Probe of Rail Contractor Finds No Bias : But Further Racial Discrimination Investigations May Follow

A Los Angeles County Transportation Commission investigation of a major contractor on its $700-million Los Angeles-to-Long Beach light-rail project has found no evidence of alleged discriminatory actions against minorities, officials said Friday.

However, officials said the investigation was less than exhaustive and that further inquiries into charges of racial bias may follow.

After hearing a report on the investigation, a key committee of the commission decided to take no disciplinary action against Missouri-based Herzog Contracting Corp., whose non-union California arm has been dogged by political controversies and labor disputes.

The discrimination investigation was prompted late last year after several former Herzog employees, most of them black, charged the company with unfair hiring and firing, favoritism toward white workers, discriminatory pay practices and improper layoffs of blacks.

Had the commission’s Rail Construction Committee found that the firm was discriminating against minority workers, Herzog could have lost a $43-million track-laying contract it now holds and been barred from competing for future work.

The commission’s attorney, David Cohen, said that “based on the evidence, it appears Herzog’s conduct vis-a-vis these people was not based on race.”

Also, Herzog had significantly exceeded minority hiring goals, according to a review of the firm’s employment records by the accounting firm of Deloitte Haskins & Sells.

But those records, which the accounting firm stressed had not been independently audited, also showed blacks are layed off or fired in disproportionate numbers when compared to whites and other minorities. No judgment about possible discrimination could be made, in part because the company does not maintain files to show if similar warnings and procedures were used for all workers, said Charles S. Ream, a partner in Deloitte Haskins.

George Kieffer, Herzog’s attorney, said Friday’s action “completely exonerated” his client. “This is not your average company in (minority hiring),” Kieffer told commissioners. “It is probably one of your better companies.”

However, one former worker who filed some of the charges, Dennis Johnson, criticized the investigation, saying the commission appeared to be “covering up” Herzog’s actions.

While the commission’s action was a victory for the company, even some commissioners acknowledged the investigation was limited in depth and focus. And the panel stopped short of approving an exonerating statement that Commissioner Walter King said was needed to remove “any type of cloud” over Herzog.

Commissioners, who met in their downtown high-rise office as the echoes of about 50 chanting anti-Herzog union pickets rose from the street below, stressed that Friday’s action does not necessarily end the matter.

Some Herzog employees have filed discrimination complaints against Herzog with state and federal agencies. Those agencies, including the state labor board, have the primary legal responsibility to investigate alleged discriminatory acts against individual workers, commission officials said. Should those agencies rule against the company, Herzog could still face disciplinary action by the commission, members noted.

Sanford Jossen, a lawyer for Johnson and other former employees, said the dispute will most likely move to federal court, where a lawsuit against Herzog will be filed.