updated 7/30/2007 5:05:36 PM ET 2007-07-30T21:05:36

Nike Inc. has reached a $7.6 million settlement in a class-action race discrimination lawsuit filed on behalf of 400 black employees of the company’s Chicago Niketown store, the company said Monday.

The lawsuit, filed in 2003, claimed managers at the retail store used racial slurs to refer to black workers and customers. They also said the store segregated black employees into lower-paying jobs as stockroom workers and cashiers rather than giving them lucrative sales jobs. And they alleged managers made unfounded accusations of theft against black workers and directed store security to monitor black employees and customers because of their race.

Nike has denied the allegations.

Under the terms of the agreement, Nike Retail Services will pay $7.6 million to the current and former employees to resolve the claims. The lawsuit covers black employees who worked at the store from 1999 until now.

Nike also must make a host of other changes to address diversity, such as appointing a diversity consultant to monitor the Chicago store’s compliance and a compliance officer at Nike’s headquarters in Beaverton. The company must also add an ombudsperson at the store and conduct diversity training for all supervisors and managers there.

Nike also is required to review its human resources practice, create equal opportunity objectives for the store and review its theft-loss policies. It also will create a formal mentoring program for black employees.

The company and the attorney for the plaintiffs declined to comment further on the case.

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