·  Legal News, Analysis, & Commentary

Verdicts & Settlements

Cato Settles EEOC Investigation for $3.5 Million Payable to Employees

— December 21, 2018

Cato Settled EEOC Investigation for $3.5 Million Payable to Employees

Charlotte, North Carolina-based women’s fashion retailer Cato Corporation has agreed to a $3.5 million settlement with the U.S. Equal Employment Opportunity Commission (EEOC) after a “nationwide, systemic investigation” uncovered discrimination against its pregnant employees and those with disabilities.  According to the EECO investigation findings, Cato Corporation denied reasonable accommodations and made certain employees take unpaid leaves of absence and/or terminated them because of their disabilities.

“Giving employees a job modification that allows them to continue working can be a critical reasonable accommodation for pregnant women or people with disabilities when they really need that paycheck,” EEOC Chicago District Director Julianne Bowman said.

The $3.5 million will be disbursed to all employees who were terminated because of their pregnancies or disabilities, the EEOC said.  Cato has also agreed to revise its employment policies, and the firm will conduct companywide training for more than 10,000 of its employees, reporting results to the EEOC continually over the next three years.  The EEOC commended Cato for entering the voluntary settlement and “making meaningful policy changes.”

Cato Settled EEOC Investigation for $3.5 Million Payable to Employees
Photo by Ashim D’Silva on Unsplash

The company submitted the following statement following the EEOC investigation: “Respect for all associates and a commitment to provide accommodations to associates who need them are key values at Cato.  We have worked with the EEOC to update our policies to ensure associates are properly granted leave and accommodations.  We are also in the process of providing training for our Human Resources team, and for all associates to ensure they understand their rights and Cato’s process for requesting accommodations.”

In 2017, Cato was also criticized by an activist shareholder and an Ohio-based company, Needmor Fund, for having a male-only board.  Needmore Fund described the board as consisting of “all white men,” saying that it did not “reflect a commitment to racial and gender diversity.”  Thirty Percent Coalition, an organization pushing for women to hold 30 percent of public company board seats, also encouraged Cato to broaden the board’s diversity.

CEO John Cato responded to the allegations, stating that the company valued diversity and inclusion and had a strong board in place.  However, the retailer would make every effort in the future to broaden the background should an opening became available.  Then, in April 2018, Queens University of Charlotte President Pamela Davies joined Cato’s board.

Also in 2017, shareholder Walden Asset Management of Boston claimed Cato stunted a shareholder vote on a proposal requesting the retailer specifically prohibit in its written employment policies discrimination based on sexual orientation and gender identity.  Walden was worried about Cato being among “a shrinking minority” of companies whose nondiscrimination policies don’t include these issues.

Again, the company responded by stating that its Equal Opportunity Employer policy prohibits discrimination based on “race, color, religion, ancestry or national origin, disability, age, sex, or any other legally-protected classification” in its hiring terms and the terms and conditions of employment.

Melissa Barrios, director of EEOC’s Fresno, California, Local Office, said, “The EEOC continues to see cases in which employers have a rigid leave policy that discriminates against individuals with disabilities or pregnant employees.”  All such policies are subject to EEOC investigation.


I’ll Take Leave of Absence Policies for $5.25 Million, Alex

Charlotte retailer agrees to multimillion-dollar settlement over discrimination claims

Join the conversation!