Calling a Cincinnati bank's hiring practices among the worst cases of discrimination she had ever seen, a U.S. Labor Department official said that her office would take a closer look at the way banks recruit.

Shirley J. Wilcher, deputy assistant secretary of labor, said Provident Bancorp passed over 1,200 African-American, Asian, and Hispanic job seekers in the Cincinnati area in 1988 and 1989, even though they were "equally or better qualified than their nonminority counterparts." Provident is paying nearly $900,000 in a settlement.

She compared the situation to the discrimination that allegedly took place at Texaco Inc., where executives are accused of plotting to destroy evidence in a racial bias case and were tape recorded making disparaging remarks about ethnic minorities. Although Ms. Wilcher said the two cases were equally disturbing, she added that Provident did not appear to be guilty of any cover-up.

Ms. Wilcher, who heads the Office of Federal Contract Compliance Programs, said in an interview that more banks will be closely watched and that her office will increase the number of spot checks it does at banks to monitor their hiring practices. The office is responsible for the Labor Department's review of hiring by banks.

"Banking has not been known for having a stellar reputation for equal employment," she said.

Some observers dispute Ms. Wilcher's assessment.

"Overall, I think banks have been sensitized for quite a period of time to these issues" because they relate to community reinvestment, said Andrew Sandler, a partner with the law firm Skadden Arps in Washington. "For that reason, I think the banking industry is better focused than other industries."

He said the issue of hiring minorities often comes up when a group charges a bank with discriminatory lending practices. Often banks will point to their record of hiring minorities to dispute such charges, he said.

Recent spot checks of banks in Washington and in Mobile, Ala., have given the government agency cause for concern, Ms. Wilcher said. In Washington, the government has sent blacks and whites into banks to apply for jobs. White candidates were either offered jobs or called back for second interviews more often than blacks, she added.

In Mobile, the federal agency reviewed notes taken by a bank during separate interviews for tellers.

"The interview notes for candidate A read: 'blonde hair, blue eyes, teller-type appearance,'" said Ms. Wilcher. "While the notes for candidate B read: 'Very large lips and hips, black girl, not good for public appearance.'"

In the case of Provident, anecdotal evidence showed minority job candidates with money-handling experience were passed over in favor of white applicants, including candidates whose only jobs had been as a lifeguard, a circus clown, and a Playboy bunny, Ms. Wilcher said. "This is one of the most egregious cases I've seen," she added.

Terry E. Henley, Provident's senior vice president of human resources, said there had been a problem with the company's hiring practices in the past. He said a number of initiatives had been put into place since he was hired in 1991 to improve the affirmative action program, which is required of all banks because they are considered federal government contractors.

"This is not the same bank that it was eight years ago," Mr. Henley said. "We did not practice effective affirmative action in 1988 and 1989."

Provident has agreed to hire up to 200 of the applicants, who were mostly seeking teller and clerical jobs, over the next two years. The company agreed to pay the employees $886,625 for back pay and for educational scholarships.

Labor Department officials said the investigation into Provident began as a routine compliance review in September 1989. The case was referred to an administrative law judge in May 1994 after attempts to resolve the issue failed, Ms. Wilcher said.

The crackdown on Provident was part of a program that monitors government vendors. Banks are considered government contractors by virtue of their status as depositories of federal funds and issuing agents for U.S. Savings Bonds. The Labor Department schedules about 1,000 reviews a year.

Provident is not the first bank to pay a large settlement in a hiring discrimination case, but the price of the agreement - which Mr. Henley said is much lower than what the Labor Department originally sought - is among the highest sums paid by a bank. The largest bank case was brought against Harris Trust and Savings Bank of Chicago, which paid a record $14 million in 1989 in connection with an 11-year sex and race discrimination case.

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