Chicago Bank Settles Bias Case for Record $14 Million

WASHINGTON —  A Chicago bank accused of job discrimination against women and minority employees has agreed to pay a record $14 million in back wages as restitution for past bias, the Labor Department announced Tuesday.

The settlement by the Harris Trust & Savings Bank was the largest such award ever obtained by the federal government in a sex or race discrimination case and ended a 14-year legal struggle with the company.

“It is a major civil rights victory for the federal government,” Labor Department Solicitor George R. Salem said. “ . . . This settlement represents a major step forward not only for the present and former employees of the Harris Bank who will benefit from it, but also for all women and minority group workers in the American labor force.”

The action was brought under a presidential order that requires companies doing business with the federal government to take affirmative action to ensure equal employment opportunity.

Civil rights advocates often have questioned the usefulness of the executive order, originally signed by Lyndon B. Johnson in 1965 and continued since then, on grounds that very few enforcement actions have been started under its provisions.

However, officials said that the size of the Harris Trust award could spur renewed emphasis on the presidential order as a remedy in job bias cases. More cases are pending.

Several thousand current and former Harris Trust employees--all women and minorities who worked for the bank between 1973 and 1988--will be eligible to receive compensation based on the harmful impact of discrimination against them, Salem said.

In Chicago, Harris Chairman B. Kenneth West described the record-breaking settlement as “a pure business decision” designed to save money and relieve the bank of additional internal stress.

“We are not at all pleased at handing over $14 million,” West said in a statement that denied the bank was guilty of discrimination. “As a matter of principle, we would have preferred to end this case with a definitive verdict, not a negotiated settlement.

“But by the same token, we wouldn’t be pleased to fight this to the end--even if the end were in our favor--at what we are convinced would be a far greater cost in money and internal stress,” West concluded.

Asked about the bank’s comment, Salem replied: “The fact that they paid $14 million speaks for itself.”

Harris, with total assets of approximately $11.7 billion, is the third largest bank in Chicago and the 47th largest in the country. At year end, the company said, it had 3,967 people on the payroll, of whom 2,372 were women, about 60%, and 1,355 were blacks or Latinos, nearly 34%.

Brace Pattou, a bank spokesman, said that 129 of the bank’s 390 vice presidents are now women.

In addition to paying the money, the bank agreed to modify its affirmative action plan to eliminate the current effects of past discrimination. It also promised to provide training to allow women and minority employees to overcome obstacles that may limit their promotions at the bank.

Nancy Kreiter, research director for Women Employed, a Chicago advocacy group, said that her organization pressed the discrimination complaint in 1974 after it was approached by Harris employees, most of them women, complaining that they were paid far less than men and rarely given an opportunity to advance.

The most frequent complaints came from women college graduates who were clustered in clerical or teller jobs, while men with similar credentials were put on the track for advancement, Kreiter said. The bank placed women and minorities “in dead-end clerical jobs, very, very, fundamental. White males who came in at the exact same time, same degrees, etc., were put into training programs and then placed in on-line positions that led to other things.”

In 1977, the Labor Department filed its charges. An initial ruling against the bank in 1981 was remanded in 1983 for further hearings on the bank’s offer of statistical evidence on the issue. In 1986, a Labor Department administrative law judge held that the bank had violated the executive order by engaging in unlawful sex and race discrimination in many aspects of its employment practices.

Kreiter estimated that more than 5,000 present or former employees of Harris may be eligible for a share of the $14 million.

Among them is Fran Huritz, 61, who spent 31 years with Harris and affiliated banks, most of them as a secretary, before leaving in 1975. “I’m going to have some champagne with some very close friends,” said Huritz, now a senior vice president at the Bank of Lincolnwood, a smaller institution in a Chicago suburb. “I think it’s a great victory and it’s like David slaying Goliath. It’s just a wonderful feeling after 14 years.”

Salem, who delayed his departure from the Labor Department to finish negotiations with the bank, said that it was one of the most significant cases in his four years as the department’s chief legal officer.

“It provides an excellent precedent for future government action and reaffirms our commitment to a strong, firm but fair enforcement effort,” Salem said.

William J. Eaton reported from Washington and Bob Secter from Chicago.