USDOL v. Harris Trust & Savings Bank, 78-OFC-2 (ALJ Jan. 10, 1989(consent decree)

USDOL/OALJ Reporter
USDOL v. Harris Trust & Savings Bank, 78-OFC-2 (ALJ Jan. 10, 1989)(consent decree)

UNITED STATES DEPARTMENT OF LABOR
OFFICE OF ADMINISTRATIVE LAW JUDGES

OFFICE OF FEDERAL CONTRACT
COMPLIANCE PROGRAMS, UNITED
STATES DEPARTMENT OF LABOR,
Plaintiff,

HARRIS TRUST AND SAVINGS BANK,
Defendant,

WOMEN EMPLOYED,
Limited Intervenor.

CONSENT DECREE

JURISDICTION AND PROCEDURAL HISTORY

1. The Administrative Complaint in this matter was filed on December 7, 1977, by the United States Department of the Treasury. The Complaint alleged that the defendant Harris Trust and Savings Bank of Chicago, Illinois ("Harris") had violated Executive Order 11246, 30 F.R. 12319, as amended by Executive Order 11375, 32 P.R. 14303 (the "Executive Order"), and the regulations promulgated thereunder at 41 CPR Chapter 60, by utilizing employment practices which unlawfully discriminated against its female and minority employees, and by failing to provide a complete remedy for women and minorities disadvantaged by such discriminatory practices. The complaint was amended in certain technical respects on June 23, 1978.

2. On March 7, 1978, Women Employed ("WE"), a Chicago-based organization of working women, moved to intervene in the instant proceeding pursuant to the provisions of 41 CFR.60-30.24. On April 13, 1978, the Administrative Law Judge granted WE "limited" intervenor status.

3. Pursuant to the provisions of Executive Order 12086, the full responsibility for the enforcement of Executive Order 11246 was consolidated within the Office of Federal Contract Compliance Programs of the Department of Labor ("OFCCP"). OFCCP participated as a party throughout the pendancy of this case, and was formally substituted as the sole party plaintiff by Order of the Secretary of Labor dated May 17, 1983.

4. Following an evidentiary hearing which was held between August and December 1979, Administrative Law Judge Rhea M. Burrow issued a Recommended Decision dated January 30, 1981, upholding in material part the allegations of violation set forth by the Department of the Treasury and OFCCP. All parties filed exceptions to the recommended decision. On May 17, 1983, Secretary of Labor Raymond J. Donovan remanded the case for rehearing on certain limited evidentiary matters.

5. Following a remand hearing which was held between November 1985 and January 1986 Chief Administrative Law Judge Nahum Litt issued a Recommended Decision dated December 22, 1986, finding that Harris had violated Executive Order 11246, as amended, with respect to its treatment of its minority and female employees. Judge Litt's decision was limited to the issue of violation and, by its own terms, was not subject to interlocutory review by the Secretary of Labor. Hence, there has been no final agency review of the question of Harris' liability.

6. In an effort to avoid the burdens and expense of further contested litigation, the parties to this action -- OFCCP, Harris and Women Employed -- have entered into this Consent Decree.

II.

GENERAL PROVISIONS

7. The record on the basis of which this Consent Decree is entered shall consist of the Administrative Complaint, as amended and the Consent Decree itself, including attachments hereto.

8. This Consent Decree shall not become final until it has been signed by the Administrative Law Judge. The effective date shall be deemed to be three (3) days after it becomes final.

9. The term of this Consent Decree shall be three (3) years.

10.This Consent Decree shall be binding upon Harris, OFCCP and Women Employed and their officers, agents and employees, and Harris' successors, and assigns, divisions and subsidiaries.

11. This Consent Decree shall constitute the final administrative order in this case, and shall have the same force and effect as an order made after a full hearing and final review by the Secretary of Labor.

12.All further procedural steps to contest the binding effect of this Consent Decree are waived by the parties.

13. Any right to challenge or contest the validity of the findings and order entered into in accordance with the agreements contained in this Consent Decree is waived by the parties.

14. Harris denies all allegations of discrimination raised in this action. This Decree does not constitute an adjudication on the merits of the allegations of discrimination raised in this action. Neither the agreement to enter into this Consent Decree nor any of its provisions constitutes an admission by Harris of any violation of the Executive Order. Nor shall they in any respect be construed or deemed admissible in this or any other proceeding as evidence of an admission by Harris either of its liability to OFCCP, Women Employed or any person, or of its maintenance of any unlawful employment policy or practice.

