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Glendale Federal Facing U.S. Probe on Pay Practices

February 25, 1988|ESTHER SCHRADER | Times Staff Writer

The U.S. Department of Labor is investigating allegations that Glendale Federal Savings & Loan, in a report to the government, deliberately understated the number of women and minority employees who, compared to white males, were underpaid.

The investigation, begun this month by the department's Los Angeles Office of Federal Contract Compliance Programs, was prompted by a complaint from the company's former affirmative-action officer.

Interviews and government memoranda show the inquiry, expected to take at least two months, is the culmination of a two-year dispute between the company and the government over hiring and promotion practices at the thrift association's 217 branches.

Glendale Federal officials deny the charges and say they have never knowingly provided false information to any regulatory agency. They confirmed that the savings and loan is under investigation but would not discuss the subject in detail.

According to federal officials, this will be an unusually detailed investigation. Five investigators from the Van Nuys office of the compliance agency are interviewing employees at Glendale Federal and examining personnel data.

The Civil Rights Act of 1964 requires federal contractors to prepare and follow plans for the hiring and promotion of women and members of minority groups. Savings and loans, because they dispense savings bonds and are involved in the sale of U.S. Treasury certificates, are considered federal contractors.

Allegations Made in Letter

Investigators review corporate personnel and hiring profiles every three years but, because of staffing limitations, usually rely on data that corporations supply. In a letter that his lawyer sent to federal investigators, Jack Clayter, the former Glendale Federal affirmative-action officer, claimed that officials at the thrift "passed its audit by submitting false and misleading statistics."

Clayter's job was to mediate among corporate officials, federal affirmative-action investigators and minority employees. Glendale Federal officials asked him in July, 1986, to prepare a report to determine if minority and women workers were underpaid compared with white men in similar positions.

Clayter based his analysis on four criteria: performance, length of time in the current jobs, education and experience. His analysis identified 127 employees as deserving raises. It estimated the additional salary cost at $289,971 during the first year.

According to memoranda obtained by The Times, Glendale Federal officials were unhappy with those results and reassigned the task to another employee.

That employee revised Clayter's report after adding two criteria. The new report cut the number of underpaid women and minority employees to 83 and estimated the first-year salary cost at $50,472.

Clayter said he was asked to submit the new report and refused. It was eventually given to the government by another Glendale Federal official.

The central issue in the investigation appears to be whether the added criteria are considered fair measures of an employee's worth. The two new criteria are: "an analysis of peer relationships in the same job," a phrase that company officials declined to explain, and the employees' length of service with Glendale Federal.

Clayter contends that the second new criterion favors white men, who have generally been in the middle and upper levels of the work force longer than women and members of minority groups.

Review Criteria Vary

Federal officials said they have not yet determined whether those criteria were discriminatory. A federal manual used by companies gives detailed suggestions on how to prepare reports requested by the government, but the specific criteria used to justify employee salaries for review vary from company to company, they said.

Clayter was fired as Glendale Federal's affirmative-action officer in the fall of 1987. He took documentation with him that he later turned over to civil rights lawyers and to state and federal investigators. Clayter has since filed a discrimination complaint against his former employer. He said he intends to file a lawsuit against the company, the nation's fifth-largest savings-and-loan institution.

Other employees filed two discrimination complaints in October with the state Department of Fair Employment and Housing and the federal Equal Employment Opportunity Commission. Officials say those agencies are investigating.

The dispute between the Labor Department and the company dates to 1986, when federal investigators looked into charges by employees of discrimination at the company. They found what they considered a disproportionate number of white men in managerial positions. What followed was a series of testy exchanges between investigators and Glendale Federal, with federal investigators repeatedly finding information supplied by the corporation inadequate.

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