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Eastman Kodak Co. v. Fair Emp. Prac. Com.





Appeal from the Appellate Court for the Second District; heard in that court on appeal from the Circuit Court of Du Page County, the Hon. John Teschner, Judge, presiding.


Rehearing denied October 19, 1981.

This appeal involves a challenge by the Eastman Kodak Company to a decision of the Fair Employment Practices Commission (Commission) which struck Kodak's name from the list of eligible bidders for public contracts with the State of Illinois. The Commission's decision was based upon the claimed failure of Kodak to submit an acceptable affirmative action program to rectify what the Commission considered an "underutilization" of minority employees at Kodak's Oak Brook facility. Kodak filed an appeal under the Administrative Review Act (Ill. Rev. Stat. 1975, ch. 110, par. 264 et seq.) in the circuit court of Du Page County and the court reversed the decision of the Commission. The appellate court in turn reversed the circuit court judgment (83 Ill. App.3d 215), and we granted Kodak's petition for leave to appeal (73 Ill.2d R. 315(a)).

As a means of carrying out the declared legislative intention under the Fair Employment Practices Act (Ill. Rev. Stat. 1975), ch. 48, par. 851 et seq.) to provide equal employment opportunities to all residents of the State and to protect them from discrimination on the basis of "race, color, religion, sex, national origin, ancestry or unfavorable discharge from military service, or physical or mental handicap unrelated to ability" (Ill. Rev. Stat. 1975, ch. 48, par. 851), section 4 of the Act imposes certain requirements upon individuals or companies who enter into public contracts with State or local governmental bodies. All contractors, subcontractors, and labor unions, as a precondition to a contract, must agree that they "shall not commit an unfair employment practice in this State as defined in this Act [see Ill. Rev. Stat. 1975, ch. 48, par. 853], and shall take affirmative action to insure that no unfair employment practice is committed." (Ill. Rev. Stat. 1975, ch. 48, par. 854.) Section 4A empowers the Commission to "issue rules and regulations, conduct investigations, hold hearings and issue orders based thereon for the purposes of enforcement and administration of Section 4 of this Act and rules and regulations adopted hereunder." Ill. Rev. Stat. 1975, ch. 48, par. 854A.

Under this grant of legislative authority to promulgate rules and regulations to carry out the legislative intent of the Act, the Commission requires a contractor or subcontractor to file a prequalification report with the Commission in order to establish its eligibility for bidding on public contracts. (Rules and Regulations for Public Contracts Prescribed by the Illinois Fair Employment Practices Commission, Art. V, sec. 5.1.) In addition to representing that it will not discriminate on the basis of "race, color, religion, sex, national origin or ancestry," the employer must also ascertain whether minorities and women are "underutilized" within his workforce. (Art. III, sec. 3.1(1) (Nov. 30, 1972).) "Underutilization," with respect to minorities, is defined as "having fewer minority workers in a particular job classification than would reasonably be expected by their availability. The availability of minority workers for any job classification shall be determined by the minority population percentages of the area(s) from which the contractor or subcontractor may reasonably recruit * * *." (Art. IV, sec. 4.2(a) (Nov. 30, 1972).) If the Commission determines from a review of the applicant's prequalification report that it is underutilizing the available minority work force, the employer must submit an acceptable affirmative action program. This program must set out the proposed area within which the applicant will actively recruit minority employees, and also the goals, programs, and timetables related to the employer's attempt to increase the percentage of minorities in its work force to a level comparable to the percentage of minorities currently employed within a reasonable recruitment area. If the plan is found acceptable so as to correct the underutilization, the applicant's name will be placed on the list of eligible bidders for public contracts with the State. If the applicant's affirmative action program is found to be unacceptable, the company may be barred from bidding on the contracts on the grounds of noncompliance. Art. III, sec. 3.1; art. V, sec. 5.1(c) (Nov. 30, 1972).

In September of 1974, Kodak filed its prequalification report with the Commission in order to maintain its bidding-eligibility status. The Commission, upon reviewing the statistical information provided by Kodak, found that it was employing minorities to the extent of 11.9% at its Oak Brook plant. Comparing this figure to the 23% minority work force currently employed within the Chicago Standard Metropolitan Statistical Area (SMSA), which is composed of Cook, Du Page, Kane, Lake, McHenry and Will counties, the Commission determined that Kodak was underutilizing minority employees. Kodak did not contest this finding. Instead, it submitted an affirmative action program according to rules and regulations of the Commission. (Art. V, sec. 5.1(c).) The program included a proposed recruitment area which consisted of all of Du Page County and that part of Cook County, excluding the city of Chicago, which extended east to Harlem Avenue, north to Devon Avenue and south to 95th Street. Of the total percentage of estimated employees within this area, minority employees comprised 4.3%. Kodak's facility was located seven miles from the proposed area's eastern boundary and 17 miles from the western boundary. As stated, no part of the city of Chicago was included in Kodak's recruitment area.

