FedEx Pays $3 Million to Settle Unusual Employment Discrimination Case With the Federal Government

In March 2012, the United States Department of Labor announced it had reached an agreement with shipping giant FedEx in which the company would pay $3 million to the federal government to settle charges of discriminatory hiring practices. Additionally, FedEx agreed to:

• Take significant steps to eliminate discrimination from its hiring processes
• Develop and implement equal employment opportunity training
• Engage in extensive self-monitoring to ensure that its hiring practices comply with all federal anti-discrimination laws

FedEx denied all wrongdoing, insisting instead that it had agreed to the settlement merely to avoid a protracted and potentially more costly resolution through the courts.

In and of itself, a large company agreeing to a settlement with the federal government while denying having violated the law is not particularly unusual. Companies calculate the risks and benefits of federal litigation all the time, and frequently come down on the side of risk-avoidance by compromising with federal agencies or prosecutors.

But two things make this case unusual. First, the case focused on hiring practices — traditionally, most employment discrimination cases focus on things like firing, failure to promote or harassment, which are usually viewed as easier to prove than hiring discrimination. Second, the case did not arise from individual complaints of discrimination, but rather from a routine review of federal contracts by the Office of Federal Contract Compliance Programs (OFCCP), part of the Department of Labor.

Anyone who does business with the federal government must make a contractual commitment to provide equal employment opportunity. The OFCCP routinely reviews hiring and selection procedures of federal contractors to ensure that they are complying with affirmative action and equal opportunity requirements.

As part of a regularly scheduled desk audit, the OFCCP discovered that FedEx was preferentially hiring males over females and white applicants over black or Hispanic applicants at a high enough rate to be statistically significant in both cases and to indicate likely discrimination. Although employment discrimination attorneys point out that $3 million is not a lot when you consider that the settlement ostensibly covers over 21,000 employees, the mere fact that the OFCCP engages in this sort of statistical analysis ¾ and that large, trusted companies agree to review and revise their hiring practices to eliminate discrimination ¾ is grounds for hope.