Texaco Case

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Texaco Racial Discrimination Suit
Legal Issue
Texaco, one of the larges oil companies, recently faced to a discrimination lawsuit. In 1994, six African-American employees on behalf of 1500 other employees of Texaco filed suit asserting that Texaco engaged in illegal racial discrimination. They claimed they had not received equal employment opportunities. African – American employees also claimed that Texaco employers did not respect them as other white employees. Employers called minorities "orangutans," "porch monkeys" and "uppity". Nevertheless, until November 3rd, 1996 when Texaco executives’ racist audiotapes were leaked to the public, the case was brought up. In the tape content, these executives made disparate treatment to minorities, and they were strived to remove the documents relating to the discrimination suit. With support of the NAACP Legal Defense, the Clinton Justice Department, and the Clinton EEOC, black employees joined the suit against Texaco. In accordance Title VII of the Civil Rights Act of 1964, racial discrimination is illegal, so Texaco faced many years of government harassment and negative publicity. On March 21st, 1997 the settlement what Texaco suggested was approved. The settlement contained “the $115 million in cash payment to the aggrieved minority employees; over $20 million in salary increases to the aggrieved minority employees; approximately $35 million for "diversity / sensitivity training", and the creation of an Equality and Fairness Task Force.” Ethical Dilemma

The racial discrimination at Texaco is not only illegal under the Title VII of the 1964 Civil Rights Act but also unethical. It breaches the right of human to be treated equal regardless of race. Because of this issue, Texaco Inc faces with the threats of racial boycotts by the usual racial special interests such as the NAACP and its Legal Defense Fund. It also faces with extensive amounts of negative publicity from the plaintiffs and other people, which may affect Texaco business. Therefore, the dilemma of Texaco is how to deal with racial discrimination, which happened in its workplace, and prevents it from happening in the future.     Stakeholders

Shareholders, employees, customers, suppliers and community are a primary group who is affected by this dispute. When executives of Texaco fail to monitor the discrimination issue, it reduces the wealth of Texaco shareholders. First of all, this case is very costly and time-consuming because the company has to pay huge settlement amounts. Also, Texaco’s share prices dramatically fall dramatically on the date that the tapes were released. It affects the short-term interest of shareholders. Furthermore, racial discrimination tarnishes the images of Texaco and affects company long-term profit what shareholders significantly concern. In addition, the racism at Texaco not only adversely impacts the employees’ work but also their moral. When minorities have unequal opportunities in working, hardship may increase. Minorities have the lower bargaining power, and they may suffer more than others when involving in any dispute. These things might lead to anxiety and depression, which can detract employees’ ability from working. In addition, employees might suffer a lack of motivation when they have to wait longer years than Whites to gain their position. The reasons are not due to the experience, ability or expertise of minority employees, but the individual’s race. Therefore, the racial discrimination at Texaco may impact seriously on the career of employees.

Furthermore, the dispute of Texaco has a negative effect on customer expectations. Consumers tend to draw more seriously conclusions about company’s issue. Consequently, it leads to diminish their trust toward company. Furthermore, the racism at Texaco directly impacts minority consumers. As some researches, minorities are high in self-esteem, especially African Americans, so after tape stereos leaked, Black consumers have...
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