Walgreen Co., the largest U.S. drugstore chain, has agreed to pay $20 million to settle a lawsuit filed by the Equal Employment Opportunity Commission over claims the company denied black managers promotions based on race.
Walgreen, which admitted no wrongdoing, was accused in March of assigning black managers and pharmacists to low-performing stores in minority communities and denying them promotion opportunities. The settlement covers an estimated 10,000 class members, the commission said in a statement.
"We're a drugstore industry leader when it comes to the employment and promotion of African American managers and pharmacists," said Walgreen chief executive Jeffrey A. Rein in a statement.
As part of the settlement, Walgreen agreed to prohibit store assignments based on race. The company will be monitored for a period of five years and must hire a consultant to review its employment processes and develop selection policies for certain positions, according to court documents.
The settlement is the largest for a race discrimination case since a June 2005 agreement with Ford Motor Co. for $8.5 million, EEOC spokesman David Grinberg said. "This settlement should remind corporate America and all employers that race discrimination is still a problem in the workplace," Grinberg said.
The settlement follows a court victory for Walgreen earlier this year in a case also related to discrimination allegations.
The company won a jury verdict in February in a suit brought by four Texas men who said a clerk used a racial slur when they tried to have film developed at a store in Reno, Nev.
The EEOC, which is responsible for enforcing the nation's anti-discrimination laws in the workplace, sued Walgreen after failing to reach an earlier settlement.
The agency's lawsuit followed a June 2005 complaint filed by a group of current and former Walgreen managers over similar allegations. Both cases were consolidated in April.
"We commend Walgreens for working cooperatively with us to reach an amicable settlement of this case without protracted litigation," EEOC chair Naomi C. Earp said in the statement.
As part of the settlement, WalGreen, which has its headquarters in Deerfield, Ill., agrees to prohibit store assignments based on race.
Walgreen shares rose 94 cents to $45.10 in New York Stock Exchange composite trading. They have fallen 1.7 percent this year, leaving the company with a market value of $44.8 billion.