Businessweek Archives

Quiet Crackdown


Top of the News

QUIET CRACKDOWN

Back in 1977, the federal government accused Honeywell Inc. of discriminating against women. The issue: The Minneapolis company printed internal job listings for heavy industrial jobs on blue paper--a code meant to discourage female applicants. The case languished during the 12 years that Republicans Ronald Reagan and George Bush lived in the White House. But a new squad of civil-rights cops in the Clinton Administration revived the matter and quietly forced Honeywell into a $6.5 million settlement on Sept. 8.

There's plenty more to come. With little fanfare, the Administration's antidiscrimination troops are gearing up a tough national enforcement drive. The crackdown's targets range from polluters who dump their muck in minority neighborhoods to companies that discriminate in hiring to banks whose loan departments redline poor areas. Business, perhaps preoccupied with issues such as health-care reform, has hardly noticed. "This wasn't on our radar screen," says Michael Rousch, a lobbyist for the National Federation of Independent Business.

MOMENTUM. Yet signs of the tougher new policy are everywhere. The U.S. Commission on Civil Rights' planned Sept. 21 hearings on Wall Street's dismal minority-employment record are only the latest example of a drive that has been gaining momentum for weeks (table). The Justice Dept. has stepped up its policing of bias in lending by banks, and it has joined the Equal Employment Opportunity Commission in more closely monitoring business discrimination against disabled Americans. The Labor Dept. is scrutinizing the civil-rights records of federal contractors. And the Environmental Protection Agency is cooking up a new program to ensure that companies don't pollute more in poor minority neighborhoods than in other areas. "There's no question they're being more aggressive," says Stephen A. Bokat, general counsel for the U.S. Chamber of Commerce.

President Clinton's antidiscrimination drive got off to a slow start because of his ill-fated nomination of Lani Guinier for Justice's top civil-rights post. But Deval L. Patrick, the new Assistant Attorney General for Civil Rights, has been on the job for nearly six months. And Gilbert F. Casellas should be confirmed any day now as the new EEOC chairman. With them and other former civil-rights activists leading the charge as Clinton appointees, critics fret that new initiatives will impose unwieldy restraints on business. Edward Yingling, chief lobbyist for the American Bankers Assn., complains that in at least one case "the government seems to be making the standards as they go along. That is scary to us."

Indeed, Justice and Treasury Dept. bank regulators are aggressively pursuing banks for unfair lending practices. The government has entered into four settlements so far. The one that irks Yingling is a controversial Aug. 22 deal suburban with Maryland's Chevy Chase Federal Savings Bank. Chevy Chase denies Justice's allegations that it adopted a policy to avoid black neighborhoods. But it agreed to provide an additional $11 million in subsidized loans and new branches in those areas.

The banking industry fears that the government is exacting overly harsh remedies in cases such as Chevy Chase. "This is credit allocation, and it's undue interference," fumes Washington banking consultant Edward E. Furash. But Justice's Patrick counters: "We're not seeking any particular remedy other than the elimination of unfair lending."

Right or wrong, many companies are reluctant to fight back. The cost of litigation is steep, and the bad publicity may be costly for image-conscious execs. That makes settling and suffering in silence the preferred option. "It was a prudent decision to put it behind us," says Andrew L. Sandler, an attorney for Chevy Chase.

Probably the most perplexing new civil-rights issue confronting business is the Administration's "environmental justice" initiative. In February, the President ordered the Environmental Protection Agency to come up with a plan to protect poor minority communities from getting hit with an unfair share of pollution. Studies have shown that a disproportionate number of hazardous-waste dumps, pollution-spewing factories, and even utility plants are located in such neighborhoods. Now, that could be a problem for utilities in the densely populated East Coast and Midwest, where utilities have often "slammed" power plants into poor areas, says Scott E. Berger, senior environmental scientist for Public Service Co. of New Mexico.

The environmental drive is already gaining speed. On Sept. 7, the EPA, the U.S. Centers for Disease Control, and related agencies launched the Mississippi Delta project to study the effects of pollution on residents in that highly industrialized area. The EPA aims to start a potentially costly emission-reduction program, and other agencies will provide medical assistance to residents.

MISPLACED? The EPA also has targeted a Chicago public-housing project built on a landfill and surrounded by 11 polluting industrial plants. "No community, just because it's poor or minority, should become the dumping ground of waste," says Clarice E. Gaylord, director of the EPA's Office of Environmental Justice.

Companies grumble that the government is changing the rules on businesses long after they got lawful permits to build. Moreover, "the charge of racism may be misplaced in some of these situations," says Charles J. McDermott, government affairs director for WMX Technologies Inc.

Another controversy is brewing at Justice over an affirmative-action case involving a white teacher, Sharon Taxman. She had sued the Piscataway (N.J.) Board of Education in 1992 for dismissing her rather than a black colleague of equal seniority and ability. She won in U.S. District Court. But on appeal the Clintonites reversed the Bush Justice Dept.'s brief in support of Taxman. Now, Justice argues that employers can use affirmative-action goals to justify retaining minorities over comparably qualified whites.

Some legal scholars allege that if Justice's view prevails, the case could lay the groundwork for expanded racial preferences--and even quotas. That could force companies to expand diversity programs--which could inflame white workers. "The Administration is giving top management a machine gun to go after expensive, middle-aged white males," claims Frederick R. Lynch, a professor of government at California's Claremont McKenna College.

Even the White House worries that its troops may be going too far. The Housing & Urban Development Dept. has already backpedaled from a controversial policy. HUD had begun an inquiry into neighborhood protests against a proposed low-income housing development in Berkeley, Calif. The investigation was prompted by housing activists' charges that the opposition was based on bias against substance abusers, who could be considered disabled. HUD dropped the matter in August, and the agency now says it will no longer investigate activities protected by the First Amendment.

Like business, Clinton has been preoccupied and hasn't paid much attention to his zealous antibias cops. But if he continues to give them free rein, companies may find that settling without a fight is too high a price to pay.

CLINTON'S

ANTIBIAS BINGE

SEPT. 21

The U.S. Civil Rights Commission plans hearings on Wall Street's minority-employment record. The inquiry will lead to recommendations for action by the White House and Congress.

SEPT. 8

The Labor Dept. reached a $6.5 million accord with Honeywell, settling a 19-year dispute over alleged discrimination against women employees. Labor is actively policing other government contractors to root out discriminatory practices.

SEPT. 6

The Justice Dept. reversed its position in a case involving a laid-off white New Jersey schoolteacher. The Bush Administration backed the teacher's claim of reverse discrimination when she was fired instead of a black teacher, but the Clintonites say that employers sometimes can choose a minority over an equally qualified nonminority.

SEPT. 1

Justice announced an agreement with Avis that requires it to provide hand-operated rental cars to disabled people. Justice is investigating 10 other rental-car companies on the same matter.

AUG. 22

Justice reached a settlement with Chevy Chase Federal Savings Bank requiring the D.C.-area bank to open more branches and to make more investments and subsidized loans in black neighborhoods. It has also stepped up investigations

of lending discrimination generally.Catherine Yang, with Amy Barrett in Washington, Richard A. Melcher in Chicago, and bureau reports


Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus