Financial Settlements of Pay Equity and Transparency Discrimination Cases

With the recent addition of pay equity laws impacting employers, we wanted to share some recent large financial settlements based on alleged pay discrimination. The following outlines conciliation agreements garnered by the Office of Federal Contracts Compliance Programs (OFCCP) as well as private actions.

OFCCP Settlements

• The Bank of New York Mellon Corporation entered into a conciliation agreement with the OFCCP (press release) and will pay $1.925 million in back wages and interest to resolve compensation discrimination allegations. OFCCP alleged systemic discrimination against 120 female, 47 Black and 26 Hispanic employees in investment services technology positions at the bank’s Jersey City location. The agency determined that the company paid the female employees less than their male counterparts in similar positions and paid the Black and Hispanic workers less than their Asian counterparts in similar positions. Other remedies include: (1) conducting a compensation analysis for the affected groups, (2) making salary adjustments to fix pay disparities, (3) review and revise its overall compensation system, (4) provide training to all managers, and (5) analyze compensation annually for disparities.
• Hospitality Logistics International LLC entered into a conciliation agreement with OFCCP and agreed to pay $100,000 to employees who allegedly were terminated for inquiring about their compensation. The company will update it policies and train all employees on their pay transparency rights under E.O. 11246. [OutSolve blog]

Private Litigation Settlements

• Alphabet Inc.’s Google settled a gender discrimination lawsuit affecting approximately 15,500 female employees by agreeing to pay $118 million. They also agreed to retain the services of an independent expert to analyze Google’s hiring practices and an independent labor economist to review their pay equity studies. The suit involved women in 236 different job titles and alleged that the company paid female employees approximately $16,794 less per year than a “similarly situated man.” It also alleged that Google relied on the candidate’s prior pay at the time of hire to assign them to lower levels than men with comparable qualifications and experience.
• Over two years ago, Goldman Sachs agreed to pay more than $12 million to a former female partner to resolve and suppress claims that senior executives created a hostile environment for women by making vulgar or dismissive remarks about women. The complaint also alleged discriminatory pay practices, disproportionate promotions of men over equally qualified women, and unfair performance evaluations without proper safeguards to ensure fair implementation. The certified class included current and former female Associates and Vice Presidents employed in the Investment Bank, Investment Management and Securities divisions from September 20, 2004 though the resolution. The company attempted to keep the settlement quiet until it was published via Bloomberg.
• In December 2022, a California federal district court gave final approval to a settlement of $24 million between the U.S. women’s soccer team and the sport’s national governing body to resolve a pay equity class action lawsuit. The suit alleged that the S. Soccer Federation Inc. paid women substantially less than the players on the men’s team despite their success on the field. The federation announced that new player contracts will include identical pay structures for appearances and tournament victories, revenue sharing and equitable distribution of World Cup prize money. Prior to these changes, American women received a $110,000 bonus for winning the 2019 World Cup compared to $407,000 the men received in 2018.
• Sterling Jewelers Inc. agreed to pay $125 million plus $50 million in attorney’s fees and costs to resolve allegations of sex bias in pay and promotions. The settlement will be split among 68,000 female retail sales workers. The 2008 lawsuit alleged that the company’s facially neutral pay and promotion systems had a disparate impact on female employees not consistent with business necessity or that the company failed to use less discriminatory pay and promotion practices. The practices discounted women’s prior experiences upon hire which led to lower starting pay. The low pay was not properly adjusted regardless of performance.

OutSolve’s Take 

As companies focus on closing the gender pay gap, strengthening compensation policies and practices, employees are becoming savvier to their rights under pay equity and pay transparency laws. Employers must make the difficult decision of pay transparency as a growing number of employees expect their companies to be more open about compensation. Additionally, to support Environmental, Social, and Governance (ESG) metrics, many institutional investors are also wanting more public disclosure.

For organizations to feel confident in their compensation practices, it is best to know what is being disclosed and how it impacts on women and people of color. For clients who wish to take preventive measures to evaluate their pay practices, OutSolve’s Pay Equity Analysis Services are available. Additional information on OutSolve’s Pay Equity Analysis or other compliance services may be obtained at info@outsolve.com or by calling 888-414-2410.