Money talks in the business world, but it also buys silence in the courtroom. In recent years—despite the rise of movements like #MeToo and Occupy Wall Street demanding more accountability from the corporate world—complex, opaque legal settlements have hushed, sealed, and silenced victims of workplace misconduct and abuse. While the details of the civil-rights and labor lawsuits have been kept from public purview, a deep dive into the Fortune 500’s legal disclosures reveals a disturbing picture of corporate America.
An analysis of hundreds of corporate legal settlements in civil-rights cases since 2000 shows that a total of $2.7 billion was paid out by many of the largest US corporations (primarily those listed on the Forbes and Fortune rankings). The report, by Good Jobs First (GJF), puts Wall Street and retail companies on top of the rankings, with $530 million in payouts each, including household names like Bank of America and Walmart. The runners-up were the food-and-beverage sector ($252 million), pharmaceuticals ($209 million), and shipping and logistics ($187 million). In addition to 235 civil lawsuits, the Equal Employment Opportunity Commission litigated 329 cases, netting some $588 million.
The most prevalent categories were cases of race and gender discrimination, with 189 and 168 cases, respectively, yielding over $1 billion for each category. Another 144 cases involved disability discrimination. Claims of direct racial and sexual harassment also resulted in scores of cases and tens of millions of dollars in payouts.
The discrimination cases covered all professional and income levels, ranging from age bias to racial discrimination, involving corporate executives, lawyers, scientists, and factory and retail workers. One eight-year civil-rights lawsuit brought by black brokers at Merrill Lynch made history in 2013 with a $160 million settlement. Women of Wall Street have settled with Wells Fargo, American Express, and other mega-banks in cases of alleged bias against female financial advisers.
Coca-Cola was the target of one of the most massive corporate-discrimination lawsuits in history: The class action, encompassing up to 2,000 workers in the corporate offices, charged the company’s white-dominated executives with systematically failing to address its diversity issues and denying job and promotion opportunities to black and Latino staff.
Walmart is the biggest offender, and arguably the luckiest. In recent years the mega-retailer has faced the highest number of wage-related suits, 27, and paid $52 million total. But a massive gender-discrimination class action involving hundreds of female retail associates was ultimately axed by a 2011 Supreme Court decision that effectively curtailed the scope of future class-action suits.
Popular
"swipe left below to view more authors"Swipe →
An earlier study published by GJF, which tracked the legal outcomes of labor-violation cases, documented about 1,200 successful wage-theft litigation cases, resulting in $8.8 billion in damages paid out to employees since 2000, plus another $400 million in penalties administered by the Labor Department. The wage violations clustered around lower-income sectors: undercounting workers’ hours, denying overtime pay, and employee misclassification (manipulating workers’ job categories to preclude certain benefits and protections). Walmart racked up the heaviest cumulative penalties, about $1.4 billion in settlements and fines, and the biggest single administrative penalty, with a 2007 Labor Department citation of $33 million for denying about 86,000 workers overtime for five years.
In the second-most-penalized sector, financial services, Wells Fargo’s wage-theft violations, including forcing staff to work off the clock, went along with a predatory racket in its financial-sales division, which pressured sales representatives to foist fraudulent accounts on unwitting clients in order to meet performance quotas—and then cheated the reps on their own paychecks.
The cases analyzed represent just the tip of an iceberg of corporate abuses. But labor and discrimination issues could now face even tougher barriers to the courts. Last year’s Supreme Court ruling in Epic Systems Corp. v. Lewis expanded employers’ powers to impose forced arbitration proceedings on workers. Moreover, many workers are preemptively “gagged” through nondisclosure agreements, which have been criticized in the #MeToo debate as a tool of legal suppression against sexual-harassment claimants.
While arbitration is often touted by corporations as a simpler, less litigious procedure than a lawsuit, the private arbitration process is skewed by asymmetries of power: Corporate lawyers control the adjudication process, often subjecting workers to onerous scrutiny by a panel of private arbitrators, and pressuring them into being “bought off” with a confidential payout. In sensitive cases involving racial bias or sexual harassment, a single worker can be tragically disadvantaged when challenging a giant corporation via a private tribunal.
Court-based legal settlements are another way of avoiding formal litigation for employers. But unlike arbitration proceedings, they are at least conducted under the purview of a civil court, with some legal representation and evidentiary standards for both sides.
Phillip Mattera, research director of GJF, noted the structural tension between private settlements and the public’s right to know on issues of public interest like workplace discrimination.
Out-of-court settlements are not seen as problematic by plaintiff lawyers since defendants may be willing to pay more if the terms are not made public…. Yet the lack of disclosure is problematic in a broader sense, since the true amount of total penalties is not known to the public.
Researchers point out that the rise of the #MeToo movement has helped bring the scourge of sexual harassment and discrimination into the public spotlight, but argues that “the fact that a discrimination or harassment case ends up in court does not mean that the ultimate outcome becomes part of the public record.”
One potential reform that could help close the legal black hole surrounding corporate settlements would be to require full disclosure of civil litigation for publicly traded companies—a proposal recently introduced by Senator Kamala Harris. Another legislative proposal emerging in response to the #MeToo campaign would bar nondisclosure agreements in sexual-harassment lawsuits. In theory, there’s nothing stopping Congress from banning mandatory arbitration in workplace disputes, which would eliminate a key weapon for employers to stifle civil-rights and wage-theft claims.
Armed with massive funds and in-house counsel, top executives can wage asymmetrical warfare on low-wage workers who are increasingly forced to defend their rights alone in private hearings. In a rigged legal system, for Fortune 500 firms, no price is too high to pay to silence their opposition.