15. This Consent Decree constitutes full and final settlement and resolution of all issues and claims arising out of the Administrative Complaint, as amended, in office of Federal Contract Compliance Programs v. Harris Trust and Savings Bank, Case No. 78-OFCCP-2, alleging race and sex discrimination in employment, and this Decree shall be binding and final as to all claims which have been or could have been advanced by OFCCP and Women Employed and those members of the affected class who receive back pay and execute the Release under the terms of this Consent Decree and which are encompassed by the Administrative as amended, with respect to any and all of Harris' employment practices or policies occurring prior to the date of entry of the Decree, including claims relating to any future effects of such acts or practices. The doctrines of res judicata and collateral estoppel shall apply to OFCCP, Women Employed and those members of the affected class who receive back pay and execute the Release under the terms of this Consent Decree with respect to all issues of law and fact within the scope of the Administrative Complaint, as amended.

16. Compliance with this Decree shall constitute compliance with the Executive Order with respect-to those issues which are within the scope of this Decree. However, nothing herein is intended to relieve Harris from its obligation to comply with the requirements of the Executive Order or its implementing regulations, nor to limit OFCCP's right to review Harris' compliance with any such requirement which is not included within the scope of this Decree.

17. Harris agrees that there will be no retaliation of any kind against any beneficiary of this Consent Decree, or against any person who provides or has provided information or assistance to OFCCP or Women Employed, or who has filed a complaint or participates in any manner in this proceeding.

18. All parties agree that the provisions of this Consent Decree represent a fair and reasonable settlement of this case, and that all parties will support acceptance of this settlement by class members as being fair and reasonable.

19. Except as provided in Paragraphs 46 and 48 of this Consent Decree, both OFCCP and Women Employed agree not to bring or intervene as a party in any additional proceedings against Harris under any legal theory and in any forum, on behalf of themselves or any other persons, with respect to events occurring during the period prior to entry of this Consent Decree. However, communications between Women Employed and individuals who seek counselling from Women Employed with respect to matters covered by this Consent Decree are confidential and not subject to discovery by the parties in any proceedings in any forum.

III.

SPECIFIC PROVISIONS

A. Back Pay

20. In full settlement and satisfaction of all claims for back pay, compensation and employee benefits as herein provided, Harris has agreed, within ten (10) days of the execution of this Consent Decree, to deposit into an escrow fund ("fund") the sum of $14,000,000. The escrow fund shall bear interest at the highest reasonable rate available under the circumstances. The escrow agent shall hold and disburse the funds in accordance with the terms of this Consent Decree. The escrow agent shall be located outside of the Midwest.

21. Except as provided in Paragraph 27, below, interest accrued in the escrow fund during the first eighteen months of its existence shall become part of the fund, and shall inure to the benefit of female and minority affected class members. The affected class shall be defined for purposes of this Decree as all women and minorities who have been employed by Harris at any time between May 1, 1973, and December 31, 1988.

22. Except as provided in Paragraph 27 below, the principal and all interest accrued by the escrow fund during the first eighteen months of its existence shall be distributed to the affected class as back pay in accordance with the principles contained in Appendix A to Plaintiff's Brief on Remedy. Appendix A is attached hereto as Exhibit A.

23. The parties recognize that back pay in litigation of this nature generally has been treated as income by the Internal Revenue Service. Therefore, the gross amount awarded to each affected class member shall be reduced by all deductions required by law including appropriate income tax, social security withholding and employer contributions with respect thereto. Such withholdings and employer contributions shall be paid to the appropriate Government agencies from-the escrow fund subject to the right of each affected class member to seek a refund of such withholdings from said agencies.

24. OFCCP shall be responsible for identifying and locating affected class members, and shall calculate the amount of back pay due to each class member. Subject to the provisions of Paragraph 43, below, both Harris and Women Employed shall assist OFCCP, insofar as possible, with the process of locating affected class members.

25. The Department of Labor shall be responsible for preparing and distributing checks in the amount of each affected class member's net award (less all required deductions and employer contributions with respect thereto) and delivering each said check to the recipient of such award.

26. Each affected class member who will receive back pay described in Paragraph 22, above, shall execute and return within 45 days of receipt a release of claims in the form attached hereto as Exhibit B as a prerequisite for receiving back pay. Executed copies of the release forms shall be submitted to the escrow agent prior to the distribution of any back pay to any claimant. Once the period provided in Paragraph 28, below, during which affected class members may cash their back pay checks, has expired, the escrow agent shall furnish all executed releases to counsel for Harris.

27. The parties recognize that the escrow fund will continue to earn interest subsequent to the date on which a final distribution formula is completed and individual awards are determined. Such interest which accrues within the first eighteen months of the fund's existence may be used to defray the Government's costs of administering the distribution of funds and for other purposes consistent with the overall purpose of this settlement.

