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Texaco Settles With Black Workers Record $176.1 Million Award Includes 10% Salary Increases

Sat., Nov. 16, 1996

Texaco Inc. Friday settled a lawsuit with its black employees for $176.1 million, the largest race discrimination settlement in history, and agreed to help create a task force of experts from outside the $37 billion company to oversee its diversity program.

As part of the settlement, which still must be approved by the court, Texaco will create a $115 million fund that will be distributed to a class of current and former non-supervisory Texaco employees who are black. Current black employees of Texaco also will receive a 10 percent increase in their salaries as of Jan. 1 from a $26 million fund that will administer raises over five years.

“Clearly, this signifies a recognition that what the company did was reprehensible,” said Michael Hausfeld, a lawyer for the Texaco workers.

Texaco Chairman Peter I. Bijur said that he was pleased that the case was settled, and was prepared to go beyond the terms of the agreement to make Texaco a model of diversity in the corporate world.

“I have committed myself - and the entire management team of this company - to the elimination of any trace of discrimination in Texaco,” he said. The objective: “zero tolerance of bigotry and scrupulously fair treatment for every individual.”

The settlement does not end Texaco’s problems in the matter, however. It still faces possible protest actions by civil rights organizations as well as a criminal investigation into the possible destruction of documents related to the lawsuit.

The agreement also faces scrutiny by the Equal Employment Opportunity Commission, which complained that it was not involved in the settlement.

Hausfeld said he believed the creation of a task force to oversee the company’s employee relations programs was the most important aspect of the settlement. And its authority was the biggest sticking point between the plaintiffs and the company, which has 27,000 employees, he said.

That task force will consist of seven people. Three will be appointed by the company, three by the plaintiffs and one independent appointee, agreed upon by both parties, will chair the task force. Hausfeld, who appeared with colleagues at a Washington press conference without representatives from Texaco, said the task force would be a full-time job for each member and that the group will have its own staff.

It will have authority over the company’s human resources program for five years and will be under court supervision. If the company does not implement the task force’s recommendations, it must justify its decision to the court.

The criminal investigation by the U.S. attorney in the Southern District of New York is examining possible obstruction of justice violations. That probe resulted from a tape recording of Texaco officials who referred to destroying documents related to the company’s personnel policies.

The settlement also came amid threats of a nationwide boycott by the Rev. Jesse Jackson and various civil rights groups. Jackson said Friday night he thought the settlement was a good first step, but that he would not commit himself to calling off the boycott, which was scheduled to start today, until he talks with Bijur and receives further commitments from Texaco for black-owned gas stations and the hiring of black professionals within the company.

NAACP President Kweisi Mfume also said that his organization will keep the pressure on Texaco. “I must caution that this is only a first step on a long path toward racial reconciliation,” he said. “The NAACP is in this process for the long haul.” If discussions with Texaco fail to bring about a specific plan of action, he said, his group is prepared to call on black Americans to sell their Texaco stock.

The lawsuit was originally filed by six black workers at the giant oil company and had been making its way through the courts since 1994. But two weeks ago, lawyers for the plaintiffs released tape recordings of a Texaco official using what the lawyers said were racist epithets for black employees.

Texaco investigators said the words were not on the tape, but the context and tone of the conversation created a storm of criticism from civil rights activists and prompted urgent settlement discussions.

Hausfeld said he did not think the lawsuit would have been settled so quickly if the tapes had not captured the attention of millions of Americans and the company.

The suit alleged that Texaco discriminated against qualified blacks by refusing to promote them or pay them comparable salaries and retaliated against those who asserted their civil rights by intimidating, demoting and sometimes firing them.


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