A Norcross, Ga.-based packaging manufacturer has agreed to pay $500,000 to settle a lawsuit filed by the federal Equal Employment Opportunity Commission in which it was charged with subjecting 14 black employees to a racially hostile environment that included racist graffiti, such as “KKK,” swastikas, Confederate flags, “white power” and other racist terms.

The EEOC said Monday that black employees at RockTenn Services Co. Inc. also saw hangman's nooses displayed at its Dallas paper mill, and several employees were referred to with racist slurs. Michael Scott, who filed a discrimination charge with the EEOC, was called a racial epithet by his supervisor and later discovered a hangman's noose at his work station, said the EEOC in a statement.

The EEOC said officials of the paperboard, containerboard and consumer and corrugated packaging firm repeatedly ignored EEOC's complaints of racist graffiti even after it was reported to management on multiple occasions.

The case had been set to go to trial on Monday in federal district court in Dallas, the EEOC said.

In addition to the $500,000 in monetary relief, other provisions of the settlement include an injunction that prohibits the company from further discriminating against any employee or harassing any worker on the basis of race, and implementation of an anti-graffiti policy.

Robert A. Canino, regional attorney for the EEOC's Dallas District Office, said in a statement: “This case demonstrates racism at its most hateful level. The violations in this case are especially odious in light of the multiple reports of racist graffiti made by numerous employees. The EEOC will continue to aggressively pursue employers that violate their workers' rights.”

“Yesterday, RockTenn agreed to resolve claims asserted by the EEOC alleging racial harassment at RockTenn's Dallas Mill,” a RockTenn spokeswoman said in an email. “RockTenn disagrees with the EEOC's characterization of the events and wants to 'set the record straight.' We believe their press release contains many inaccurate claims.

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“RockTenn has vigorously defended this case for almost five years because the allegations were fabricated and exaggerated. In fact, the EEOC's key witness in this case was fired from the Company for lying on his employment application about his felony conviction.

“The conduct that the EEOC complains of was anonymous behavior that the Company appropriately addressed when it was reported to management. The anonymous graffiti in one of the private bathroom stalls in the men's locker room was found almost five years ago. When the graffiti was reported to management, the Company took numerous actions to remedy the problem created by the anonymous vandal, including: repainting bathroom stalls, remodeling bathrooms, installing a coded lock to the locker room, installing exterior cameras, utilizing graffiti resistant materials and performing regular inspections. There were two allegations of nooses both which were investigated but neither of which were substantiated.

“The Dallas EEOC recruited 14 employees to join this case; many of these same employees who are participating in the monetary settlement have also testified under oath that they did not believe they had been harassed or subjected to discriminatory treatment. The fact is that all but two of the complainants are currently employed by the Company and most have testified that they enjoy working for RockTenn and intend to retire from the Company.

“RockTenn has never wavered in its position that harassment and discrimination in our workplace is unacceptable, which is why we have policies and complaint procedures in place to keep our workplace free of such conduct. The settlement included monetary and non-monetary terms that were far more favorable to RockTenn than those initially sought by the EEOC, and as a result, while the Company continues to deny liability, the decision to resolve this case was the best decision for RockTenn as we move forward as a leader in the industry.”