Italian Chain Rosebud Settles Race Discrimination Lawsuit for $1.9 Million

Rosebud Restaurants has reached a $1.9 million settlement in a class-action lawsuit alleging the 13-restaurant chain refused to hire African Americans. The U.S. Equal Employment Opportunity Commission announced that Rosebud, as part of the agreement, will actively recruit African Americans with the goal that they should make up 11 percent of the workforce. Many of Rosebud’s restaurants did not employ African Americans. The lawsuit also claimed that the chain’s management team, including founder Alex Dana, referred to African Americans with racial slurs creating a culture of racism.

The commission filed its lawsuit in 2013. Other former employees and job applicants followed and filed similar lawsuit alleging racism and sexism. The government also claims that Rosebud broke federal law by failing to accurately report employment data. That information includes the number of minorities that were hired. The lawsuit also claimed that many job applications from African-American jobseekers were immediately discarded by managers.

The Tribune received a statement from the chain reading that the settlement was “in the best interests of our employees, staff and patrons.”

How will the lawsuit affect other restaurants? Chicago-based attorney Barry Hartstein co-chairs Littler Mendelson’s equal employment opportunity and diversity practice. Hiring barriers, particularly racial discrimination cases, have been a recent focus for the EEOC. A seven-figure settlement is a good way to grab the attentions of restaurant investors and managers. It’s a good way of stressing the importance of equality.

“At the end of the day, employers just need to be more-than-gently reminded that a diverse workforce is critical,” Hartstein said.

Managers need to pay attention to hiring practices and not merely rely on referrals, Hartstein added. Heavy dependence on referrals can unintentionally lead to discrimination, though the intent doesn’t matter to the job applicant that’s been turned away. This doesn’t just apply to racial biases. Hartstein noted a recent age discrimination settlement case, as well as how the LGBTQ community is affected.

There’s also the hope that the public doesn’t read too much into the $1.9 million figure, Hartstein said. He pointed out that this was a class-action suit, so the amount will be divided. He’s worried about triggering the filing of meritless lawsuits in the future.

Rosebud’s restaurants include Carmine’s in Gold Coast, Mama’s Boy in River North, and the original Rosebud in Little Italy. The chain also has suburban locations in Naperville, Highland Park, and Deerfield.