28. Any amounts in the escrow fund not distributed because a particular affected class member cannot be located, refuses to execute the required release or fails to cash his/her back pay check within six (6) months after it is tendered, as well as any interest accrued by the escrow fund after the first eighteen months of its existence, shall be utilized by Harris solely to fund training programs which are specifically set forth in Part III. B, of this Decree, and which will be for the purpose of improving employment opportunities for minorities and women at Harris. Harris shall not be obligated to pay the costs of implementing the additional training programs set forth in Part III. B, of this Decree and referenced above insofar as those costs exceed the funds identified in this Paragraph. However, the funds identified in this Paragraph shall not be applied to the costs of implementing Harris' AAP.

B. Special Training Programs

29. Within thirty (30) days following the six month period allowed for affected class members to cash their back pay checks, the escrow agent shall furnish the parties a statement of the final balance remaining in the escrow fund. The fund shall be closed as of the date of the statement, and the remaining balance shall be transferred to Harris solely for the purpose of establishing a new fund ("the training fund"). The training programs set forth herein are to be paid for from the monies contained in the training fund, and all monies in the training fund must be used for these training programs. Notwithstanding Paragraph 9 herein, the training programs provided for in this section B and the reporting provisions set forth in Paragraph 44, below, shall continue after the Decree otherwise expires until such monies are exhausted.

30. Harris shall establish, by the time funding pursuant to Paragraph 29 of this Decree becomes available, a career counselling and training program. This program shall afford current female and minority employees the opportunity to improve their job skills, to enhance their opportunities for advancement to higher-rated clerical, technical, professional and management positions and to help these employees to develop a career plan which will aid them in moving toward a career in such positions. As part of this program, Harris will fund the programs of a career education counselling center to apprise female and minority employees of advancement opportunities to higher-rated positions, the skill requirements for such positions and the methods by which such employees may seek higher-rated positions and avail themselves of the training opportunities offered by Harris to acquire the necessary skills for such positions. It is expressly understood and agreed that monies from this training fund will only be used to fund new programs to be offered to female and minorities to effectuate the purpose of improving their employment opportunities provided that Harris shall have the right to initiate such programs prior to the time funding becomes available, and shall be permitted to fund such programs retroactively from the training fund. Nothing in this Section of the Consent Decree restricts Harris' right to implement any training program which is not funded pursuant to this Decree, and which is in compliance with the Executive Order.

31. As part of the programs to be established pursuant to Paragraph 30, Harris shall also establish and conduct career development training courses specifically targeted to address the problems of women and minorities in its workforce. The courses will be designed to enhance such employees' job related skills and to help those employees plan a career for advancement to higher rated positions. The courses will address such areas as instruction on skills necessary to perform specific Bank functions and services, as well as supervisory, personal development, effective communication and customer contact skills. Harris shall offer these courses periodically through the term of the Decree to the extent funds therefor are available.

C. Affirmative Action Program

32. Harris agrees to maintain and to update annually an Affirmative Action Program (AAP) which is in compliance with Executive Order 11246, as amended, and the regulations at 41 CFR Part 60-2.

33. Subject to Harris' fulfilling the following commitments by February 15, 1989, its 1989 AAP shall be deemed to be in compliance with Executive Order 11246, as amended, and the regulations at 41 CFR Part 60-2.

A. Harris will submit to OFCCP a revised workforce analysis for its 1989 AAP which shall list, by Division within Department, the race and sex of incumbent employees.

B. Harris will make the following technical and/or typographical corrections to its 1989 AAP, and submit revisions to OFCCP:

1) The workforce statistics for the Trust Administrator job title will be corrected;

2) Remove the three obsolete job groups from the workforce analysis;

3) Correct the title of the professional trainee job group;

4) Correct the workforce statistics of the Investment Analyst job title in the Professional Securities job group;

5) Correct errors in the computation sheets contained in the utilization analysis; and

6) Recalculate the general population and unemployment rates for each job group on the basis of current statistics in the utilization analysis.

C. Harris will update the results of its 1989 AAP through the fourth quarter of 1988 and add a narrative summary of the results.

D. Harris will review the placement of job titles within job groups in its job group analysis, correct any inconsistent placement of job titles within job groups, and revise the job group analysis if required.

E. Harris will submit to OFCCP its rationale for the definition of the Professional Financial job group. P>

F. Harris will provide to OFCCP a narrative summary of its review of available sources of data regarding the availability of individuals with requisite skills including a description of the sources considered, a list of the source(s) selected, and the rationale for the selections.

G. Harris will provide to OFCCP a written explanation of the weight applied to each factor in its availability analysis.

H. Harris shall provide to OFCCP a detailed explanation of the term "enhancement training" as that term is used in the utilization analysis.

I. Harris will identify as a problem area to be addressed in 1989 the need to provide a year-end summary of trainees by race and sex, by job group or training program as appropriate, including a summary of all professional trainees. J. Harris will submit to OFCCP a narrative stating what conclusions the Bank draws from its statistical evaluations of hires, transfers, promotions and terminations.