An examination of Kodak's employment records for the first half of 1975 with respect to employee residences, which were grouped on the basis of zip codes, gender, and race, and of Kodak's employment-application records disclosed that 47% of its employees resided outside its proposed recruitment area and that 19% of its total number of employees lived in Chicago. The Commission also found that 40% of Kodak's applicants lived outside the recruitment area; that for the same period of time, the first half of 1975, 26% of these applicants were from minority groups and that 13% of the total of applicants resided in Chicago. On the basis of these findings, the Commission concluded that Kodak's proposed recruitment area was unreasonable considering the significant percentage of employees and applicants who lived outside this area.

The Commission on October 15, 1975, issued an order of noncompliance based on what it termed Kodak's failure to submit an acceptable affirmative action program. The program was unacceptable, the Commission decided, because of an unreasonable recruitment area and because of Kodak's stated goal to recruit and hire minority employees at a rate of only 5%.

Under the Commission's rules, Kodak requested a public hearing before an administrative hearing officer. At this proceeding, the Commission, in support of its position that Kodak's proposed recruitment area was unreasonable, introduced into evidence various maps outlining the Chicago SMSA and the area submitted as Kodak's recruitment area; that portion of the 1970 SMSA census figures showing the relation of the black and Spanish populations to the population as a whole; an applicant flow chart and employment chart prepared by Kodak when it filed its prequalification report; and, finally, a map of Chicago and suburbs which indicated the residences of Kodak's current employees and the applicants for employment.

Kodak, in the proceeding before the hearing officer, did not contest the accuracy of the employment statistics or the evidence presented by the Commission. Instead, it called two expert witnesses. The first, Byrne Underhill, is Kodak's national corporate coordinator for equal employment programs. He described Kodak's local efforts in encouraging applications and referrals of prospective minority employees through various urban and suburban minority organizations. He said that while Kodak has been particularly successful with such organizations in the Maywood area, it did not have favorable results with the Chicago Urban League and stated that Kodak no longer works with the league in trying to attract minority employees. It appeared that this was one factor in Kodak's decision not to include the city of Chicago in drawing its proposed recruitment area. Underhill was not able to state, however, what number or percentage of its minority employees or applicants it secured through the various minority organizations.

He further testified that the turnover rate of the minority work force at the Oak Brook facility was only 3% in 1975 and that 33% of its new hirees in that year were minorities. In response to a question as to why close to 20% of its employees are willing to travel from Chicago to Oak Brook, Underhill offered as explanation the "fact" that a significant number of these individuals had worked with Kodak in Chicago before it relocated in Oak Brook and did not wish to forfeit employment benefits which had accrued. The record reveals, however, that only 6 of the 28 affected employees decided to relocate. Approximately 100 of Kodak's employees in 1975 resided in Chicago.

When asked why the city of Chicago was not included in Kodak's recruitment area, the witness cited the lack of recruitment success through the Chicago Urban League and also expressed the opinion that to actively seek prospective minority employees in Chicago as well as in other areas in the SMSA would dilute their overall effectiveness in recruiting, particularly in the Maywood area. Underhill also raised the point that of Kodak's 528 employees, which, excluding salespersons, are subject to a Federal affirmative action program, 350 were locally recruited, whereas the remaining number of employees had been the subject of a national search. The significance of this employment statistic is Kodak's argument that of these local employees, 18.2% were minorities who served principally in clerical and service-oriented positions and who in 1975 were paid entry-level salaries of between $150 and $175 per week. It was Kodak's position that only the 350 locally recruited employees should be included in any statistical employment analysis of its hiring practices. The apparent implication was that nationally recruited employees are more apt to live farther from the Oak Brook facility than its locally recruited employees do. Kodak did not provide, however, any evidence as to where the employees hired as a result of national recruiting actually resided.

Melvin W. Reder, a professor of urban economics at the University of Chicago, also testified for Kodak. The purpose of Professor Reder's testimony, supported to some extent by SMSA statistics from the Chicago area, was to establish that the greater the distance a jobsite is from an employee's residence, the less likely that employee is willing to travel to the site of employment or be able to arrange to travel to work in a car pool. This position was then applied to Kodak's location and its ...

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