EEOC settles class action over hiring practices for $5 million

By Jeff Jones
Special to the UCBJ

In February, the U.S. Equal Employment Opportunity Commission (“EEOC”) settled a nationwide class action lawsuit against American Freight Management Company (“American Freight”) for $5 million.  In that case the EEOC alleged that the company, which owns and operates furniture stores, intentionally did not hire women into sales and warehouse jobs.

The EEOC’s evidence included statistics.  In the Complaint filed in the U.S. District Court for the Northern District of Alabama, the EEOC presented a snapshot related to warehouse positions for 14 stores with employee compliments ranging from 70 to over 300.  According to the allegation, for the years 2013 to 2016 there were no female warehouse employees in 13 of the 14 stores.  In the other store there was one female warehouse employee.

One might suspect that in the warehouse setting there tend to be fewer female employees.  Are those figures actually so unusual?  The EEOC further alleged that for 2013, American Freight hired 821 warehouse workers nationwide, only 1.2% of which were female.  This compared with an industry average of 6.9%.  Accordingly, while the industry average showed a low percentage of females hired, American Freight’s figures were far lower than the average for the industry.

The EEOC painted a similar picture with respect to sales positions.  The EEOC presented a chart that focused on 12 stores at locations around the country and their hires from 2013 to 2016.  Several hired zero, one, or two females, out of more than 30 total hires.  Some stores hired over 30 females, out of around 150 total hires.  

The number of females hired in sales was clearly a higher percentage than those hired into warehouse positions.  Even so, the percent was well below the industry average. The Complaint alleged that in 2013, American Freight hired females into sales positions at 32.2%, compared to the industry average of 48.7%.  

The EEOC presented more than statistics. The allegations included both conduct and directives from corporate management designed to keep females out of warehouse and sales positions.  The EEOC alleged that store managers had observed corporate managers discard applications from females.  In addition, corporate managers told store managers not to hire women because “women complain and make trouble.”  The EEOC alleged that former employees heard store managers say that American Freight did not hire women because they “b   too much,” because they are “too much of a distraction” to male employees in the warehouse, because they “can’t lift,” and because women do not “do as great a job of selling furniture” as men.

In addition to the monetary amount of $5 million, the settlement included a three-year consent decree.  Commitments in the decree include American Freight’s commitment to appoint a Title VII Coordinator, develop a recruitment plan for women in sales and warehouse positions, and provide periodic reports to the EEOC regarding the number of women who apply and are hired.    

There are many industries where certain positions have traditionally been filled by men, or by women. Obviously, any employer who intentionally continues that trend, such as American Freight was alleged to have done, is creating significant legal exposure.

Even where there is no intentional action, there is potential exposure where there are clear disparities in positions.  This is true whether the disparity is  based on gender or race or any other protected status.  If you find your organization in that position, it would  be well to engage in a thoughtful analysis of questions such as:

  1. How the circumstance came to exist;
  2. What trends supported it in the past;
  3. What trends may contribute to the pattern continuing, and 
  4. What efforts can be wisely and lawfully made to help bring about a course correction?

At the risk of stating the obvious, it would not be wise to simply run out and hire as many persons in the under-represented status as possible.  It is of course unlawful to discriminate in hiring decisions on the basis of any protected status. Rather, an employer can take steps such as engaging in the training of its management team, its recruiters, and its employees; and such steps as expanding recruiting sources, and developing relationships that can help provide outreach and training to under-represented groups, and the like. Steps of this nature can and should go a long way towards creating a more balanced and inclusive workforce, and towards keeping your organization away from the EEOC’s crosshairs.

Jeffrey G. Jones is a regional managing member for Wimberly Lawson Wright Daves & Jones PLLC. He can be reached at jjones@wimberlylawson.com.

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