34. Beginning with its 1990 AAP, Harris will include an organizational chart of its workforce which shows all levels of supervision.

35. Harris will conduct an analysis of external availability during the 1989 AAP year focusing on where the Bank recruits for various positions. The results of that study will be applied to estimate availability for Harris' 1991 AAP.

36. Harris will conduct a study of internal movements beginning second quarter 1989. The study shall include movements from job group to job group and movements within job groups. Beginning with its 1991 AAP, Harris will determine internal availability in accordance with the study.

37. Harris will define "applicant" for purposes of its AAP as any individual who submits an application or resume which is reviewed and considered by Harris. Harris will implement a tracking system to enhance the Bank's ability to gather accurate information regarding the race and sex of applicants. Beginning with its 1990 AAP, applicants will be listed by job group.

38. Harris shall submit to OFCCP within sixty (60) days of implementing its 1990 AAP and 1991 AAP, a report evidencing its compliance with the commitments contained in Paragraphs 34-37 above, as applicable.

IV.

REPORTING

A. Reports by OFCCP

39. Within thirty (30) days of the establishment of the escrow fund referred to in Paragraph 20, above, OFCCP shall furnish to Women Employed and Harris a report setting forth:

1. The date on which the fund was established;

2. The amount of the initial deposit;

3. The identity of the institution where the fund was established; and

4. The interest rate at which the fund was invested;

40. Within 120 days of the establishment of the escrow fund, and every 90 days thereafter, OFCCP shall furnish to Women Employed and Harris a report setting forth:

1. The amount of interest earned by the escrow fund during the preceding quarter;

2. The number of affected class members located to date; and

3. The amounts spent on the cost of administering the Decree to date.

OFCCP's obligation to report to Women Employed under this provision shall end with the quarterly report following the date on which the escrow fund is terminated pursuant to Paragraph 28 above.

41. In addition to the information set forth in the quarterly reports described in Paragraph 40 above, certain information shall be furnished by OFCCP to Women Employed and Harris on a one time only basis, and shall be contained in the first quarterly report after each item of information becomes available to OFCCP. This information shall include:

1. The distribution formula utilized by OFCCP to allocate the back pay fund;

2. The date on which the amount to be distributed to each affected class member is finally determined;

3. The total amount of back pay to be distributed;

4. The date on which releases are mailed to the affected class;

5. The total number of affected class members to whom releases are mailed; and

6. The total number of affected class members whom OFCCP was unable to locate;

7. The date on which Harris submits to OFCCP each revision to its AAP required by Paragraph 33 of this Decree.

42. Within thirty (30) days after termination of the escrow fund, OFCCP shall furnish to Women Employed and Harris a report setting forth:

1. The total amount of interest earned by the fund following the date on which the amount to be distributed to each class member was finally determined;

2. The total cost to the Government of administering the back pay distribution;

3. The number of affected class members who did not return releases to the escrow agent;

4. The number of affected class members who did not cash their back pay checks;

5. The total amount of distributed and undistributed funds; and

6. The date on which the fund was terminated.

43. Neither Women Employed nor its representatives or attorneys are to be provided access to or given copies of any information identifying individuals which is located in files, personnel files, documents or records and which concerns or reflects either the identity of individual class members or the individual amounts of back pay awarded to such class members. In addition, such personally identifiable data and information shall be confidential, and shall not be communicated to any third party.

B. Reporting by Harris

44. In addition to the reports required in Paragraph 38 above, Harris shall provide to OFCCP periodic reports concerning its administration of the training programs described in Paragraphs 29-31 of this Decree. Such a report shall be furnished within 60 days after the establishment by Harris of a training program pursuant to Paragraphs 30 and 31 of this Decree or within 60 days after termination of the escrow fund and the transfer of the balance of said fund to Harris pursuant to the provisions of Paragraph 29 above, whichever first occurs, and every 90 days thereafter until all the monies in the training fund are exhausted. The report shall contain the following information:

A. The balance remaining in the training fund.

B. A description of the programs funded by the training fund during the preceding period, listing separately programs initiated and programs terminated during the reporting period, and setting forth the manner in which each program initiated during the reporting period is targeted to address the problems of minorities and women in Harris' workforce.

C. A list of individuals, coded to protect their confidentiality, who began training in programs funded under this Decree during the reporting period, indicating race, sex and job title.

D. A list of individuals, coded to protect their confidentiality, who completed training during the reporting period, indicating race, sex and job title.

E. The current job title of each coded individual listed as having completed training in a program funded out of the training fund on a report for a prior reporting period.

IMPLEMENTATION AND ENFORCEMENT OF THE DECREE

45. The Chief Administrative Law Judge shall retain jurisdiction over this administrative enforcement proceeding for the sole purpose of enforcing implementation of the Consent Decree in accordance with its terms.

