For what was billed as the site of a major guns-a-blazin' showdown, the setting was bizarre. The lights were dimmed, the doors locked. For weeks, lawyers had been expected to converge in U.S. District Judge Ortrie Smith's courtroom, ready to duke it out over a controversial settlement that Plano-based Rent-A-Center had inked with a group of plaintiffs' lawyers.
But something funny happened on the way to Judge Smith's Kansas City, Missouri, courtroom: Rent-A-Center blinked.
The nation's No. 1 rent-to-own business, faced with potentially staggering claims in an East St. Louis, Illinois, sex-discrimination lawsuit, had tried to engineer an end-run by quickly settling a competing class-action suit in Kansas City ("Where the Boys Are," March 7). But the proposed settlement, a paltry $12.25 million for more than 4,800 women, drew intense fire from lawyers in the East St. Louis case, including the U.S. Equal Employment Opportunity Commission, which condemned the Kansas City settlement as too meager. Even the National Organization for Women weighed in, filing a brief urging Judge Smith to repudiate the agreement.
Those objections were scheduled to be heard March 6, but there was no hearing.
On February 28, the day the Riverfront Times, the Dallas Observer's sister paper, ran a story detailing allegations against the company, Rent-A-Center's two top executives huddled in Plano with EEOC lawyer Donna Harper and St. Louis plaintiffs' lawyers Mary Anne Sedey, Jon T. Ray and Jerry Schlichter.
Had Rent-A-Center seen the story, the execs were asked?
Then the blustering began.
Chief Executive Officer Mark Speese and President Mitch Fadel defended the company's dearth of female workers, saying that it was an unintended consequence of the company's recent 75-pound lifting requirement. Rent-A-Center changed the requirement when it eliminated separate positions for sales, delivery drivers and account managers, and, the execs argued, if one person would be called on to fill all those roles, that employee should be able to lift more weight.
Not so fast, came the response from the plaintiffs as they pulled out a copy of the Riverfront Times and read an excerpt from St. Louis store manager Tammy Shell.
Shell, an employee the company had offered up as a contact, was quoted in the story saying that she had not hired a woman in three years and that women job-seekers don't fill out applications after learning about the lifting requirement. She admitted she'd never actually tested any applicants to see whether they could lift 75 pounds. And Shell added that workers probably don't even need to be able to pick up that weight because lifting is done with hand trucks and dollies.
By the end of the meeting, the Rent-A-Center execs agreed to scrap the earlier settlement and pay $47 million--almost four times the amount they'd already agreed to pay in Kansas City.
Under the new settlement--announced by the EEOC on March 7--the women plaintiffs (employees, ex-employees and unsuccessful applicants) were also able to extract from the company a number of precedent-setting conditions: Rent-A-Center agreed to fill 10 percent of job vacancies during the first 15 months with women who had been fired and also to create a human resources department. Quarterly reports must be filed for the next four years describing the company's steps to end discrimination, detail complaints and provide statistical information. Discrimination complaints will be decided by a court-appointed special master.
In a statement announcing the proposed settlement, Rent-A-Center President Fadel said, "While our track record of providing a nondiscriminatory workplace is strong, we believe the proposed settlement is in the best interest of Rent-A-Center given the costs and uncertainty of litigation."
Although the company officially denies wrongdoing, Speese and Fadel will appear in a company video stating that the company won't tolerate discriminatory behavior. The company will also try to find women to serve on its all-male board of directors.
The conditions are crucial if a woman's lot in the company is to improve.
In 1998, before it was acquired by Plano-based Renter's Choice, nearly 22 percent of Rent-A-Center's workforce was female. By comparison, less than 2 percent of the Renter's Choice workforce was female. Two years after the acquisition, the number of women working at the combined company, which retained the Rent-A-Center name, had been cut in half.
According to sworn statements filed in the East St. Louis case, the company directed its managers to send women, including pregnant employees, out alone to deliver large appliances. Those who refused were fired. Yet men were allowed to go in teams to make big deliveries.
Female employees were assigned to clean the bathrooms because it was allegedly "woman's work." Women were rebuffed when they complained that co-workers were watching porn videos in the stores. Some female store managers were forced to attend company meetings at strip clubs. Men who grabbed, groped or fondled female employees weren't fired. Store managers also admitted that women's applications were filed in the trash can.
Employees who wanted to lodge sex-discrimination complaints were required to first approach their managers, then pursue appeals up an overwhelmingly male chain of command. In 1999, all seven vice presidents were men, 261 men and seven women were market managers, and 30 men and two women were service managers.
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In all, lawyers in the East St. Louis case compiled about 300 statements from men and women in 47 states describing workplace discrimination at Rent-A-Center.
The new settlement agreement, which must still be finalized by U.S. District Judge David R. Herndon in East St. Louis, covers 5,300 women. If approved, it will end the East St. Louis lawsuit as well as a separate EEOC action brought against the company in Memphis, Tennessee. It is also expected to supersede the Kansas City settlement.
Claudine Wilfong, the lead plaintiff in the East St. Louis case, says that Rent-A-Center "did the right thing by settling with us" because the Kansas City agreement was nothing more than "a slap on the hand."
And she's thrilled about the conditions being imposed on the company: "I'm glad that women have the option of going back if they want, and it's good there is going to be an HR [human resources] department. I mean, that is just a normal thing that should have to be done."