Lawyers for the Scottsdale, Ariz.-based company and the U.S. Equal Employment Opportunity Commission announced the agreement a day after the case was scheduled to go to trial.
"I think you're going to see a workplace in which the ability of women to work without fear, without experiencing harassment, is going to become a reality," said John Hendrickson, a Chicago-based EEOC regional attorney.
The lawsuit centered around allegations that dozens of employees faced sexual harassment at Dial's Aurora plant, which produces 2.3 million bars of soap daily and employs 350 people.
The company admitted no fault and said it had made a business decision to settle the suit.
"Today's announcement closes the door on this lawsuit," said Christopher J. Littlefield, Dial's senior vice president and general counsel.
Dial attorneys said the allegations were overblown and that men who caused real problems were warned and in some cases fired. The company said it established a training program to head off such problems as early as 1990, and even got an EEOC award for a job well done.
The EEOC said the suit was its biggest sexual harassment case since a suit against Mitsubishi Motor Manufacturing of America five years ago. That plant was also in Illinois, in Normal.
Mitsubishi settled for $34 million. The company's North American division paid awards ranging from $10,000 to $300,000 to 486 female workers to settle allegations that women on an assembly line were groped and insulted and that managers did nothing to stop it.
The average award in the Dial case will be $100,000, both sides said.
As part of the Dial settlement, the company agreed a court order barring sexual harassment at the plant and to two and a half years of EEOC monitoring at the facility.
By Mike Robinson