46. OFCCP shall be solely responsible for enforcement of compliance with the terms of the Consent Decree.

47. Harris agrees that OFCCP may review compliance with this Consent Decree. If at any time during the term of this Decree or, solely for the purposes of enforcing Paragraphs 30, 31 and 44 of this Decree, during the life of the training programs and their attendant reporting obligations, OFCCP believes that Harris has violated any portion of this Consent Decree, Harris will be promptly notified of that fact in writing. This notification will include a statement of the facts and circumstances relied upon by OFCCP in forming that belief. Harris will have fifteen (15) days in which to respond in writing to the allegation of violation, except in those circumstances where OFCCP alleges that such a delay would result in irreparable injury. OFCCP also may request Harris to provide information and documents relevant to the alleged violation within said 15 day time period.

48. Enforcement proceedings for violation of this Consent Decree may be initiated at any time after the fifteen (15) day period has elapsed (or sooner if irreparable injury is alleged), upon filing with the Administrative Law Judge a motion for an order of enforcement and/or sanctions.

49. If a motion for an order of enforcement indicates by signature of counsel that the motion is unopposed by Harris the motion may be presented to the Administrative Law Judge without bearing, and the proposed order may be implemented immediately. If said application or motion is opposed by Harris it shall file a written response within twenty (20) days of service of such motion.

50. Except in cases where irreparable injury is alleged and supported by specific facts set forth in an affidavit, the Administrative Law Judge shall schedule an oral hearing on the motion, and shall permit the introduction by the parties of such evidence as may be appropriate. The issues in such a hearing shall relate solely to the factual and legal claims made in the motion. Where irreparable injury is alleged by OFCCP, and supported by an appropriate affidavit, the Administrative Law Judge may issue an ex parte order temporarily restraining Harris from engaging in the complained of conduct pending the outcome of a hearing, provided that OFCCP certifies to the Administrative Law Judge that it has attempted to give notice to Harris of its motion alleging irreparable injury, and sets forth adequate reasons why it has been unable to do so.

51. Liability for violation of this Consent Decree may subject Harris to the sanctions set forth in Executive Order 11246 and its implementing regulations, and the entry of appropriate orders necessary to enforce this Decree and to remedy the effects of any noncompliance with this Decree.

52. The Consent Decree herein set forth is hereby approved, and this action is hereby settled, terminated and dismissed with prejudice.

IT IS SO ORDERED, ADJUDGED AND DECREED

January 10, 1987
Date

NAHUM LITT
Chief Administrative Law Judge

AGREED:

FOR THE UNITED STATES DEPARTMENT OF LABOR,
OFFICE OF FEDERAL CONTRACT COMPLIANCE PROGRAMS

FOR THE HARRIS TRUST AND SAVINGS BANK

FOR WOMEN EMPLOYED

APPENDIX A

The following is an example of how the Government's formula relief proposal would apply.¹ For purposes of this example we will address the 211 minority female clericals hired between 1973 and 1977 and still active as of March 31, 1977, and will focus in particular on a minority female assumed to have been hired on March 31, 1974. The back pay entitlement of this group may be divided into three parts: initial salary discrimination (or as Dr. Roberts labeled it, initial placement discrimination) within each job group; discriminatory assignment into job group (clerical versus professional); and salary advancement. The relevant statistical results for this group with respect to initial placement within job group are presented in Exhibit 85 R 31A, Chapter 4, page 15. Dr. Roberts' results show that, on average, the initial salary of the 211 minority women in the group was 2.21% less than that paid to comparable white men. For purposes of this example we will assume hiring was distributed evenly throughout the 1973-77 period (i.e., 42 minority females were hired in each year 1973-1976, 43 in 1977). Actual year of hire, which is available for those class members currently in the data base, will be used if this methodology is adopted.

The salary shortfall which resulted from discrimination in initial placement within job group is calculated by multiplying the percentage shortfall (2.21%) by the average initial salary

for white male clerical hires in each relevant year. This information (average white male initial salary) is not presently in the record. It will have to be calculated as part of the discovery process. For purposes of this example, we will assume the 1974 average white male clerical initial salary was $8,000. Thus, the initial salary shortfall for each minority female hired in 1974 would be 2.21% of $8000, or $176.80.² Each of the 42 minority women hired as a clerical in 1974 would be entitled to $176.80 in back pay plus interest for each year she was employed by Harris.³ To make this calculation, we will have to discover the year each person left the Bank. For purposes of this example, we will assume a 10% attrition rate, each year 1978-1987.⁴ Thus, our calculations for minority women hired in 1974 as clericals will assume back pay entitlement of $176.80 per year for the following number of women for each year 1974-1987:

