SAN FRANCISCO — Corporate racism suffered a defeat on November 16. In the largest settlement ever in a corporate racial discrimination case, the Coca-Cola Company agreed to pay more than US$156 million to resolve a federal lawsuit brought by black employees.
An additional $36 million is to be spent on structural programs within the company overseen by an outside panel of seven. Some 2000 black employees are to receive an average of $40,000, with four of the eight original plaintiffs receiving up to $300,000 apiece.
Coke agreed to take steps to promote minorities to executive positions and hire more African-Americans. It did not, however, acknowledge a history of racial discrimination.
The fact that black employees were clustered at the bottom of the pay scale, averaging $26,000 a year less than white workers, was rejected by Coke officials as proof of institutional discrimination. The top company officials continued to deny that this reality in the company was done intentionally. The company executives argued that workers throughout the company, regardless of gender or race, had suffered similar experiences as the African-American plaintiffs.
So why settle? The damage done to Coke's image abroad and among minorities was increasing and corporate profits were declining.
"It [the settlement] sets a new standard for corporate settlements", said civil rights leader Jesse Jackson, who actively supported the Coke workers. Jackson and other civil rights groups have targeted multinationals and Wall Street for their lack of blacks in executive positions and corporate boards.
Coke was particularly suffering a public relations disaster in the black community. African-Americans drink more Coke per capita than any other segment of the US population.
Coke's decision to settle also reflects the flip-side of globalisation, in that major US corporations that do significant business abroad, particularly in Third World countries, can't appear openly hostile to people of colour. The largest potential markets include India and China.
According to an article in the November 17 New York Times, when a Coke official visited China earlier in the year, "Chinese reporters hounded him about the company's racial problems, driving home the point that a global company operating in roughly 200 countries can ill afford to develop a reputation for intolerance."
The settlement with four of the eight plaintiffs doesn't end Coke's legal problems. The remaining four original plaintiffs decided in June to get new high profile lawyers and filed a separate $1.5 billion lawsuit in a Georgia state court. The high number is to send a message to all corporations that corporate racism will not be tolerated.
They and other employees are also concerned that the settlement reached is inadequate. While the formation of a seven-member outside panel is a positive step, the body does not have the authority or power to force structural internal changes. The settlement contains no measurable goals or time period to increase employment and promotions. It's up to top management.
Recent settlements without goals have all been limited in changing corporate culture. Texaco, a major oil company, for example, in 1996 reached a similar accord without enforceable goals. Before the consent decree nearly 20.5% of Texaco's total work force and 9.4% of its executives were minorities. Today minorities represent only 23% of employees and 11% of its executives.
In contrast, companies that applied strict goals and deadlines have made significant progress. Home Depot was taken to court in 1998 by its women employees. In its settlement, Home Depot agreed to strict targets for promotions. Within two years, women represent roughly 22% of the sales force, up from 10% when the accord was reached.
The Coke settlement, and others, show the limitations of winning a case in a political climate where the federal government and the courts are ruling against quotas and strict guidelines to eliminate institutional racism.
Direct actions locally, including protests at the world headquarters of Coke, and questions raised abroad can make a difference. They were key to exposing Coke's racism and why Coke's owners announced new plans to cooperate with the black community, including donating $50 million to the Coca-Cola Foundation to support schooling. It affirms that in a period of neoliberalism, corporate power and bias can be challenged — and victories won.
While the settlement is modest, and more needs to be done, it is a blow to corporate racism.
BY MALIK MIAH