Feds tell FedEx to pay $3M for hiring discrimination

WASHINGTON (Legal Newsline) -- The U.S. Department of Labor Office of Federal Contract Compliance Programs says FedEx will pay $3 million in back wages and interest to 21,635 applicants who were rejected for entry-level package handler and parcel assistant positions at 22 FedEx Ground facilities and one FedEx SmartPost facility.

The payment resolves allegations of hiring discrimination by FedEx subsidiaries FedEx Ground Package System Inc. and FedEx SmartPost Inc. Both are federal contractors.

"We are committed to building an economy that lasts - one in which every qualified worker gets a fair shot to compete for jobs, and every employer plays by the same set of rules," Secretary of Labor Hilda L. Solis said in making the announcement March 22. "This settlement is proof that we will aggressively protect workers, promote workplace diversity and enforce the laws governing federal contractors."

According to the announcement, during a series of regularly scheduled reviews OFCCP compliance officers determined FedEx violated Executive Order 11246 that prohibits companies contracting with the government to discriminate on the bases of sex, race and/or national origin. OFCCP said the company's hiring processes and selection procedures were discriminatory. The alleged discriminatory practices affected workers at 23 facilities in 15 states. FedEx Corp. is based in Memphis, Tenn.

The workers included men and women as well as African-American, Caucasian Hispanic, Asian and Native American job seekers. The OFCCP reviews also revealed extensive violations of the record-keeping requirements.

"Being a federal contractor is a privilege and means you absolutely, positively cannot discriminate, not when you are profiting from taxpayer dollars," said OFCCP Director Patricia A. Shiu. "Under this agreement, FedEx will have to really examine and revamp its hiring practices across the entire company. The American people ought to have confidence that one of our nation's most trusted brands will not tolerate discrimination."

OFCCP said that FedEx Ground has committed to reforming its hiring practices. It will develop and implement equal employment opportunity training, and launch extensive self-monitoring measures to ensure that all hiring practices fully comply with the law. It will also hire a consultant to review and monitor its hiring practices. The company also said it will comply with all record-keeping requirements in the future.

FedEx issued this statement about the settlement:

"FedEx Ground has signed an agreement with the U.S. Department of Labor settling a multi-year disagreement over hiring practices in certain locations. The company admitted no wrongdoing and believes the DOL's position was not supported by the law. The allegations were based on computer statistical analysis rather than individual complaints or investigations. We agreed to pay $3 million to avoid what would have certainly been a prolonged and much more expensive resolution process. We have and will continue to review and enhance our hiring practices to promote FedEx Ground's commitment to diversity and equal employment opportunity."

The company's communique differs from the government announcement which makes no mention that FedEx does not admit wrongdoing. FedEx claims that they are innocent and only settled to avoid paying more money to resolve the allegations. The company claims that DOL's evidence was merely a statistical analysis - not the result of complaints or individual investigations during the seven year period in question.

Hans von Spakovsky is a senior legal fellow and manager of the Civil Justice Reform Initiative at the Heritage Foundation, a Washington DC think tank. He formerly worked at the U.S. Department of Justice as counsel to the Assistant Attorney General for Civil Rights. He believes that this action is indicative of a desire for hiring quotas not evidence of racial discrimination.

"The government obviously used statistics to go after FedEx because their hiring did not exactly match the distribution of racial minorities in the general population," he said. "This case wasn't about any actual discrimination, it was about quotas. Three million dollars for FedEx is a nuisance value settlement."