Coca-Cola has abandoned, at least temporarily, a controversial company diversity plan that was accused of violating the Civil Rights Act.
What is the background?
Bradley Gayton, who was the general counsel for Coca-Cola, announced a new diversity plan in January that promised to punish outside law firms seeking to work with Coca-Cola.
Under Gayton's plan, outside law firms would be required to use "diverse attorneys" for at least 30% of their billable hours with Coca-Cola, half of whom were required to be black. Firms that did not meet the diversity quota would be financially penalized.
The plan stated:
Failure to meet the commitment over two quarterly reviews will result in a non-refundable 30% reduction in the fees payable for such New Matter going forward until the commitment is met and, continued failure may result in your firm no longer being considered for KO work.
Last month, Boyden Gray, writing on behalf of the Project on Fair Representation, said the "policy of discrimination is illegal," and demanded it be immediately revoked. Gray said the quota violated federal law that prohibits racially discriminatory hiring practices.
In fact, Gray said Coca-Cola was aware the quotas are "indefensible" because of Gayton's sudden departure as Coca-Cola's general counsel last month. Gayton had joined Coca-Cola less than one year ago on Sept. 1. Gayton transitioned to a consultant role, which is worth $12 million, according to Bloomberg Law.
What is the new development?
Newly hired Coca-Cola general counsel Monica Howard Douglas is reviewing Gayton's plan, and has put the quota policy on "pause" — at least for now.
When asked about Gayton's diversity initiative, Douglas indicated that Coca-Cola was "taking a pause for now" but would likely salvage some parts of the plan, the source said. Douglas didn't provide any additional details about what would remain and what would be scrapped, according to the source.
"She said she … plans to use some of it, but everything is being evaluated. They plan to adopt some of his strategies and passions. Everything was, 'More to come,'" the source added.
While the details of Gayton's departure were not clear — nor did Douglas address it — a spokesperson for Coca-Cola said the pause is related to Douglas taking over as general counsel.
"When there is a leadership change, it takes time for the new leader to review the current status of the team, organization and initiatives," spokesman Scott Leith told Fox Business. "Monica is fully committed to the notions of equity and diversity in the legal profession, and we fully expect she will take the time necessary to thoughtfully review any plans going forward."
Coca-Cola also came under fire in February after some employees completed an online racial sensitivity training course that taught participants how to "be less white."
At the time, Coca-Cola explained the course was not internal training curriculum, but was a publicly available LinkedIn course. Still, Coca-Cola did not clarify whether employees were forced to participate in the course.
"The video circulating on social media is from a publicly available LinkedIn Learning series and is not a focus of our company's curriculum. Our Better Together global learning curriculum is part of a learning plan to help build an inclusive workplace. It is comprised of a number of short vignettes, each a few minutes long. The training includes access to LinkedIn Learning on a variety of topics, including on diversity, equity, and inclusion. We will continue to refine this curriculum," the company said.