     Year     Number     Back Pay

     1974     42     7425.60
     1975     42     7425.60
     1976     42     7425.60
     1977     42     7425.60
     1978     38     6718.40
     1979     34     6011.20
     1980     31     5480.80
     1981     28     4950.40
     1982     25     4420.00
     1983     22     3889.60
     1984     20     3536.00
     1985     18     3182.40
     1986     16     2828.80
     1987     14     2475.20⁵

Pursuant to OFCCP policy, interest on the back pay amount oust be calculated, compounded quarterly, using the IRS rate for the over or underpayment of taxes. 26 U.S.C. §6621.⁶ The interest rates are:

Beginning                 Ending

January 1, 1972           June 30, 1975             6.0%
July 1, 1975              January  31, 1976         9.0%
February 1, 1976          January  31, 1978         7.0%
February 1, 1978          January  31, 1980         6.0%
February 1, 1980          January  31,  1982       11.0%
February 1,  1982         December 31,  1982       20.0%
January 1, 1983           June 30,      1983       16.0%
July 1, 1983              December 31,  1984       11.0%
January 1, 1985           June 30,      1985       13.0%
July 1, 1985              December 31,  1985       11.0%
January 1, 1986           June 30,      1986       10.0%
July 1, 1986              Present                   9.0%

Thus, for a person hired on March 31, 1974, and still employed, the total amount due would be calculated as follows:

1974 Back pay                            132.60⁷ 
Interest on 1974 Back pay                  3.01

Total 1974                               135.61


1975 Interest on accrued amount           10.46
1975 Back pay                            176.80
Interest on 1975 Back pay                  7.41

Total 1974-75                            330.28

This series of calculations would then be repeated for each year to the date of judgment.

The calculations would be repeated for each of the 211 individuals. For those who left the Bank prior to the date of judgment, back pay would cease to accrue as of the date of last employment, but interest would continue to accrue on the money owed, to date of judgment. The total figure would represent that portion of the monetary harm suffered by minority women hired as clericals between 1973 and 1977 by virtue of the fact that their salaries were set initially at a lower level than those of comparable white men hired as clericals during the same period.

In addition to the salary differential among individuals placed into the same job groups, the court held that women and minorities were discriminated against by being assigned as clericals while comparably qualified white men were assigned as professionals. Thus., separate and apart from the monetary damage that the minority women in our example suffered because they were paid less than white male clericals, there must be compensation for the damage that they suffered because some proportion of then should have been assigned as professionals. The Government's proposal would calculate the back pay due for this portion of the formula based upon Dr. Killingsworth's probit analysis of the likelihood of placement as a clerical or professional employee (Exhibit 85 G 41). First, we propose that an assignment differential percentage be calculated for each protected group (minority women, minority men, white women). For example, Dr. Killingsworth studied 72 minority female clerical employees hired between January 1, 1973, and March 31, 1977. He found that, based upon their qualifications, eight (8) of the 72 would have been expected to be professionals (Exhibit 85 C 41). Dr. Welch found that two (2) minority females who were placed as professionals should have been clericals ( Exhibit 85 R 5). Thus, the net shortfall of minority female professional placement was 6 (8-2) and the assignment differential percentage is 8.33% (6/72).⁸ The Government's formula assumes that this shortfall in professional placements occurred at a constant rate throughout the entire relevant period and should be extrapolated to apply to all clerical hires. Thus, of the 211 minority women hired as clericals between 1973 and 1977 and studied by Dr. Roberts, 8.33% or 18 should have been placed initially as professionals.⁹ We assume that these 18 shortfalls were evenly distributed during the 1973-1977 period. Therefore, we assume that 4 occurred in

1973; 3 in 1974; 4 in 1975; 3 in 1976; and 4 in 1977.¹⁰ The number of shortfalls is then multiplied by the difference between the average initial salary for white male clericals and the average initial salary for white male professionals, in each year.¹¹ If we assume that the average white male initial clerical salary was $8,000 in 1974, and the average white male initial professional salary was $13,000 in 1974, the average differential was $5,000.¹² This is multiplied by the number of shortfalls for that year (in this example 3) to arrive at the pool -- $15,000. The.pool is then divided evenly among all the minority women hired in 1974 as clericals (42) to arrive at the annual assignment differential ($357.14). Each of the 42 minority women are due $357.14 for each full year they were employed by the Bank.¹³ Back pay plus interest forward to 1987 is then calculated as explained for initial salary above.

