and months of tumultuous boardroom intrigue. After a tangle with an activist shareholder, who at first urged Wet Seal to put itself up for sale, the chairman and three board directors were replaced in October.
In its latest quarter ended Oct. 27, the retailer reported a loss of $14.8 million, or 17 cents a share, compared with a profit of $3.7 million, or 4 cents a share, in the same period a year earlier. Sales dropped 10.9% to $135.5 million.
Shares of Wet Seal fell 5 cents, or 1.7%, to $2.88 on Monday.