Bank Goldman Sachs has reached an out-of-court settlement to settle a class action lawsuit alleging it systematically discriminates against women, the company and plaintiffs said in a statement. Goldman will pay $215 million (approximately €200 million at current exchange rates) in an agreement that will affect approximately 2,800 female employees and vice presidents employed in investment banking, investment management or securities, as described below.
With the out-of-court settlement, Goldman Sachs avoids a lawsuit, which was due to begin next month and which would have publicly exposed its discriminatory labor practices against women in an industry with a significant proportion of male leadership positions.
The lawsuit was filed on September 10, 2010 by Cristina Chen-Oster, Shanna Orlich, Allison Gamba and Mary De Luis, women formerly of Goldman Sachs as associates or vice presidents in the United States in investment banking, investment management or were values. They alleged systematic discrimination in terms of salary, performance evaluation and promotions.
“As one of the original plaintiffs, I’ve been proud to unquestioningly support this case for the past nearly 13 years, and I believe this settlement will help the women I had in mind when I filed the case,” said Shanna Orlich in the publication. “My goal in this case has always been to support the strong women of Wall Street,” plaintiff Allison Gamba said. “I am proud that the result we have achieved here advances gender equality,” she added.
The settlement is larger than the approximately $150 million Smith paid Barney in 1997 to settle the so-called Boom-Boom Room lawsuit alleging the company was harassing and discriminating. Morgan Stanley reached a settlement in 2004, paying $54 million to avoid a lawsuit in which more than 300 female employees accused the bank of discriminating against their male colleagues over pay and promotions. Merrill Lynch reached another settlement valued at $250 million by attorneys for Stowell & Friedman. Similar lawsuits are pending before the courts or out-of-court settlements at other banks.
In addition to the severance package, the settlement requires an independent expert to review performance appraisal and promotion processes for three years “to ensure they deliver accurate, reliable and unbiased results,” the statement said. In addition, additional pay equity studies must be conducted by an independent expert and Goldman Sachs must investigate and address any gender pay gap. The bank also commits to improving certain communications to vice presidents related to career development and promotion criteria during these three years.
Class action settlement benefits are available to all women who served as associates or vice presidents in New York from July 7, 2002 to March 28, 2023 or in other parts of the United States from September 10, 2004 to March 28, 2023 and were subject to specific performance appraisal processes. However, about a third of the compensation will go to the lawyers, according to Bloomberg.
The court sets a hearing date for tentative approval of the settlement, which, if approved, will result in an administrator sending a notice to class members. If the court later grants final approval of the settlement, the administrator will allocate the settlement amounts to each eligible group member based on an objective formula.
For her part, Jacqueline Arthur, global director of human capital management at Goldman Sachs, said in the statement, “Goldman Sachs is proud of its long history of nurturing and empowering women and remains committed to providing a diverse and inclusive workplace for all of our employees to ensure . After more than a decade of intense litigation, both parties have agreed to resolve this matter. We will continue to focus on our people, our customers and our business.”
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