The final component of the formula is salary advancement. The Government's proposal calculates back pay owing for shortfalls in salary advancement based upon the results of Dr. Roberts' advancement regressions. Dr. Roberts' advancement regressions measure salary change from initial salary to salary as of March 31, 1977.¹⁴ The amount of this change is a loss over and above the annual salary differential attributable to Harris' discrimination in initial placement and initial salary.¹⁵ We make two assumptions in the formula. First, we assume that the salary advancement differential which accrued between date of hire and March 31, 1977, was proportional by year. Specifically, if an individual was hired March 31, 1973, and had an advancement shortfall Of $100 as of arch 31, 1977, we assumed that the shortfall was $25 as of March 31, 1974, $50 as of March 31, 1975 and $75 as of March 31, 1976. The second assumption was that the advancement disparity continued to accrue in the same proportion until the employee left the Bank or date of judgment. In other words, in the example discussed above, the salary shortfall would continue to increase by $25 per year.¹⁶

As an example of the calculations, we will again refer to the 211 minority females hired as clericals between 1973 and 1977 and still active as of March 31, 1977. Dr. Roberts' regression coefficient for this group was -.0326 (approximately a 3.26% shortfall). Exhibit 85 R 31A, Chapter 3, page 16. If we assume that the average white male clerical salary increased by $2500 from 1973 to 1977,¹⁷ the shortfall for that period would be $81.50 (3.26% of $2500) or $20.38 per year (pro rating the $81.50). We would then calculate back pay accrual by year as follows:

      1974      $20.38
      1975      $40.75
      1976      $61.13
      1977      $81.50

In each year after 1977, the principal amount would increase by $20.38. Interest would then be calculated as described in the section on initial salary.

The formula for all three components of monetary relief would be applied to a minority woman hired as a clerical on march 31, 1974, and who remained at the Bank until March 31, 1980, as follows:

          Initial        Assignment
          Salary         Differential   Advancement
   Year   Backpay        Backpay        Backpay        Total
   ____   _______        _______        _______

   1974   $132.60¹⁸  $267.86¹⁹    ²⁰    400.46
   1975   176.80      357.14   20.38   533.94
   1976   176.80      357.14   40.75   574.69
   1977   176.80      357.14   61.13   595.07
   1978   176.80      357.14   81.50   615.44
   1979   176.80      357.14   101.88     635.82
   1980   44.20²¹    89.29²²    30.56²³    164.05

Interest would then be calculated on the award for the entire back pay period (1973-1980) and continuing through date of judgment.

GENERAL RELEASE AND COVENANT NOT TO SUE

For and in consideration of the relief provided to me under the terms of the Consent Decree dated __________ , 1989, entered into between the United States Department of Labor, Office Federal Contract Compliance Programs (OFCCP), Harris Trust and Savings Bank of Chicago, Illinois (Harris) and Women Employed, I, _______________ , do hereby fully waive, release, remit and forever discharge Harris and any and all of its parents, divisions, subsidiaries, successors, officers, directors, stockholders, agents, advisers and employees ("Releasees"), from any and all claims, demands or causes of action arising under Executive Order 11246, as amended, which relate to discrimination in employment opportunities on the basis of race and/or sex, whether past or present, whether known or unknown, and whether or not in litigation, which I, or acting on my behalf, my heirs, assigns, executors, administrators or agents, may have or may ever have based on any action, omission or event occurring prior to this date, including any and all claims for future damages allegedly arising from the-alleged continuation of the effects of any past action, omission or event.

I further represent that, from the date of the Decree, I have not filed any complaints, charges or lawsuits against the Releasees with any Governmental agency or court relating to discrimination based upon race or sex in employment opportunities at Harris, that I have no such pending actions and that it is not my intention to file any such actions in the future based upon any act, omission or event which occurred prior to the date of this Release, including any action for future damages arising from the alleged continuation of the effects of any past action, omission or event.

I affirm that this General Release and Covenant Not to Sue is freely executed by me in return for payment of $ which will be made to me after receipt of this Release by the escrow agent named in the Consent Decree; that the only consideration of my signing this Release is the terms stated above; that no other promise or agreement of any kind has been made to or with me by any person or entity whatsoever to cause me to sign the Release; that I am competent to execute this Release; that I fully understand the meaning and intent of this document; and that I have signed this Release voluntarily and knowingly, without coercion, and with full knowledge of the nature and consequences thereof.

Dated:_____________ _________________________

City of_____________

State of_____________

Subscribed and sworn to before me

this ___ day of ___________1989.

_________________________

Notary Public

My Commission Expires:______

[ENDNOTES]

¹This sample calculation assumes that the back Pay period begins in May 1973 (see n. 5 at p. of our main brief). If the September 1974 date is used, the calculations would be altered, but the methodology would remain the same.

²For the year of hire, each minority female would receive a proportionate fraction of the annual shortfall, depending upon her date of hire. For affected class members hired prior to may ll, 1973, back pay does not begin to accrue until that date, and they would receive 2/3 of the annual shortfall for 1973.

³They are entitled to the initial placement salary shortfall each year because their salary gap did not close during their employment. In fact, the negative coefficients in Dr. Roberts' salary advancement studies discussed infra show that this gap continued to widen.

