Coca-Cola takes the high road.

Another major corporation is forced to pay dearly for discrimination practices

Just as Denny's and Texaco have realized that they must do right by African Americans or their businesses will surfer, so has Coca-Cola. The soft drink company has topped the payoffs made by all other companies involved in similar racial discrimination suits, with a whopping settlement of $192.5 million in November.

In April 1999, Coke employees filed suit against the company, accusing it of having a corporate hierarchy in which blacks floundered at the bottom of the pay scale.

From job-placement executives to diversity specialists, the consensus is that this pact--heralded as the largest financial settlement of its kind--signals a major breakthrough in "big business" coming to terms with diversity in the workplace. "It's a great thing for corporate America," says John Challenger, chief executive of Challenger, Gray & Christmas, a Chicago job-placement firm. "Coca-Cola has always been a leader in many areas. They now have become an example for the rest of the world to [follow] to a different kind of environment, one where there's much more openness to promotions [and] the glass ceiling comes down."

Coke's race wrangling--including a $1.5 billion discrimination suit it still faces--is merely the latest episode where blacks, fed up with the odds stacked against them in the corporate world, turned to the courts for redress. Denny's Restaurants, Shoney's Inc., AT&T Corp., and Boeing Co.--all have come up against, and buckled under, pressure to dig deep into their coffers and do right by blacks.

What stands out about Coke's recent settlement over charges of discrimination in pay, promotion, and job-performance evaluations is that it surpasses the astonishing $176.1 million that off giant Texaco Inc. agreed to shell out in 1997 over similar accusations.

Dr. B. Roosevelt Thomas Jr., president of the Atlanta-based American Institute for Managing Diversity, is encouraged by Coke's willingness to open its arms to diversity. Apart from the settlement, Coke has promised to Rive a $1.5 million grant to establish the Diversity Leadership Academy of Atlanta.

Such commitment "definitely begins to put on the agenda the notion that there is something called diversity management," Thomas said. That's more far-reaching, he explains, than what corporate America has done up to this point, in that it "looks at enhancing [corporate America's] ability to deal with diversity not only in the workplace, but overall. That's separate from affirmative action and equal opportunity [initiatives]."

The financial terms of the settlement are as follows: a $23.7 million Back Pay Fund, a $58.7 million Compensatory Damages Fund, and a $10 million Promotional Achievement Award Fund, all distributed to members of the class action. An estimated $20 million will go to attorneys' fees, and $36 million will go toward the implementation of internal program reforms.

Similar to the Texaco settlement, Coke has agreed to include the creation of an outside, seven-member task force to ensure compliance with the settlement agreement and to provide independent oversight of Coca-Cola's diversity efforts.

Top Racial Discrimination-in-Employment Class Action Lawsuits

Name of Case                Financial Settlement

Texaco Inc.                 $176.1 million
(Roberts v. Texaco)
Filed: 3/94
Resolved: 3/21/97

Shoney's Inc.               $132 million
(Haynes v. Shoney's Inc.)
Filed: 4/5/89
Resolved: 1/25/93

Winn-Dixie Stores Inc.      Approximately
Filed: 10/16/96             $28.1 million
Resolved: 7/16/99

CSX Transportation          $25 million
(Williams v. CSX
Transportation Inc.)
Filed: 3/94
Resolved: 1/29/99