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2 black McDonald's executives allege discrimination and 'irrational, vile, and cruel' retaliation at the fast-food giant in new lawsuit

  • Two black McDonald's executives claim in a lawsuit filed on Tuesday that they faced discrimination, a hostile work environment, and "irrational, vile, and cruel" retaliation at the fast-food giant.
  • Vicki Guster-Hines and Domineca Neal allege in the suit that discrimination cost them millions of dollars combined in lost pay and benefits, in addition to suffering "emotional distress, humiliation and related physical suffering."
  • The lawsuit claims that discrimination at McDonald's became "overt" under ex-CEO Steve Easterbrook and Chris Kempczinski, who was promoted from the head of the US business to CEO in November.
  • According to the lawsuit filed Tuesday, McDonald's cut its total number of black corporate officers from 42 to seven from 2014 to 2019. McDonald's uses the term "officer" to describe employees at a vice-president level or above that. A McDonald's representative told Business Insider that the company's officer count has dropped overall, in a recent restructuring.
  • "At McDonald's, our actions are rooted in our belief that a diverse, vibrant, inclusive and respectful company makes us stronger," a McDonald's representative said in a statement.
  • Sign up for Business Insider's retail newsletter, The Drive-Thru, to get more stories like this in your inbox.
  • Visit Business Insider's homepage for more stories.

Two black female executives at McDonald's claim in a new lawsuit that the fast-food giant discriminated against them, other black employees, and franchisees at the chain.

Vicki Guster-Hines and Domineca Neal, two McDonald's operations officers based in Dallas, Texas, filed a suit against the fast-food company in the North District Court of Illinois on Tuesday, The Wall Street Journal first reported. The complaint, which also names McDonald's CEO Chris Kempczinski, former CEO Steve Easterbrook, and US West Zone President Charles Strong as defendants, claims Guster-Hines and Neal faced intentional race discrimination, a hostile work environment, and unlawful retaliation.

"McDonald's subjected them to continuing racial discrimination and hostile work environment impeding their career progress, even though they both did great work for McDonald's, which the Company consistently acknowledged in their performance reviews," the complaint reads.

"And then, when they protested internally not only for themselves but for all other similarly situated African Americans, McDonald's subjected them to unlawful retaliation that was irrational, vile, and cruel," the complaint continues.

Carmen Caruso, attorney for Guster-Hines and Neal, told Business Insider that the two executives have taken leaves of absence related to the dispute.

Guster-Hines claims in the suit that McDonald's discrimination cost her more than $2 million in lost pay and benefits, while Neal alleges she lost hundreds of thousands of dollars in lost pay and benefits. Both claim to have additionally "suffered emotional distress, humiliation and related physical suffering."

The lawsuit comes at a time when McDonald's is facing backlash from black franchisees who allege unequal treatment from the company. As Business Insider reported in December, black franchisees say their stores net $68,000 less a month, on average, than McDonald's overall franchisee average. The disparity between the two groups has more than doubled in recent years, according to data from the National Black McDonald's Operators Association.

mcdonalds cash flow gap african american franchisees

In mid-December, McDonald's created a new position focused on franchisee diversity.

"At McDonald's, our actions are rooted in our belief that a diverse, vibrant, inclusive and respectful company makes us stronger," a McDonald's representative said in a statement on Wednesday.

According to the company, almost half of all its corporate officers are people of color, representing an increase of nearly 10% since 2013, and all 10 US field vice presidents are people of color. McDonald's uses the term "officer" to describe employees at a vice-president level or above that.

"While we disagree with characterizations in the complaint, we are currently reviewing it and will respond to the complaint accordingly," the representative said.

The lawsuit claims that discrimination became 'overt' under ex-CEO Easterbrook

Steve Easterbrook

The complaint states that, while black executives at McDonald's have faced "systematic but covert racial discrimination" for years, Easterbrook's appointment as CEO in 2015 and Kempczinski's joining the company shortly after caused discrimination to become "overt."

"Easterbrook and Kempczinski excluded African Americans from their inner circles of trusted advisors, such as Defendant Charles Strong, who they used to carry-out their ruthless humiliation and expulsion of highly qualified African Americans including Vicki and Domineca," the complaint states.

Both Guster-Hines and Neal claim that they and other black executives were not treated as equals at McDonald's, being passed over for promotions and dealing with what the complaint calls a "hostile work environment."

In one incident mentioned in the complaint, a corporate employee told Guster-Hines that she was "a [n-word] like all the rest - you just believe you are better because you are a smart one," in or around 2005. The complaint says that the employee who called Guster-Hines the n-word was promoted and later became a franchisee.

In another instance, in March 2018, Guster-Hines claims that McDonald's executive Strong called a group of five black female executives "angry black women," that "always seemed to be mad about something."

The complaint alleges that Easterbrook and Kempczinski contributed to the hostile and discriminatory environment. Kempczinski became McDonald's CEO in early November 2019, when he was promoted after ex-CEO Easterbrook was forced to leave after an investigation into his relationship with a coworker.

"[A]t a meeting of the National Black McDonald's Operators' Association (NBMOA) in 2016, and on other occasions, Easterbrook confirmed that 'diversity' at McDonald's meant 'women', specifically omitting persons of color," the complaint states. "Kempczinski further reiterated this exclusion in April 2019 at a meeting requested by senior African American executives to discuss the lack of African American representation in upper management, when he stated point blank that the 'numbers [of African Americans] don't matter.'"

Business Insider reported in December that black franchisees said disparities between themselves and their white counterparts grew significantly during Easterbrook's time as McDonald's CEO from 2015 to November. Franchisees were concerned about the shrinking number of black leaders at McDonald's as the company revamped its corporate structure.

According to the lawsuit filed Tuesday, McDonald's cut its total number of black corporate officers from 42 to seven from 2014 to 2019, between dismissals and demotions. Two franchisees previously provided similar numbers to Business Insider when discussing the decline in black leadership at the chain.

According to McDonald's, the decline in black leadership has been broadly proportional during the reorganization. McDonald's says 45% of its US corporate officers are people of color and all of its US field vice presidents today are people of color.

Black franchisees and customers were also affected, according to the complaint

The lawsuit's claims mirror Business Insider's reporting into systematic disadvantages faced by black franchisees in recent years. The complaint claims that there was a "startling" decline in the number of McDonald's locations owned and operated by African-Americans during the period that Easterbrook was CEO and Kempczinski was the head of the US business.

"The disproportionate loss of nearly one-third of the African American franchisees in the Easterbrook and Kempczinski era was intentional or, in the alternative, it was in reckless disregard of plainly foreseeable consequences of business decisions made by Easterbrook and Kempczinski and their minions," the complaint reads.

mcdonalds franchisee count shrinking

At the end of 2014, there were 261 black McDonald's franchisees, according to NBMOA documents obtained by Business Insider. Today, two franchisees told Business Insider, there are fewer than 200 black franchisees. Franchisees said they were forced out due in part to the financial burden of the chain's 2017 tech-centric "Experience of the Future" growth plan and a shift towards a system in which fewer franchisees own more locations.

McDonald's said in a statement to Business Insider in late November that it "is among our top priorities that all McDonald's franchises in all communities have the opportunity to prosper, grow and achieve their business ambitions."

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