Ford Motor Co. has agreed to pay $7.5 million in damages and millions more in training costs to settle a sexual harassment complaint brought by the U.S. Equal Employment Opportunity Commission on behalf of female workers at the company's two Chicago area plants, the government announced yesterday.

The $7.5 million settlement was the fourth-largest sexual harassment case in EEOC history and the second major damages award in the auto industry in little more than a year. The largest harassment settlement was last year's agreement by Mitsubishi Motor Manufacturing Co. to pay $34 million to settle a similar case at its Normal, Ill., assembly plant.

In a scenario similar to the landmark sexual harassment case the EEOC filed against Mitsubishi in April 1996, the Ford case began when a group of 19 women working at the company's Chicago stamping and assembly plants filed a complaint with the agency claiming male workers routinely used sexually degrading names to refer to the women, placed sexually explicit materials in the workplace, made sexual comments about the body parts of the female workers and physically groped some of the women.

The EEOC said some managers retaliated by threatening the jobs of the women who complained of harassment. Since January 1998, Ford has fired 10 employees, including an undisclosed number of managers, who were accused of retaliating against the women, the agency said.

The settlement covers 700 to 900 women who were employed at the two plants between Jan. 1, 1996, and yesterday, the date of the settlement. Women who believe they were harassed during that period must file individual claims with the EEOC to be eligible for payments from the $7.5 million settlement fund. The amount each woman receives will be determined by a three-member independent panel. If there is any money left over after all the claims have been resolved, Ford will donate the money to charity, under terms of the agreement.

Seventeen of the 19 women who filed the initial complaint have filed a private lawsuit and are not eligible for damages from the settlement fund. Two female employees, who were not identified by either the company or the EEOC, will receive a total of $250,000 as part of the settlement agreement.

As part of the settlement, Ford also agreed to spend as much as $10 million to train approximately 40,000 employees--including managers--at 23 stamping and assembly plants nationwide on how to prevent job discrimination.

The automaker also agreed to increase the number of women entering supervisory positions to 30 percent over the next three years at the two Chicago plants. Women now make up about 15 percent of the supervisors at the two plants.

Under the settlement, Ford also promises "substantial discipline," including dismissal, for any managers who allow discrimination or harassment to take place against workers under their supervision.

At best, said an EEOC official, "they can kiss their bonuses goodbye" if they permit discrimination at their work sites.

EEOC officials, who praised Ford for its cooperation, said it was the largest sexual harassment settlement reached through a conciliation process without the government having to take the company to court.

"Throughout the negotiating process, Ford was receptive to our invitation to work with the EEOC to provide substantial remedies to its employees and to develop a process to rid its work sites of this invidious form of discrimination," John Rowe, director of the EEOC's Chicago office, said in a statement.

James Padilla, Ford's group vice president for manufacturing, called the settlement "a positive step forward in resolving these issues in partnership with the EEOC." To any company employees who were not accorded full dignity in the workplace, Padilla said, "we apologize."

After an investigation of the Chicago plants, the EEOC notified Ford in the fall of 1998 that it had found resonable cause to believe the company had violated federal sexual harassment laws.

Rowe said he was particularly pleased that Ford had agreed to allow a three-member independent panel to monitor the company's anti-discrimination efforts over the next three years with veto power over decisions it doesn't agree with. The panel, which also will hear the individual complaints filed by the female employees and determine their awards, will consist of one member picked by the company, one by the EEOC and the third picked by the other two panel members.