⁴Because these individuals are in the Roberts Cohort, we know they all worked until at least March 31, 1977.

⁵This figure assumes a date of judgment of December 31, 1987.

⁶Pursuant to the Tax Reform Act of 1986 (Pub. L. 99-514), 26 U.S.C. 6621 was amended to create separate rates for over payment ,and underpayment of taxes. OFCCP has adopted the IRS underpayment formula. See OFCCP Order No. 660c6, January 9. 1987. The rates quoted in the text reflect this change.

⁷Three-fourths of the $176.80 yearly total based upon date of hire.

⁸The same methodology described in the text demonstrates that assignment differential percentage for white women is 4.89% and for minority men is 18.18%.

⁹We have rounded the shortfall to the nearest whole number. Because when applying the formula we will have the year of hire of each of the 211 people# we will compute the shortfall each year. For purposes of this example however, we will proceed using the 18 total shortfalls.

¹⁰As explained at n.9. supra, we will have actual numbers in applying the formula and this assumption will not be necessary.

¹¹The back pay due for initial salary discrimination within the clerical group, as already calculated, compensates the 211 minority women for only a part of what they did not earn because they are not white men -- it brings them to the salary level they would have achieved had they been white men, hired as clericals. The assignment differential calculation now brings them to the full level they would have achieved but for discrimination.

¹²As with the first part of the formula, actual average initial salaries for each year of hire will have to be calculated.

¹³Each individual is entitled to the back pay differential for discriminatory assignment as a clerical each year because, as with the initial salary disparity within job groups, the salary gap did not close during their employment.

¹⁴Dr. Roberts 1985 advancement studies for individuals hired prior to January 1, 1973, encompassed his "Statute of imitations theory. These SOL regressions measured salary charge from January 1, 1973 to March 31, 1977. The SOL theory was rejected by this court (Rec. Dec., pp. 11-12). Therefore for pre-1973 hires, we will not use Dr. Roberts' 1985 advancement studies.

One alternative is to use the advancement regressions performed by Dr. Roberts in 1979 (Exh. 85 G 19B, Ch. 6). These analyses apply the same theory as his 1985 regressions on the 1973-77 cohort (measure salary change from date of hire to March 31, 1977). However, Dr. Roberts did not study the same people as he did in his 1985 work, nor did he study all active employees as of March 31, 1977.

Therefore, the Government proposes using Dr. Levin's direct regressions reported in Exh. 85 G 67. Dr. Levin testified that he performed these direct regressions for comparison with Dr. Roberts' results (Tr. 1679-81), and the use of these salary advancement results would have the advantage that they apply to the same subgroups as do Dr. Roberts' initial salary regressions. Although Dr. Levin testified that he did not rely upon his direct regressions as a basis for his opinions at trial-, he stated that the reason was because he preferred the urn model methodology (Tr. 1663), not because of any flaw in his regression methodology. Because this Court has relied upon the direct regressions in its ]Recommended Decision (Rec. Dec. at P. 67), the Government proposes the use of Dr. Levin's direct regression advancement results. The alternative to this proposal is to perform regressions on the pre-1973 hires using Dr. Roberts' 1985 non-SOL methodology. Although this alternative would require additional coding and expert work, it is acceptable to plaintiff.

¹⁵Similarly, if the advancement coefficient is Positive, the amount of gain to the protected group should be subtracted from the initial salary plus assignment shortfall. This is because a positive coefficient indicates that the initial salary gap narrows during the employee's tenure at the Bank.

¹⁶Both assumptions are reasonable in light of the burden of proof at Stage II. If Harris disputes the assumptions, they are entitled to put forth evidence to prove that they are incorrect, and Harris has the burden of persuasion on that issue. (However, as we note in our briefs the evidence which Harris may introduce is limited to applying Dr. Roberts' regressions to actual data for the post-1977 period. The Bank may not seek to reopen the question of liability by developing yet another regression formula based upon new variables.)

¹⁷The actual average salary changes will have to be calculated. For individuals hired in 1974, the change between 1974 and 1977 will be used, and so forth. For purposes of the examples here, we assume that there was an advancement shortfall of $20.38 per year for minority females hired throughout the 1973-77 period.

¹⁸Three-fourths of the $176-80 yearly total based on date of hire.

¹⁹Three-fourths of the yearly total based on date of hire.

²⁰No salary advancement component is included in the first year of employment because we have assumed that employees did not receive a pay raise until their one-year anniversary. Thus, the advancement shortfall began to accrue after their first anniversary.

²¹One fourth of the yearly total based upon termination date.

²²One fourth of the yearly total based upon termination date.

²³One fourth of the yearly total based upon termination date.

Office of Administrative Law Judges