5 Things We Can Learn From the Recent Cargill Settlement

March 31, 2014

5 Things We Can Learn From the Recent Cargill Settlement 150 150 Shegerian Law

Agribusiness mogul Cargill recently fended off allegations of hiring discrimination, agreeing to compensate disgruntled workers with back pay and new job offers as available.

The Department of Labor (DOL) claimed that the company’s meat packing division unfairly preferred Asian and Pacific Islander employees over African-American, Hispanic, White and female workers. The settlement reached a total $2.2 million, and its decree requires Cargill to extensively self-monitor its hiring practices as well as post notice of Equal Employment Opportunity (EEO) policy throughout its numerous meat packing divisions.

Federal law prohibits discrimination in hiring practices as well as discrimination on the basis of race and national origin. Title VII of the Civil Rights Act explicitly lists hiring practices as an area of employmet that shoud remain free of discrimination, and race and national origin are two well-known protected categories found throughout employmet discimination law.

Here, the Department of Labor sought to enforce an executive order, E.O. 11246, prohibiting companies under federal contractcs worth $10,000 or more from discriminating against employees on the basis of race, sex, gender or national origin.

5 Things Cargill Can Teach Us

1. The Department of Labor enforces federal employment discriminaton violations.

Although the Equal Employment Opportunities Commission (EEOC) handles the bulk of employment discrimination issues, the Department of Labor is in charge of issues involving federal contracts and labor law disputes.

The Office of Federal Contracts Compliance Programs (OFCCP), a division of the DOL, enforces and adminsters civil righs laws involving employment discrimination among federal contractors. Cargill, a grain and enrgy trading giant with revenues as high as 32.9 billion, is a federal contractor with government contracts worth more than 1.4 billion.

In the Cargill case, the OFCCP also enforced Section 503 of the Rehabilitation Act of 1973 as well as the Vietnam-Era Veterans Protection Act. Both these laws protect the employees of federally contracted companies from discrimination on the basis of race, color, national origin, disability and veteran status.

2. Settlements sometimes involve back wages and new jobs.

As part of the large settlement agreement, Cargill agreed to pay back wages to nearly 3000 employees and to present 354 workers with new jobs as they became available. This is common in settlements involving discrimination which results in a loss in job benefits, salary or security.

In discrimination suits approriate remedies involve the amount or actions to be taken that would make the aggrieved parties whole. Settlement negotiations are similar in that each side advocates for the best position possible. For the aggrieved party, this often means compensation for lost wages.

Because the Cargill case involved discrimination claims based on unfair hiring practices, some of the workers involved were not yet full employees, and compensation for lost wages was not a relevant remedy under the circumstances. For these workers, the best remedy was for Cargill to agree to make new job offers to these workers as jobs became available.

3. An EEO clause governed by Executive Order 11246 must be included in all federal contracts.

Each Executive Branch entity of the federal government is required to insert what is known as an EEO clause in its nonexempt government contracts. The clause ensures that any company doing buiness with the federal government takes affirmative action to extend employment opportunities to minorities (Asians, Pacific Islanders, Native Americans, African-Americans and Hispanics). It also requires contractors and subcontactors to maintain discrimination-free work environments.

Another important aspect of the executive order is its requirements concerning affirmative action programs (AAPs) for federal contractors and subcontractors. According to the Code of Federal Regulations, an AAP is “a set of specific and result oriented procedures to which a contractor commits itself to apply every good faith effort.” All service and supply federal contractors with contracts of $50,000 or more and 50 or more employees must have an AAP in place.

4. Violations of E.O. 11246 may resut in cancelation of federal contracts.

When the OFCCP finds violations of E.O. 11246, it may seek to cancel or suspend any and all government contracts with the offending company. This is why compliance with the order as well as Section 503 of the Rehabilitation Act and the Vietnam-Era Veteran’s Act is so important.

E.O. 11246 requires federal contractors and subcontractors to take affirmative action, ensuring that “applicants are employed and that employees are treated during employment, without regard to their race, color, religion, sex or national origin.” The order covers several employment practices including demotion, transfer, recruitment and recruitment advertising, rates of pay, and selection for hiring.

5.  A settlement does not determine whether a violaton ocurred.

After the settlement, Cargill admitted no wrongdoing. The company was adamant in defense of its actions, stating that it regretted the perceived push on the part of the Department of Labor toward maintaining employee quotas.

Though this behavior may seem brash, it is not illegal. This is because a settlement does not determine liability. In other words, a settlment differs from a court ruling in that settlements do not determine whether a violation has or has not ocurred. Instead, a settlement is an agreement between two parties, closely negotiated, often in an effort by the defending company to avoid costly litigation.

An Important Employment Discirmination Learning Tool

Cargill gets attention because of its hefty settlement amount, but there are other features of the settlement worth the attention. The involvment of prominent employment discriminaiton law, namely E.O. 11246, Section 503 of the Rehabilitation Act and the Vietnam-Era Veteran’s Protection Act, make it an important learning tool for employees seeking remedies from discriminatiory hiring practices.

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