Recent Settlements for Enormous Monetary Sums Highlight the Risks for Employers in Employment Cases

Two recent settlements, one by the Coca-Cola Company and another by Microsoft Corp., both for enormous sums of money, highlight the ever-present risks faced by defendant employers in employment cases. In November 2000, Coca-Cola agreed to pay $192.5 million and to revamp its human resource policies in order to settle a class action race discrimination lawsuit that had been filed in April 1999. The settlement encompasses a class consisting of salaried African American employees who worked for the company in the United States any time from April 22, 1995 to June 14, 2000. The settlement is expected to cover approximately 2,000 employees nationwide. The plaintiffs in the action had accused the company of discrimination in pay, performance and evaluations. Under the settlement, Coca-Cola agreed to allow close scrutiny of its human resource procedures for four years.

In December 2000, a federal court in the State of Washington preliminarily approved a settlement of two class action lawsuits filed against Microsoft by temporary workers who alleged that the company had employed them as "permatemps" through temporary staffing companies and as independent contractors in order to avoid paying certain benefits for the workers. Under the terms of the settlement, Microsoft agreed to pay nearly $97 million. In the settlement agreement, the parties acknowledge that Microsoft had made important changes in recent years in its staffing and worker classification practices. Curiously, however, the agreement contains no restrictions on the company's future policies, practices or hiring. A hearing for final approval of the settlement was scheduled to occur as this issue was going to press.